UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


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

For the transition period from to

Commission File Number: 1-39686 (Apartment Income REIT Corp.)

Commission File Number: 0-24497 (Apartment Income REIT, L.P.)

APARTMENT INCOME REIT CORP.

APARTMENT INCOME REIT, L.P.

(Exact name of registrant as specified in its charter)


Maryland (Apartment Income REIT Corp.)						84-1299717
Delaware (Apartment Income REIT, L.P.)						84-1275621
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
4582 South Ulster Street, Suite 1700
Denver, Colorado						80237
(Address of principal executive offices)						(Zip Code)

(303) 757-8101

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Class A Common Stock (Apartment Income REIT Corp.)

AIRC

New York Stock Exchange

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 Income REIT Corp.: Yes x No o						Apartment Income REIT, L.P.: Yes x No o

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 Income REIT Corp.: Yes x No o						Apartment Income REIT, L.P.: Yes x No o

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 Income REIT Corp.:						Apartment Income REIT, L.P.:

Large accelerated filer

Accelerated filer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 Income REIT Corp.:

Apartment Income REIT, L.P.:

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


Apartment Income REIT Corp.: Yes o No x						Apartment Income REIT, L.P.: Yes o No x

The number of shares of Apartment Income REIT Corp. Class A Common Stock outstanding as of ~~November 1, 2023: 146,992,711~~May 6, 2024: 145,104,221

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EXPLANATORY NOTE

This filing combines the quarterly reports on Form 10-Q for the quarterly period ended ~~September 30, 2023,~~March 31, 2024, of Apartment Income REIT Corp. (“AIR”), Apartment Income REIT, L.P. (“AIR Operating Partnership”), and their consolidated subsidiaries. The AIR Operating Partnership’s condensed consolidated financial statements include the accounts of the AIR Operating Partnership and its consolidated subsidiaries. Except as the context otherwise requires, “we,” “our,” and “us” refer to AIR, the AIR Operating Partnership, and their consolidated subsidiaries, collectively.

AIR is a self-administered and self-managed real estate investment trust (“REIT”). AIR Operating Partnership owns substantially all of the assets and owes substantially all of the liabilities of the AIR enterprise and manages the daily operations of AIR’s business. AIR owns, through its wholly-owned subsidiaries, the general partner interest and special limited partner interest in the AIR Operating Partnership.

As of ~~September 30, 2023,~~March 31, 2024, AIR owned approximately ~~91.2%~~91.7% of the legal interest and ~~93.6%~~93.7% of the economic interest in the common partnership units of the AIR Operating Partnership, respectively. The remaining ~~8.8%~~8.3% legal interest is owned by third parties. A portion of the ~~8.8%~~8.3% owned by third parties is subject to vesting. If the vesting requirements are not met, the ~~8.8%~~8.3% ownership will be reduced to no less than ~~6.4%~~6.3%. The legal ownership percentage is based on the outstanding Class A Common Stock of AIR (“Common Stock”) and common OP Units (as defined below), including unvested restricted stock and unvested LTIP units. The economic ownership percentage includes any unvested restricted stock and unvested LTIP units to the extent they are considered participating securities, as defined by accounting principles generally accepted in the United States (“GAAP”). As the sole general partner of the AIR Operating Partnership, AIR has exclusive control of the AIR Operating Partnership’s day-to-day management.

As stated above, the AIR Operating Partnership holds all of AIR’s assets and manages the daily operations of AIR’s business. Pursuant to the AIR Operating Partnership agreement, AIR is required to contribute to the AIR Operating Partnership all proceeds from the offerings of its securities. In exchange for the contribution of such proceeds, AIR receives additional interests in the AIR Operating Partnership with terms substantially similar to the stock issued by AIR.

We believe combining the periodic reports of AIR and the AIR 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 AIR and the AIR Operating Partnership; and

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

We operate AIR and the AIR Operating Partnership as one enterprise, the management of AIR directs the management and operations of the AIR Operating Partnership, and the members of the Board of Directors of AIR are identical to those of the AIR Operating Partnership’s general partner.

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

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

To help investors understand the differences between AIR and the AIR Operating Partnership, this report provides separate condensed consolidated financial statements for AIR and the AIR Operating Partnership; a single set of condensed

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consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, and earnings per share or earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for AIR and the AIR Operating Partnership in order to establish that the requisite certifications have been made and that AIR and the AIR 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 INCOME REIT CORP.

APARTMENT INCOME REIT, L.P.

TABLE OF CONTENTS

FORM 10-Q


	PART I. FINANCIAL INFORMATION	Page
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)
	Apartment Income REIT Corp.:
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss	6
	Condensed Consolidated Statements of Equity	7
	Condensed Consolidated Statements of Cash Flows	98
	Apartment Income REIT, L.P.:
	Condensed Consolidated Balance Sheets	109
	Condensed Consolidated Statements of Operations	1110
	Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss	1211
	Condensed Consolidated Statements of Partners’ Capital	1312
	Condensed Consolidated Statements of Cash Flows	1513
	Notes to the Condensed Consolidated Financial Statements of Apartment Income REIT Corp. and Apartment Income REIT, L.P.:	1614
	Note 1 — Basis of Presentation and Organization	1614
	Note 2 — Summary of Significant Accounting Policies	1715
	Note 3 — Significant Transactions	1716
	Note 4 — Leases	1916
	Note 5 — Debt	2017
	Note 6 — Investment in ~~Joint Ventures~~Unconsolidated Real Estate Part n er ships	2218
	Note 7 — Commitments and Contingencies	2319

	Note 8 ~~— Earnings and Dividends per Share and per Unit~~	24
	~~Note 9~~ — Fair Value Measurements	2519
	Note 10 9 — Derivative Financial Instruments and Hedging Activities	2620
	Note 111 0 — Variable Interest Entities	21
	Note 121 1 — Business Segments	2722
	Note 1 2 —Subsequent Events	24

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3025
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4535
ITEM 4.	CONTROLS AND PROCEDURES	4536
	PART II. OTHER INFORMATION
ITEM 1A.	RISK FACTORS	4737
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ~~AND ISSUER PURCHASES OF EQUITY SECURITIES~~	4738
ITEM 5.	OTHER INFORMATION	4738
ITEM 6.	EXHIBITS	4839
Signatures		5042

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APARTMENT INCOME REIT CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
ASSETS	ASSETS
Buildings and improvements
Buildings and improvements
Buildings and improvements	Buildings and improvements	$	6,290,960	$	6,784,965
Land	Land	1,285,398		1,291,429
Total real estate	Total real estate	7,576,358		8,076,394
Accumulated depreciation	Accumulated depreciation	(2,173,273)		(2,449,883)
Net real estate	Net real estate	5,403,085		5,626,511
Cash and cash equivalents	Cash and cash equivalents	106,630		95,797
Restricted cash	Restricted cash	27,540		205,608
Investment in unconsolidated real estate partnerships
Goodwill	Goodwill	32,286		32,286
Investment in unconsolidated real estate partnerships		352,096		41,860
Other assets, net	Other assets, net	477,612		549,821
Total assets	Total assets	$	6,399,249	$	6,551,883

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Non-recourse property debt, net
Non-recourse property debt, net
Non-recourse property debt, net	Non-recourse property debt, net	$	2,231,238	$	1,985,430
Term loans, net	Term loans, net	473,486		796,713
Revolving credit facility borrowings	Revolving credit facility borrowings	25,750		462,000
Unsecured notes payable, net	Unsecured notes payable, net	397,760		397,486
Total indebtedness	Total indebtedness	3,128,234		3,641,629
Accrued liabilities and other	Accrued liabilities and other	483,147		513,805
Total liabilities	Total liabilities	3,611,381		4,155,434

Commitments and contingencies (Note 7)
Commitments and contingencies (Note 7)
Commitments and contingencies (Note 7)
Commitments and contingencies (Note 7)

Preferred noncontrolling interests in AIR Operating Partnership
Preferred noncontrolling interests in AIR Operating Partnership
Preferred noncontrolling interests in AIR Operating Partnership	Preferred noncontrolling interests in AIR Operating Partnership	77,140		77,143

Equity:	Equity:
Equity:
Equity:
Perpetual Preferred Stock	Perpetual Preferred Stock	2,000		2,000
Common Stock, $0.01 par value, 1,021,175,000 shares authorized at September 30, 2023 and December 31, 2022, and 146,973,055 and 149,086,548 shares issued/outstanding at September 30, 2023 and December 31, 2022, respectively		1,470		1,491
Perpetual Preferred Stock
Perpetual Preferred Stock
Common Stock, $0.01 par value, 1,021,175,000 shares authorized at March 31, 2024 and December 31, 2023, and 145,104,220 and 144,925,604 shares issued/outstanding at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital	Additional paid-in capital	3,355,316		3,436,635
Accumulated other comprehensive income	Accumulated other comprehensive income	24,794		43,562
Distributions in excess of earnings	Distributions in excess of earnings	(876,116)		(1,327,271)
Total AIR equity	Total AIR equity	2,507,464		2,156,417
Noncontrolling interests in consolidated real estate partnerships	Noncontrolling interests in consolidated real estate partnerships	(83,110)		(78,785)
Common noncontrolling interests in AIR Operating Partnership	Common noncontrolling interests in AIR Operating Partnership	286,374		241,674
Total equity	Total equity	2,710,728		2,319,306
Total liabilities, preferred noncontrolling interests in AIR Operating Partnership, and equity	Total liabilities, preferred noncontrolling interests in AIR Operating Partnership, and equity	$	6,399,249	$	6,551,883

See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended					Nine Months Ended
		September 30, 2023		September 30, 2022			September 30, 2023		September 30, 2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024							2024	2023
REVENUES	REVENUES
Rental and other property revenues
Rental and other property revenues
Rental and other property revenues	Rental and other property revenues	$	194,244	$	198,413		$	616,659	$	558,686
Other revenues	Other revenues	3,063		2,458			7,018		7,163
Total revenues	Total revenues	197,307		200,871			623,677		565,849

EXPENSES	EXPENSES
EXPENSES
EXPENSES
Property operating expenses
Property operating expenses
Property operating expenses	Property operating expenses	58,076		64,009			190,122		176,679
Property management expenses	Property management expenses	7,899		7,241			23,318		21,594
Depreciation and amortization	Depreciation and amortization	79,023		90,445			263,949		253,650
General and administrative expenses	General and administrative expenses	5,663		7,663			18,866		19,593

Other expenses, net	Other expenses, net	8,110		4,941			14,434		5,883
Other expenses, net
Other expenses, net
						169,075
		158,771		174,299			510,689		477,399

Interest income
Interest income
Interest income	Interest income	2,918		9,613			6,133		48,746
Interest expense	Interest expense	(22,888)		(32,656)			(96,629)		(80,790)
Loss on extinguishment of debt	Loss on extinguishment of debt	—		—			(2,008)		(23,636)
Gain on dispositions and impairments of real estate		692,861		—			675,534		587,609
Gain on derivative instruments, net		14,070		—			23,322		—

Gain (loss) on derivative instruments, net
Gain (loss) on derivative instruments, net
Gain (loss) on derivative instruments, net

Loss from unconsolidated real estate partnerships	Loss from unconsolidated real estate partnerships	(10,390)		(87)			(12,267)		(2,974)
Income before income tax expense		715,107		3,442			707,073		617,405
Loss from unconsolidated real estate partnerships
Loss from unconsolidated real estate partnerships
Loss before income tax expense
Income tax expense	Income tax expense	(4,595)		(46)			(5,911)		(966)
Net income		710,512		3,396			701,162		616,439
Net loss

Noncontrolling interests:	Noncontrolling interests:
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships		(2,525)		102			(3,894)		285
Noncontrolling interests:
Noncontrolling interests:
Net income attributable to noncontrolling interests in consolidated real estate partnerships
Net income attributable to noncontrolling interests in consolidated real estate partnerships
Net income attributable to noncontrolling interests in consolidated real estate partnerships
Net income attributable to preferred noncontrolling interests in AIR Operating Partnership	Net income attributable to preferred noncontrolling interests in AIR Operating Partnership	(1,570)		(1,602)			(4,710)		(4,807)
Net income attributable to common noncontrolling interests in AIR Operating Partnership		(42,386)		(137)			(41,245)		(37,053)
Net loss attributable to common noncontrolling interests in AIR Operating Partnership
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(46,481)		(1,637)			(49,849)		(41,575)
Net income attributable to AIR		664,031		1,759			651,313		574,864
Net loss attributable to AIR
Net income attributable to AIR preferred stockholders	Net income attributable to AIR preferred stockholders	(44)		(43)			(129)		(128)
Net (income) loss attributable to participating securities		(391)		44			(484)		(373)
Net income attributable to AIR common stockholders		$	663,596	$	1,760		$	650,700	$	574,363
Net loss (income) attributable to participating securities
Net loss attributable to AIR common stockholders

Net income attributable to AIR common stockholders per share – basic		$	4.50	$	0.01		$	4.39	$	3.69
Net income attributable to AIR common stockholders per share – diluted		$	4.43	$	0.01		$	4.35	$	3.68
Net loss attributable to AIR common stockholders per share – basic and diluted
Net loss attributable to AIR common stockholders per share – basic and diluted
Net loss attributable to AIR common stockholders per share – basic and diluted

Weighted-average common shares outstanding – basic		147,474		153,811			148,372		155,488
Weighted-average common shares outstanding – diluted		150,045		154,057			150,692		157,440

Weighted-average common shares outstanding – basic and diluted

Weighted-average common shares outstanding – basic and diluted

Weighted-average common shares outstanding – basic and diluted											144,550	148,810

See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(In thousands)

(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Net income $ 710,512 $ 3,396 $ 701,162 $ 616,439
Unrealized (loss) gain on derivative instruments, net (2,236) 34,209 2,955 47,141
Reclassification of interest rate derivative (gain) loss to net income (loss) (14,186) 731 (23,704) 2,720
Comprehensive income 694,090 38,336 680,413 666,300
Comprehensive income attributable to noncontrolling interests (44,608) (4,379) (47,868) (45,488)
Comprehensive income attributable to AIR $ 649,482 $ 33,957 $ 632,545 $ 620,812


	Three Months Ended March 31,
		2024		2023
Net loss		$	(4,278)	$	(9,948)
Unrealized loss on derivative instruments, net		—		(19,748)
Reclassification of interest rate derivative (gain) loss to net loss		(2,101)		4,154
Comprehensive loss		(6,379)		(25,542)
Comprehensive income attributable to noncontrolling interests		(2,132)		(327)
Comprehensive loss attributable to AIR		$	(8,511)	$	(25,869)

See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

~~(In thousands, except share data)~~

~~(Unaudited)~~

Perpetual Preferred Stock Common Stock Additional
Paid-
in Capital Accumulated
Other
Comprehensive
Income (Loss) Distributions
in Excess
of Earnings Total AIR
Equity Noncontrolling Interests in Consolidated Real Estate Partnerships Common Noncontrolling Interests in AIR Operating Partnership Total
Equity
Shares
Issued Amount Shares
Issued Amount
Balances at June 30, 2022 20 $ 2,000 154,187,241 $ 1,542 $ 3,636,906 $ 13,750 $ (1,521,749) $ 2,132,449 $ (70,609) $ 226,985 $ 2,288,825
Redemption of AIR Operating Partnership units — — — — — — — — — (3,178) (3,178)
Repurchase of Common Stock, net — — (1,195,690) (12) (46,699) — — (46,711) — — (46,711)
Amortization of share-based compensation cost — — — — 878 — — 878 — 943 1,821
Effect of changes in ownership of consolidated entities — — — — (2,140) — — (2,140) — 2,140 —
Purchase of noncontrolling interests in consolidated real estate partnerships — — — — (5,529) — — (5,529) 120 — (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 529 — 529
Change in accumulated other comprehensive income — — — — — 32,198 — 32,198 — 2,742 34,940
Net income (loss) — — — — — — 1,759 1,759 (102) 137 1,794
Common Stock dividends — — — — — — (69,377) (69,377) — — (69,377)
Distributions to noncontrolling interests — — — — — — — — (6,226) (4,472) (10,698)
Other, net — — 1,897 — (305) — (42) (347) 88 (235) (494)
Balances at September 30, 2022 20 $ 2,000 152,993,448 $ 1,530 $ 3,583,111 $ 45,948 $ (1,589,409) $ 2,043,180 $ (76,200) $ 225,062 $ 2,192,042
Balances at June 30, 2023 20 $ 2,000 149,223,526 $ 1,492 $ 3,430,731 $ 39,343 $ (1,474,101) $ 1,999,465 $ (80,087) $ 249,512 $ 2,168,890
Redemption of AIR Operating Partnership units — — — — — — — — — (1,745) (1,745)
Repurchase of Common Stock, net — — (2,249,800) (22) (77,760) — — (77,782) — — (77,782)
Amortization of share-based compensation cost — — — — 816 — — 816 — 1,155 1,971
Effect of changes in ownership of consolidated entities — — — — 1,446 — — 1,446 (1,397) 1,070 1,119
Contributions from noncontrolling interests in consolidated real estate partnerships — — — — — — — — 718 — 718
Change in accumulated other comprehensive loss — — — — — (14,549) — (14,549) — (1,873) (16,422)
Net income — — — — — — 664,031 664,031 2,525 42,386 708,942
Common Stock dividends — — — — — — (66,002) (66,002) — — (66,002)
Distributions to noncontrolling interests — — — — — — — — (4,851) (4,134) (8,985)
Other, net — — (671) — 83 — (44) 39 (18) 3 24
Balances at September 30, 2023 20 $ 2,000 146,973,055 $ 1,470 $ 3,355,316 $ 24,794 $ (876,116) $ 2,507,464 $ (83,110) $ 286,374 $ 2,710,728

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

~~Table of Contents~~

~~APARTMENT INCOME REIT CORP.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~For the Nine Months Ended September 30, 2023 and 2022~~

(In thousands, except share data)

(Unaudited)


		Perpetual Preferred Stock			Common Stock			Additional Paid- in Capital				Accumulated Other Comprehensive Income (Loss)		Distributions in Excess of Earnings				Total AIR Equity				Noncontrolling Interests in Consolidated Real Estate Partnerships				Common Noncontrolling Interests in AIR Operating Partnership				Total Equity
		Shares Issued	Amount		Shares Issued	Amount
Balances at December 31, 2021		145	$	2,129	156,998,367	$	1,570			$	3,763,105					$	—			$	(1,953,779)			$	1,813,025			$	(70,883)			$	197,013	$	1,939,155

	Perpetual Preferred Stock																																			Perpetual Preferred Stock	Common Stock	Additional Paid- in Capital	Accumulated Other Comprehensive Income (Loss)	Distributions in Excess of Earnings	Total AIR Equity	Noncontrolling Interests in Consolidated Real Estate Partnerships	Common Noncontrolling Interests in AIR Operating Partnership	Total Equity
	Shares Issued
Balances at December 31, 2022
Balances at December 31, 2022
Balances at December 31, 2022
Issuance of Common Stock
Redemption of AIR Operating Partnership units	Redemption of AIR Operating Partnership units	—	—		—	—		—				—		—				—				—				(7,423)				(7,423)
Repurchase of Common Stock, net		—	—		(4,107,451)	(41)		(171,670)				—		—				(171,711)				—				—				(171,711)

Amortization of share-based compensation cost	Amortization of share-based compensation cost	—	—		—	—		3,519				—		—				3,519				—				2,753				6,272
Amortization of share-based compensation cost
Amortization of share-based compensation cost
Effect of changes in ownership of consolidated entities	Effect of changes in ownership of consolidated entities	—	—		—	—		(5,404)				—		—				(5,404)				—				5,404				—
Purchase of noncontrolling interests in consolidated real estate partnerships		—	—		—	—		(5,529)				—		—				(5,529)				120				—				(5,409)

Contributions from noncontrolling interests in consolidated real estate partnerships
Contributions from noncontrolling interests in consolidated real estate partnerships
Contributions from noncontrolling interests in consolidated real estate partnerships	Contributions from noncontrolling interests in consolidated real estate partnerships	—	—		—	—		—				—		—				—				8,337				—				8,337
Change in accumulated other comprehensive income	Change in accumulated other comprehensive income	—	—		—	—		—				45,948		—				45,948				—				3,913				49,861
Net income (loss)		—	—		—	—		—				—		574,864				574,864				(285)				37,053				611,632
Net (loss) income
Common Stock dividends	Common Stock dividends	—	—		—	—		—				—		(210,361)				(210,361)				—				—				(210,361)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—				—		—				—				(13,561)				(13,408)				(26,969)
Distributions to noncontrolling interests
Distributions to noncontrolling interests
Other, net	Other, net	(125)	(129)		102,532	1		(910)				—		(133)				(1,171)				72				(243)				(1,342)
Balances at September 30, 2022		20	$	2,000	152,993,448	$	1,530	$	3,583,111			$	45,948	$	(1,589,409)			$	2,043,180			$	(76,200)			$	225,062			$	2,192,042
Balances at March 31, 2023

Balances at December 31, 2022		20	$	2,000	149,086,548	$	1,491	$	3,436,635			$	43,562	$	(1,327,271)			$	2,156,417			$	(78,785)			$	241,674			$	2,319,306
Issuance of AIR Operating Partnership units		—	—		—	—		—				—		—				—				—				22,383				22,383
Balances at December 31, 2023
Balances at December 31, 2023
Balances at December 31, 2023

Redemption of AIR Operating Partnership units	Redemption of AIR Operating Partnership units	—	—		—	—		—				—		—				—				—				(17,559)				(17,559)
Repurchase of Common Stock, net		—	—		(2,249,800)	(22)		(77,760)				—		—				(77,782)				—				—				(77,782)
Redemption of AIR Operating Partnership units
Redemption of AIR Operating Partnership units

Amortization of share-based compensation cost
Amortization of share-based compensation cost
Amortization of share-based compensation cost	Amortization of share-based compensation cost	—	—		—	—		3,607				—		—				3,607				—				3,465				7,072
Effect of changes in ownership of consolidated entities	Effect of changes in ownership of consolidated entities	—	—		—	—		(7,840)				—		—				(7,840)				(1,397)				10,356				1,119
Purchase of noncontrolling interests in consolidated real estate partnerships		—	—		—	—		479				—		—				479				(1,996)				—				(1,517)
Contributions from noncontrolling interests in consolidated real estate partnerships		—	—		—	—		—				—		—				—				5,235				—				5,235
Change in accumulated other comprehensive loss		—	—		—	—		—				(18,768)		—				(18,768)				—				(1,981)				(20,749)
Net income		—	—		—	—		—				—		651,313				651,313				3,894				41,245				696,452

Change in accumulated other comprehensive income

Change in accumulated other comprehensive income

Change in accumulated other comprehensive income
Net (loss) income
Common Stock dividends	Common Stock dividends	—	—		—	—		—				—		(200,142)				(200,142)				—				—				(200,142)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—				—		—				—				(9,908)				(13,212)				(23,120)
Other, net	Other, net	—	—		136,307	1		195				—		(16)				180				(153)				3				30
Balances at September 30, 2023		20	$	2,000	146,973,055	$	1,470	$	3,355,316			$	24,794	$	(876,116)			$	2,507,464			$	(83,110)			$	286,374			$	2,710,728
Balances at March 31, 2024

See notes to the condensed consolidated financial statements.

Table of Contents

APARTMENT INCOME REIT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Net loss
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization
		Nine Months Ended September 30,
		2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	701,162	$	616,439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		263,949		253,650
Gain on dispositions and impairments of real estate		(675,534)		(587,609)
Loss on extinguishment of debt	Loss on extinguishment of debt	2,008		23,636

Loss on extinguishment of debt
Loss on extinguishment of debt
Income tax expense	Income tax expense	5,911		966
Other, net	Other, net	4,308		6,890
Net changes in operating assets and operating liabilities	Net changes in operating assets and operating liabilities	(55)		37,484
Net cash provided by operating activities	Net cash provided by operating activities	301,749		351,456
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate	Purchases of real estate	(339,696)		(858,815)
Purchases of real estate
Purchases of real estate
Capital expenditures	Capital expenditures	(140,855)		(151,115)
Contribution to unconsolidated joint ventures		(51,836)		—
Proceeds from dispositions of real estate		52,066		759,227

Distributions from unconsolidated joint ventures		207,137		—

Proceeds from repayment of note receivable		—		534,127

Other investing activities, net	Other investing activities, net	3,194		(30,500)
Net cash (used in) provided by investing activities		(269,990)		252,924

Other investing activities, net

Other investing activities, net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt		(111,699)		(361,056)
Proceeds from non-recourse property debt	Proceeds from non-recourse property debt	1,005,920		—
Proceeds from non-recourse property debt
Proceeds from non-recourse property debt
Principal repayments of non-recourse property debt

Repayment of term loan		(325,000)		(350,000)
Net (repayments of) borrowings on revolving credit facility		(436,250)		176,205
Proceeds from the issuance of unsecured notes payable		—		400,000

Net borrowings on (repayments of) revolving credit facility

Net borrowings on (repayments of) revolving credit facility

Net borrowings on (repayments of) revolving credit facility

Repurchases of Common Stock
Repurchases of Common Stock
Repurchases of Common Stock	Repurchases of Common Stock	(77,782)		(171,711)

Payment of dividends to holders of Common Stock	Payment of dividends to holders of Common Stock	(200,137)		(210,377)
Payment of distributions to noncontrolling interests		(23,524)		(18,262)

Payment of dividends to holders of Common Stock

Payment of dividends to holders of Common Stock

Redemptions of noncontrolling interests in the AIR Operating Partnership

Redemptions of noncontrolling interests in the AIR Operating Partnership

Redemptions of noncontrolling interests in the AIR Operating Partnership

Other financing activities, net	Other financing activities, net	(30,522)		(47,294)
Net cash used in financing activities		(198,994)		(582,495)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(167,235)		21,885

Other financing activities, net

Other financing activities, net
Net cash provided by (used in) financing activities
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	301,405		92,761
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	134,170	$	114,646

See notes to the condensed consolidated financial statements.

Table of Contents

APARTMENT INCOME REIT, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	March 31, 2024		December 31, 2023
ASSETS
Buildings and improvements	$	6,428,478	$	6,324,857
Land	1,297,414		1,285,710
Total real estate	7,725,892		7,610,567
Accumulated depreciation	(2,319,064)		(2,245,589)
Net real estate	5,406,828		5,364,978
Cash and cash equivalents	87,795		91,401
Restricted cash	26,942		26,090
Investment in unconsolidated real estate partnerships	324,876		336,077
Goodwill	32,286		32,286
Other assets, net	319,579		283,920
Total assets	$	6,198,306	$	6,134,752

LIABILITIES AND PARTNERS’ CAPITAL
Non-recourse property debt, net	$	2,217,191	$	2,223,791
Term loans, net	473,915		473,701
Revolving credit facility borrowings	260,000		115,000
Unsecured notes payable, net	397,943		397,852
Total indebtedness	3,349,049		3,210,344
Accrued liabilities and other	303,442		296,894
Total liabilities	3,652,491		3,507,238

Commitments and contingencies (Note 7)

Redeemable preferred units	77,140		77,140

Partners’ capital:
Preferred units	2,000		2,000




General Partner and Special Limited Partner	2,277,237		2,349,896
Limited Partners	278,699		284,451
Partners’ capital attributable to the AIR Operating Partnership	2,557,936		2,636,347
Noncontrolling interests in consolidated real estate partnerships	(89,261)		(85,973)
Total partners’ capital	2,468,675		2,550,374
Total liabilities, redeemable preferred units, and partners’ capital	$	6,198,306	$	6,134,752

See notes to the condensed consolidated financial statements.

Table of ~~Contents~~

~~APARTMENT INCOME REIT, L.P.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(In thousands)~~

~~(Unaudited)~~

September 30, 2023 December 31, 2022
ASSETS
Buildings and improvements $ 6,290,960 $ 6,784,965
Land 1,285,398 1,291,429
Total real estate 7,576,358 8,076,394
Accumulated depreciation (2,173,273) (2,449,883)
Net real estate 5,403,085 5,626,511
Cash and cash equivalents 106,630 95,797
Restricted cash 27,540 205,608
Goodwill 32,286 32,286
Investment in unconsolidated real estate partnerships 352,096 41,860
Other assets, net 477,612 549,821
Total assets $ 6,399,249 $ 6,551,883
LIABILITIES AND PARTNERS’ CAPITAL
Non-recourse property debt, net $ 2,231,238 $ 1,985,430
Term loans, net 473,486 796,713
Revolving credit facility borrowings 25,750 462,000
Unsecured notes payable, net 397,760 397,486
Total indebtedness 3,128,234 3,641,629
Accrued liabilities and other 483,147 513,805
Total liabilities 3,611,381 4,155,434
Commitments and contingencies (Note 7)
Redeemable preferred units 77,140 77,143
Partners’ capital:
Preferred units 2,000 2,000
General Partner and Special Limited Partner 2,505,464 2,154,417
Limited Partners 286,374 241,674
Partners’ capital attributable to the AIR Operating Partnership 2,793,838 2,398,091
Noncontrolling interests in consolidated real estate partnerships (83,110) (78,785)
Total partners’ capital 2,710,728 2,319,306
Total liabilities, redeemable preferred units, and partners’ capital $ 6,399,249 $ 6,551,883

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

~~Table of~~ Contents

APARTMENT INCOME REIT, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)


		Three Months Ended					Nine Months Ended
		September 30, 2023			September 30, 2022		September 30, 2023		September 30, 2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024								2024	2023
REVENUES	REVENUES
Rental and other property revenues
Rental and other property revenues
Rental and other property revenues	Rental and other property revenues	$	194,244		$	198,413	$	616,659	$	558,686
Other revenues	Other revenues	3,063			2,458		7,018		7,163
Total revenues	Total revenues	197,307			200,871		623,677		565,849

EXPENSES	EXPENSES
EXPENSES
EXPENSES
Property operating expenses
Property operating expenses
Property operating expenses	Property operating expenses	58,076			64,009		190,122		176,679
Property management expenses	Property management expenses	7,899			7,241		23,318		21,594		Property management expenses	8,197	7,676
Depreciation and amortization	Depreciation and amortization	79,023			90,445		263,949		253,650
General and administrative expenses	General and administrative expenses	5,663			7,663		18,866		19,593

Other expenses, net	Other expenses, net	8,110			4,941		14,434		5,883
Other expenses, net
Other expenses, net
						169,075
		158,771			174,299		510,689		477,399

Interest income
Interest income
Interest income	Interest income	2,918			9,613		6,133		48,746
Interest expense	Interest expense	(22,888)			(32,656)		(96,629)		(80,790)
Loss on extinguishment of debt	Loss on extinguishment of debt	—			—		(2,008)		(23,636)
Gain on dispositions and impairments of real estate		692,861			—		675,534		587,609
Gain on derivative instruments, net		14,070			—		23,322		—

Gain (loss) on derivative instruments, net
Gain (loss) on derivative instruments, net
Gain (loss) on derivative instruments, net

Loss from unconsolidated real estate partnerships	Loss from unconsolidated real estate partnerships	(10,390)			(87)		(12,267)		(2,974)
Income before income tax expense		715,107			3,442		707,073		617,405
Loss from unconsolidated real estate partnerships
Loss from unconsolidated real estate partnerships
Loss before income tax expense
Income tax expense	Income tax expense	(4,595)			(46)		(5,911)		(966)
Net income		710,512			3,396		701,162		616,439
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships		(2,525)			102		(3,894)		285
Net income attributable to the AIR Operating Partnership		707,987			3,498		697,268		616,724
Net loss
Net income attributable to noncontrolling interests in consolidated real estate partnerships											Net income attributable to noncontrolling interests in consolidated real estate partnerships	(1,101)	(685)
Net loss attributable to the AIR Operating Partnership											Net loss attributable to the AIR Operating Partnership	(5,379)	(10,633)

Net income attributable to the AIR Operating Partnership's preferred unitholders	Net income attributable to the AIR Operating Partnership's preferred unitholders	(1,614)			(1,645)		(4,839)		(4,935)
Net (income) loss attributable to participating securities		(391)			44		(484)		(373)
Net income attributable to the AIR Operating Partnership’s common unitholders		$	705,982		$	1,897	$	691,945	$	611,416

Net income attributable to the AIR Operating Partnership common unitholders per unit – basic		$	4.49		$	0.01	$	4.38	$	3.69
Net income attributable to the AIR Operating Partnership common unitholders per unit – diluted		$	4.42		$	0.01	$	4.34	$	3.68
Net income attributable to the AIR Operating Partnership's preferred unitholders

Weighted-average common units outstanding – basic		157,366			163,866		158,138		165,578
Weighted-average common units outstanding – diluted		159,937			164,112		160,458		167,529
Net income attributable to the AIR Operating Partnership's preferred unitholders												(1,614)	(1,613)
Net loss (income) attributable to participating securities											Net loss (income) attributable to participating securities	66	(37)
Net loss attributable to the AIR Operating Partnership’s common unitholders

Net loss attributable to the AIR Operating Partnership common unitholders per unit – basic and diluted
Net loss attributable to the AIR Operating Partnership common unitholders per unit – basic and diluted
Net loss attributable to the AIR Operating Partnership common unitholders per unit – basic and diluted

Weighted-average common units outstanding – basic and diluted

Weighted-average common units outstanding – basic and diluted

Weighted-average common units outstanding – basic and diluted												154,323	159,284

See notes to the condensed consolidated financial statements.

Table of Contents

APARTMENT INCOME REIT, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
		2024		2023
Net loss		$	(4,278)	$	(9,948)
Unrealized loss on derivative instruments, net		—		(19,748)
Reclassification of interest rate derivative (gain) loss to net loss		(2,101)		4,154
Comprehensive loss		(6,379)		(25,542)
Comprehensive income attributable to noncontrolling interests		(1,101)		(685)
Comprehensive loss attributable to the AIR Operating Partnership		$	(7,480)	$	(26,227)

See notes to the condensed consolidated financial statements.

Table of Contents

APARTMENT INCOME REIT, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME (LOSS)~~PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2024 and 2023

(In thousands)

(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Net income $ 710,512 $ 3,396 $ 701,162 $ 616,439
Unrealized (loss) gain on derivative instruments, net (2,236) 34,209 2,955 47,141
Reclassification of interest rate derivative (gain) loss to net income (loss) (14,186) 731 (23,704) 2,720
Comprehensive income 694,090 38,336 680,413 666,300
Comprehensive (income) loss attributable to noncontrolling interests (2,525) 102 (3,894) 285
Comprehensive income attributable to the AIR Operating Partnership $ 691,565 $ 38,438 $ 676,519 $ 666,585


	Preferred Units		General Partner and Special Limited Partner		Limited Partners		Partners' Capital Attributable to the AIR Operating Partnership		Noncontrolling Interests in Consolidated Real Estate Partnerships		Total Partners' Capital
Balances at December 31, 2022	$	2,000	$	2,154,417	$	241,674	$	2,398,091	$	(78,785)	$	2,319,306
Issuance of AIR Operating Partnership units	—		—		22,383		22,383		—		22,383

Redemption of common partnership units	—		—		(10,529)		(10,529)		—		(10,529)

Amortization of share-based compensation cost	—		1,971		1,155		3,126		—		3,126
Effect of changes in ownership of consolidated entities	—		(6,102)		6,102		—		—		—

Contributions from noncontrolling interests in consolidated real estate partnerships	—		—		—		—		1,567		1,567
Change in accumulated other comprehensive income	—		(14,492)		(1,102)		(15,594)		—		(15,594)
Net (loss) income	—		(11,377)		(826)		(12,203)		685		(11,518)
Distributions to common unitholders	—		(66,939)		(4,552)		(71,491)		—		(71,491)
Distributions to noncontrolling interests	—		—		—		—		(2,485)		(2,485)
Other, net	—		137		(1)		136		1		137
Balances at March 31, 2023	$	2,000	$	2,057,615	$	254,304	$	2,313,919	$	(79,017)	$	2,234,902

Balances at December 31, 2023	$	2,000	$	2,349,896	$	284,451	$	2,636,347	$	(85,973)	$	2,550,374

Redemption of common partnership units	—		—		(3,793)		(3,793)		—		(3,793)

Amortization of share-based compensation cost	—		2,300		1,417		3,717		—		3,717
Effect of changes in ownership of consolidated entities	—		(1,839)		1,839		—		—		—


Change in accumulated other comprehensive income	—		(1,919)		(182)		(2,101)		—		(2,101)
Net (loss) income	—		(6,592)		(357)		(6,949)		1,101		(5,848)
Distributions to common unitholders	—		(64,649)		—		(64,649)		—		(64,649)
Distributions to noncontrolling interests	—		—		(4,676)		(4,676)		(4,395)		(9,071)
Other, net	—		40		—		40		6		46
Balances at March 31, 2024	$	2,000	$	2,277,237	$	278,699	$	2,557,936	$	(89,261)	$	2,468,675

See notes to the condensed consolidated financial statements.

Table of ~~Contents~~

~~APARTMENT INCOME REIT, L.P.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL~~

~~For the Three Months Ended September 30, 2023 and 2022~~

~~(In thousands)~~

~~(Unaudited)~~

Preferred Units General Partner
and Special
Limited Partner Limited
Partners Partners' Capital Attributable to the AIR Operating Partnership Noncontrolling Interests in Consolidated Real Estate Partnerships Total
Partners'
Capital
Balances at June 30, 2022 $ 2,000 $ 2,130,449 $ 226,985 $ 2,359,434 $ (70,609) $ 2,288,825
Redemption of common partnership units — — (3,178) (3,178) — (3,178)
Repurchase of common partnership units — (46,711) — (46,711) — (46,711)
Amortization of share-based compensation cost — 878 943 1,821 — 1,821
Effect of changes in ownership of consolidated entities — (2,140) 2,140 — — —
Purchase of noncontrolling interests in consolidated real estate partnerships — (5,529) — (5,529) 120 (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 529 529
Change in accumulated other comprehensive income — 32,198 2,742 34,940 — 34,940
Net income (loss) — 1,759 137 1,896 (102) 1,794
Distributions to common unitholders — (69,377) (4,472) (73,849) — (73,849)
Distributions to noncontrolling interests — — — — (6,226) (6,226)
Other, net — (347) (235) (582) 88 (494)
Balances at September 30, 2022 $ 2,000 $ 2,041,180 $ 225,062 $ 2,268,242 $ (76,200) $ 2,192,042
Balances at June 30, 2023 $ 2,000 $ 1,997,465 $ 249,512 $ 2,248,977 $ (80,087) $ 2,168,890
Redemption of common partnership units — — (1,745) (1,745) — (1,745)
Repurchase of common partnership units — (77,782) — (77,782) — (77,782)
Amortization of share-based compensation cost — 816 1,155 1,971 — 1,971
Effect of changes in ownership of consolidated entities — 1,446 1,070 2,516 (1,397) 1,119
Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 718 718
Change in accumulated other comprehensive loss — (14,549) (1,873) (16,422) — (16,422)
Net income — 664,031 42,386 706,417 2,525 708,942
Distributions to common unitholders — (66,002) (4,134) (70,136) — (70,136)
Distributions to noncontrolling interests — — — — (4,851) (4,851)
Other, net — 39 3 42 (18) 24
Balances at September 30, 2023 $ 2,000 $ 2,505,464 $ 286,374 $ 2,793,838 $ (83,110) $ 2,710,728

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

~~Table of Contents~~

~~APARTMENT INCOME REIT, L.P.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL~~

~~For the Nine Months Ended September 30, 2023 and 2022~~

~~(In thousands)~~

~~(Unaudited)~~

Preferred Units General Partner
and Special
Limited Partner Limited
Partners Partners' Capital Attributable to the AIR Operating Partnership Noncontrolling Interests in Consolidated Real Estate Partnerships Total
Partners'
Capital
Balances at December 31, 2021 $ 2,129 $ 1,810,896 $ 197,013 $ 2,010,038 $ (70,883) $ 1,939,155
Redemption of common partnership units — — (7,423) (7,423) — (7,423)
Repurchase of common partnership units — (171,711) — (171,711) — (171,711)
Amortization of share-based compensation cost — 3,519 2,753 6,272 — 6,272
Effect of changes in ownership of consolidated entities — (5,404) 5,404 — — —
Purchase of noncontrolling interests in consolidated real estate partnerships — (5,529) — (5,529) 120 (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 8,337 8,337
Change in accumulated other comprehensive income — 45,948 3,913 49,861 — 49,861
Net income (loss) — 574,864 37,053 611,917 (285) 611,632
Distributions to common unitholders — (210,361) (13,408) (223,769) — (223,769)
Distributions to noncontrolling interests — — — — (13,561) (13,561)
Other, net (129) (1,042) (243) (1,414) 72 (1,342)
Balances at September 30, 2022 $ 2,000 $ 2,041,180 $ 225,062 $ 2,268,242 $ (76,200) $ 2,192,042
Balances at December 31, 2022 $ 2,000 $ 2,154,417 $ 241,674 $ 2,398,091 $ (78,785) $ 2,319,306
Issuance of AIR Operating Partnership units — — 22,383 22,383 — 22,383
Redemption of common partnership units — — (17,559) (17,559) — (17,559)
Repurchase of common partnership units — (77,782) — (77,782) — (77,782)
Amortization of share-based compensation cost — 3,607 3,465 7,072 — 7,072
Effect of changes in ownership of consolidated entities — (7,840) 10,356 2,516 (1,397) 1,119
Purchase of noncontrolling interests in consolidated real estate partnerships — 479 — 479 (1,996) (1,517)
Contributions from noncontrolling interests in consolidated real estate partnerships — — — — 5,235 5,235
Change in accumulated other comprehensive loss — (18,768) (1,981) (20,749) — (20,749)
Net income — 651,313 41,245 692,558 3,894 696,452
Distributions to common unitholders — (200,142) (13,212) (213,354) — (213,354)
Distributions to noncontrolling interests — — — — (9,908) (9,908)
Other, net — 180 3 183 (153) 30
Balances at September 30, 2023 $ 2,000 $ 2,505,464 $ 286,374 $ 2,793,838 $ (83,110) $ 2,710,728

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

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APARTMENT INCOME REIT, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Net loss
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization
		Nine Months Ended September 30,
		2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	701,162	$	616,439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		263,949		253,650
Gain on dispositions and impairments of real estate		(675,534)		(587,609)
Loss on extinguishment of debt	Loss on extinguishment of debt	2,008		23,636

Loss on extinguishment of debt
Loss on extinguishment of debt
Income tax expense	Income tax expense	5,911		966

Other, net	Other, net	4,308		6,890
Net changes in operating assets and operating liabilities	Net changes in operating assets and operating liabilities	(55)		37,484
Net cash provided by operating activities	Net cash provided by operating activities	301,749		351,456
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate	Purchases of real estate	(339,696)		(858,815)
Purchases of real estate
Purchases of real estate
Capital expenditures	Capital expenditures	(140,855)		(151,115)
Contribution to unconsolidated joint ventures		(51,836)		—
Proceeds from dispositions of real estate		52,066		759,227

Distributions from unconsolidated joint ventures		207,137		—

Proceeds from repayment of note receivable		—		534,127

Other investing activities, net	Other investing activities, net	3,194		(30,500)
Net cash (used in) provided by investing activities		(269,990)		252,924

Other investing activities, net

Other investing activities, net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt		(111,699)		(361,056)
Proceeds from non-recourse property debt	Proceeds from non-recourse property debt	1,005,920		—
Proceeds from non-recourse property debt
Proceeds from non-recourse property debt
Principal repayments of non-recourse property debt

Repayment of term loan		(325,000)		(350,000)

Net (repayments of) borrowings on revolving credit facility		(436,250)		176,205
Proceeds from the issuance of unsecured notes payable		—		400,000

Net borrowings on (repayments of) revolving credit facility

Net borrowings on (repayments of) revolving credit facility

Net borrowings on (repayments of) revolving credit facility

Repurchases of common partnership units held by General Partner and Special Limited Partner

Repurchases of common partnership units held by General Partner and Special Limited Partner

Repurchases of common partnership units held by General Partner and Special Limited Partner	Repurchases of common partnership units held by General Partner and Special Limited Partner	(77,782)		(171,711)

Payment of distributions to General Partner and Special Limited Partner	Payment of distributions to General Partner and Special Limited Partner	(200,137)		(210,377)
Payment of distributions to Limited Partners		(13,591)		(13,439)
Payment of distributions to noncontrolling interests		(9,933)		(4,823)
Payment of distributions to General Partner and Special Limited Partner
Payment of distributions to General Partner and Special Limited Partner

Redemption of common and preferred units

Redemption of common and preferred units

Redemption of common and preferred units

Other financing activities, net	Other financing activities, net	(30,522)		(47,294)
Net cash used in financing activities		(198,994)		(582,495)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(167,235)		21,885
Other financing activities, net
Other financing activities, net
Net cash provided by (used in) financing activities
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	301,405		92,761
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	134,170	$	114,646

See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.

APARTMENT INCOME REIT, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2023~~March 31, 2024

(Unaudited)

Note 1 — Basis of Presentation and Organization

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Apartment Income REIT Corp. (“AIR”), Apartment Income REIT, L.P. (“AIR Operating Partnership”), and their consolidated subsidiaries. The AIR Operating Partnership’s condensed consolidated financial statements include the accounts of the AIR Operating Partnership and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

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

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation have been included. Operating results for the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2023.~~2024.

The condensed consolidated balance sheets of AIR, the AIR Operating Partnership, and their consolidated subsidiaries as of December 31, ~~2022,~~2023, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. Except where indicated, the footnotes refer to AIR, the AIR Operating Partnership and their consolidated subsidiaries, collectively.

Reclassifications

Certain prior period balances in the condensed consolidated ~~balance sheets,~~ statements of operations and statements of cash flows have been combined or reclassified to conform to current period presentation pursuant to Rule 10-01(a)(2) of Regulation S-X of the SEC. These changes had no impact on net income (loss), cash flows, assets and liabilities, equity or partners’ capital previously reported.

Organization and Business

AIR is a self-administered and self-managed REIT. AIR owns, through its wholly-owned subsidiaries, the general partner interest and special limited partner interest in AIR Operating Partnership. AIR Operating Partnership conducts all of the business of AIR, which is focused on the ownership of stabilized multi-family properties located in top markets including eight important geographic concentrations: Boston; Philadelphia; Washington, D.C.; Miami; Denver; the San Francisco Bay Area; Los Angeles; and San Diego.

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communities with ~~26,623~~27,015 apartment homes, in which we held an average ownership of approximately ~~81%~~82%. ~~We also have one land parcel and one indirect land interest that we lease to third parties.~~

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Interests in the AIR Operating Partnership that are held by limited partners other than AIR 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 ~~September 30, 2023,~~March 31, 2024, after elimination of units held by consolidated subsidiaries, the AIR Operating Partnership had ~~156,840,617~~158,247,357 common OP Units and equivalents outstanding. As of ~~September 30, 2023,~~March 31, 2024, AIR owned ~~146,973,055~~145,104,220 of the common OP Units of the AIR Operating Partnership and AIR had an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock. AIR’s ownership of the total common OP Units outstanding represents a ~~91.2%~~91.7% legal interest in the AIR Operating Partnership and a ~~93.6%~~93.7% economic interest.

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

We consolidate variable interest entities (“~~VIEs”~~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 ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, AIR consolidated five ~~and seven~~ VIEs, ~~respectively,~~ including the AIR Operating Partnership. Please see Note 1 0 for further discussion regarding our consolidated VIEs.

Redeemable Preferred OP Units

The AIR Operating Partnership has various classes of preferred OP Units. Each class of preferred OP Units is currently redeemable at the holders’ option. The AIR Operating Partnership, at its sole discretion, may settle such redemption requests in cash or cause AIR to issue shares of its Common Stock with a value equal to the redemption price. The preferred OP Units are therefore presented within temporary equity in AIR’s condensed consolidated balance sheets and within temporary partners’ capital in the AIR Operating Partnership’s condensed consolidated balance sheets.

The following table presents a rollforward of the AIR Operating Partnership’s preferred OP Units’ redemption value (in thousands):

The AIR Operating Partnership has outstanding various classes of redeemable preferred OP Units. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the AIR Operating Partnership had 2,846,524 ~~and 2,846,574~~ redeemable preferred OP Units issued and ~~outstanding, respectively.~~outstanding. Distributions per annum range from 1.92% to 8.75% per class and $0.48 to $8.00 per unit, respectively.

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 condensed consolidated financial statements and accompanying notes thereto. Actual results could differ from those estimates.

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Note 3 — Significant Transactions

Apartment Community Acquisitions

During the three months ended ~~September 30, 2023,~~March 31, 2024, we acquired one apartment community located in Raleigh, North Carolina ~~and one~~with 384 apartment ~~community located in Durham, North Carolina. During the nine months ended September 30, 2023, we acquired one additional apartment community located in South Florida with 495 apartment homes~~

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~~and 29,000 square feet of commercial space.~~homes. Summarized information regarding ~~these acquisitions~~this acquisition is set forth in the table below (dollars in thousands):

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023
Number of apartment communities 2 3
Number of apartment homes 620 1,115
Purchase price $ 154,500 $ 452,500
Capitalized transaction costs 1,270 6,739
Total consideration (1) $ 155,770 $ 459,239
Land $ 19,226 $ 118,564
Building and improvements 130,937 318,364
Intangible assets (2) 5,768 17,845
Mark-to-market on debt assumed — 7,370
Below-market lease liabilities (2) (161) (2,904)
Total consideration (1) $ 155,770 $ 459,239


	Three Months Ended March 31, 2024
Purchase price	$	86,500
Capitalized transaction costs	713
Total consideration	$	87,213

Land	$	11,704
Building and improvements	73,102
Intangible assets (1)	2,482

Below-market lease liabilities (1)	(75)
Total consideration	$	87,213

(1)~~Total consideration for the apartment community acquisition in South Florida includes $101.2 million of debt assumed and the issuance of $22.4 million in common OP Units.~~

~~(2)~~Intangible assets and below-market lease liabilities for the ~~South Florida~~Raleigh, North Carolina apartment community acquisition have a weighted-average term of ~~1.4 years and 0.5 years, respectively. Intangible assets and below-market lease liabilities for the North Carolina apartment community acquisitions have a weighted-average term of~~ 0.5 years.

~~Apartment Community Dispositions~~Subsequent to March 31, 2024, we acquired one apartment community located in Bethesda, Maryland with 359 apartment homes and 50,500 square feet of commercial space for $150.0 million. In connection with the acquisition, AIR placed $97.3 million of non-recourse property debt on the property.

~~During~~Dividends and Distributions

For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~we sold one apartment community~~dividends and distributions paid per share of Common Stock and per common unit were $0.45. As a result of the announced Plan of Merger with ~~195 apartment homes included in our Other~~Blackstone Real Estate ~~segment~~as described in N ote 1 2, payment of additional quarterly dividends has been suspended, effective immediately, other than for ~~net proceeds~~the purpose of ~~$19.9 million which approximates its carrying value. During~~meeting REIT status, and any such dividends would result in an offsetting decrease to the ~~nine months ended September 30, 2023, we sold three apartment communities with 257 apartment homes included in our Other Real Estate segment for net proceeds~~Common Stock Merger Consideration. Subject to and upon consummation of ~~$52.1 million which approximates their carrying value.~~

~~During~~ the ~~three months ended September 30, 2022, we did not sell any apartment communities. During~~Merger, the nine months ended September 30, 2022, we sold 12 apartment communities with 2,050 homes, 10 of which were included in our Same Store segment and two included in our Other Real Estate segment, for a gainCompany’s Class A common stock will no longer be listed on ~~disposition of $587.6 million.~~

At the end of each reporting period, we evaluate whether any communities meet the criteria to be classified as held for sale. As of September 30, 2023, no communities were classified as held for sale.

~~Impairment~~

~~Impairments are rare; however, in exiting~~ the New York market, we impaired three properties in 2023 as further described below. Real estate and other long-lived assets to be held and used are individually evaluated for impairment when conditions exist that may indicate the carrying amount of a long-lived asset may not be recoverable. Impairment indicators include significant fluctuations in rental and other property revenues less property operating expenses, occupancy changes, significant near-term lease expirations, current and historical cash flow losses, rental rates, and if applicable, a comparison of an asset’s carrying value to its estimated fair value. Upon determination that an impairment has occurred, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community.

During the three months ended September 30, 2023, we did not recognize any impairment losses. During the nine months ended September 30, 2023, we evaluated the expected hold period of three apartment communities in our Other Real Estate reporting segment. Given management's assessment of the likelihood of the sale of these assets, which occurred during the nine months ended September 30, 2023, we reduced the carrying value of three properties to their estimated fair value and recognized a non-cash impairment loss on real estate of $23.6 million. As of September 30, 2023, the three impaired properties have been sold.

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~~During the three and nine months ended September 30, 2022, we did not recognize any impairment losses.~~

~~Share Repurchases~~

During the three months ended September 30, 2023, AIR repurchased 2.2 million shares for $77.8 million, at an average price of $34.57 per share. As of September 30, 2023, we are authorized by the AIR Board of Directors to repurchase an additional $105.5 million of shares. We consider share buybacks as part of a balanced investment program.

~~Joint Venture Transactions~~

In the third quarter of 2023, we formed an unconsolidated joint venture with a global institutional investor (the "Core JV") and in the second quarter of 2023, we formed an unconsolidated joint venture (the "Value-Add JV") with a global asset manager. Please see ~~Note 6~~ fo~~r discussion regarding our joint venture transactions.~~Stock Exchange.

Note 4 — Leases

Tenant Lessor Arrangements

The majority of lease payments we receive from our residents are fixed. We receive variable payments from our residents primarily for utility reimbursements. Our total lease income was comprised of the following amounts for all operating leases (in thousands):


		Three Months Ended					Nine Months Ended
		September 30, 2023		September 30, 2022			September 30, 2023		September 30, 2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
Fixed lease income	Fixed lease income	$	179,069	$	184,509		$	572,123	$	522,074
Variable lease income	Variable lease income	14,502		13,141			43,043		35,165
Total lease income	Total lease income	$	193,571	$	197,650		$	615,166	$	557,239

Generally, our residential leases do not provide extension options and, as of ~~September 30, 2023,~~March 31, 2024, have an average remaining term of ~~10.8~~7.2 months. In general, our commercial leases have options to extend for a certain period of time at the

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tenant’s option. As of ~~September 30, 2023,~~March 31, 2024, future minimum annual rental payments we are contractually obligated to receive under residential and commercial leases, excluding such extension options, are as follows (in thousands):


2023 (remaining)		$	164,948
2024		379,399
2024 (remaining)
2025	2025	69,870
2026	2026	11,740
2027	2027	10,218
2028
Thereafter	Thereafter	36,463
Total	Total	$	672,638

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Note 5 — Debt

The following table summarizes our total indebtedness (in thousands):


	March 31, 2024					March 31, 2024	December 31, 2023
Secured debt:
Fixed-rate property debt due May 2025 to January 2055 (1)
Fixed-rate property debt due May 2025 to January 2055 (1)
Fixed-rate property debt due May 2025 to January 2055 (1)

		September 30, 2023		December 31, 2022
Secured debt:
Fixed-rate property debt due May 2025 to January 2055 (1)		$	2,244,776	$	1,906,151
Variable-rate property debt		—		88,500
Total non-recourse property debt		2,244,776		1,994,651
Debt issuance costs, net of accumulated amortization

Debt issuance costs, net of accumulated amortization

Debt issuance costs, net of accumulated amortization	Debt issuance costs, net of accumulated amortization	(13,538)		(9,221)
Total non-recourse property debt, net	Total non-recourse property debt, net	$	2,231,238	$	1,985,430

Unsecured debt:	Unsecured debt:
Unsecured debt:
Unsecured debt:
Term loans due December 2024 to April 2026 (2)
Term loans due December 2024 to April 2026 (2)
Term loans due December 2024 to April 2026 (2)	Term loans due December 2024 to April 2026 (2)	$	475,000	$	800,000
Revolving credit facility borrowings due April 2025 (3)	Revolving credit facility borrowings due April 2025 (3)	25,750		462,000
4.58% Notes payable due June 2027	4.58% Notes payable due June 2027	100,000		100,000
4.77% Notes payable due June 2029	4.77% Notes payable due June 2029	100,000		100,000
4.84% Notes payable due June 2032	4.84% Notes payable due June 2032	200,000		200,000
Total unsecured debt	Total unsecured debt	900,750		1,662,000
Debt issuance costs, net of accumulated amortization	Debt issuance costs, net of accumulated amortization	(3,754)		(5,801)
Total unsecured debt, net	Total unsecured debt, net	$	896,996	$	1,656,199
Total indebtedness	Total indebtedness	$	3,128,234	$	3,641,629

(1)In the first quarter of 2023, AIR borrowed $320 million using 10-year fixed rate financing, bearing interest at 4.9%. Proceeds were used to refinance a floating rate loan and reduce borrowings by $230 million on our revolving credit facility. The stated rates on our fixed-rate property debt are between 2.7% to 5.7%.

(2)The term loans bear interest at a one-month Term Secured Overnight Financing Rate (“SOFR”) plus 1.00% and a SOFR adjustment of 10-basis points, based on our current credit rating. As of ~~September 30, 2023,~~March 31, 2024, the weighted-average interest rate for our term loans before consideration of in place interest rate swaps was 6.4%. ~~As of September 30, 2023, $350 million of our term loans are fixed via~~During the three months ended March 31, 2024, we restructured and terminated certain interest rate swaps, economically hedging our entire $475 million term loan balance at ~~a weighted-average interest rate of 4.3%. The blended weighted-average~~an effective interest rate for ~~our $475 million term loans, after consideration~~2024 of ~~in place interest rate swaps, is 4.9%~~3.5%. The term loans mature on the following schedule: $125 million matures on December 15, 2024, with a one-year extension option; $150 million matures on December 15, 2025; and $200 million matures on April 14, 2026. As of ~~September 30, 2023,~~March 31, 2024, the weighted-average remaining term of the term loans was ~~2.3~~1.8 years.

(3)As of ~~September 30, 2023,~~March 31, 2024, we had capacity to borrow up to ~~$970.0~~$735.7 million under our revolving credit facility after consideration of undrawn letters of credit. The revolving credit facility bears interest at a one-month Term SOFR plus 0.89%~~, based on our current credit rating,~~ and a SOFR adjustment of 10-basis ~~points.~~points based on our current credit rating. During the three months ended March 31, 2024, we entered into interest rate swaps economically hedging $200 million of our $260 million revolving credit facility borrowings at 4.9%. As of ~~September 30, 2023,~~March 31, 2024, the weighted-average interest rate for the remaining $60 million outstanding on our revolving credit facility was 6.3%.

During the three months ended ~~September 30, 2023, AIR refinanced~~March 31, 2024, we increased the borrowings against our ~~$325 million~~revolving credit facility primarily to fund the acquisition of ~~term loans with fixed rate property debt to lock~~one apartment community located in ~~rates for debt with longer maturities. The amount included full repayment~~Raleigh, North Carolina.

As of ~~$150 million of~~March 31, 2024, our term loans with a maturity of December 15, 2023 and partial repayment of $175 million of term loans with a maturity of December 15, 2024. In conjunction with the prepayment, AIR accelerated recognition of $0.8 million of associated debt issuance costs,available liquidity was approximately $1.7 billion, which is ~~included in interest expense in~~comprised of available capacity on our ~~condensed consolidated statements~~secured and revolving credit facilities, our share of ~~operations.~~

In advance of a joint venture closing during the period, AIR placed $611.4 million in new fixed-rate property debt related to nine properties, which was subsequently contributed to the Core JV. Additionally, one property with $33.0 million in fixed-rate property debt was also contributed to the Core JV, for a total of $644.4 million of debt contributed. As the Core JV is unconsolidated, this fixed-rate property debt is excluded from our condensed consolidated balance sheet as of September 30, 2023.

In April 2023, we established a secured credit facility that provides for up to $1 billion of committed property level financing, on an as needed basis. The facility has minimal upfront costs, a 15-year term,restricted cash, and provides AIR the opportunity to place up to 10-year non-recourse property debt financing. Pricing can be fixed rate or variable rate at AIR's choice and is based on the Fannie Mae grid. As of September 30, 2023, and after consideration of the secured credit facility, our share of cash and cash ~~equivalents, and our share~~equivalents. As a result of ~~restricted cash, total liquidity~~the announced Plan of Merger with Blackstone Real Estate as described in Note 12, AIR is ~~approximately $2.1 billion.~~generally prohibited from creating, incurring, assuming, replacing, prepaying, or guaranteeing any indebtedness for borrowed money or issuing or materially amending the terms of any indebtedness.

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Under our credit agreement and unsecured notes payable, we have agreed to maintain certain financial covenants, as well as other covenants customary for similar credit arrangements. The financial covenants we are required to maintain include a maximum leverage ratio of no greater than 0.60 to 1.00; a fixed charge coverage ratio of no less than 1.50 to 1.00, a maximum secured indebtedness to total assets ratio of no greater than 0.40 to 1.00, a maximum unsecured leverage ratio no greater than 0.60 to 1.00, and a minimum unsecured interest coverage ratio no less than 1.50 to 1.00.

Note 6 — Investment in ~~Joint Ventures~~

~~Joint Venture Transactions~~

In the third quarter of 2023, we formed the Core JV by contributing 10 properties included in our Same Store reporting segment located in Philadelphia, Washington, D.C. area, Denver area, Oceanside, and Kendall. The Core JV, in which we retain a 53% interest, closed with respect to (i) eight of the properties in July 2023, (ii) one property in August 2023, and (iii) one property in September 2023. The 10 properties, with a total fair value of $1.1 billion and a carrying value of $373.3 million, were contributed to the Core JV subject to $644.4 million of non-recourse property debt, which represents a non-cash financing activity during the period. In advance of the joint venture closing, AIR placed $611.4 million in new non-recourse property debt, which was subsequently contributed to the joint venture. As a result of the transaction, AIR received $201.9 million in cash and recognized a gain of $698.8 million, including the measurement of the fair value of our interest in the Core JV during the three months ended September 30, 2023. AIR will earn various fees for providing property management, construction, and corporate services to the joint venture.

Additionally, during the third quarter of 2023, AIR and our joint venture partner increased the investment in the Core JV to fund the joint venture's acquisition of an eleventh property, a 456-unit property located in Bethesda, Maryland. The Core JV funded the acquisition with $155.0 million in new debt, and capital contributions to the joint venture of $95.0 million, for a purchase price of $250.0 million.

In addition, during the second quarter of 2023, we formed the Value-Add JV by contributing the Huntington Gateway property, a 443-unit property located in Virginia. AIR is the general partner and retains legal ownership of 30%, and AIR will receive 50% of the net cash flows from operations, and various fees for providing property management, construction, and corporate services to the joint venture. We recognized a gain of $0.5 million during the nine months ended September 30, 2023 in connection with this transaction.

Unconsolidated ~~Joint Ventures~~Real Estate Partnerships

As of ~~September 30, 2023,~~March 31, 2024, AIR has equity investments in three significant unconsolidated joint ventures: the ~~Core JV,~~joint venture with a global institutional investor (the “Core JV”), the joint venture with a global asset manager (“Value-Add ~~JV,~~JV”), and the ~~Virginia JV~~“Virginia JV” (collectively, the ~~"Joint~~“Joint Venture ~~Entities"~~Entities”). We account for these joint ventures utilizing the equity method of accounting and our ownership interests meet the definition of a VIE. However, we are not the primary beneficiary and do not consolidate these entities.


	Virginia JV	Value-Add JV (1)	Core JV
Initial formation date	October 2021	June 2023	July 2023
AIR Ownership	20%	30%	53%
Outside Entities Ownership	80%	70%	47%
Number of Apartment Communities	3	1	11
Apartment Units	1,748	443	3,549

(1)A global asset manager acquired a 70% legal ownership in the Huntington Gateway property, but AIR ~~will receive~~is entitled to 50% of the net cash flows from operations, and various fees for providing property management, construction, and corporate services to the joint venture.

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The carrying value of AIR's investment in each joint venture is included in investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets. AIR's exposure to the obligations of the VIEs is limited to the carrying value of the limited partnership interests and AIR's interest of the joint ventures' guarantor non-recourse liabilities. The following table summarizes certain relevant information with respect to our investments in unconsolidated ~~joint ventures~~real estate partnerships (in thousands):

September 30, 2023
Virginia JV Value-Add JV Core JV
Total Third-Party Debt $ 395,000 $ 94,105 $ 799,164
AIR's Investment In Balance (1) $ 18,198 $ 29,341 $ 272,957


	March 31, 2024
	Virginia JV		Value-Add JV		Core JV
Third-party debt	$	395,000	$	89,053	$	793,874
AIR's investment in balance (1)	$	16,539	$	28,482	$	258,590

(1)AIR's investment in balance includes certain basis differences that are subject to amortization. AIR's investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets also includes $21.3 million related to two immaterial unconsolidated investments.


	December 31, 2023
	Virginia JV		Value-Add JV		Core JV
Third-party debt	$	395,000	$	88,741	$	793,910
AIR's investment in balance (1)	$	17,212	$	28,606	$	268,931

(1)AIR's investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets includes ~~$31.6 million related to two immaterial unconsolidated investments and certain basis differences.~~

~~December 31, 2022~~

~~Virginia JV~~

~~Value-Add JV~~

~~Core JV~~

~~Total Third-Party Debt~~

~~395,000~~

—

~~AIR's Investment In Balance (1)~~

~~20,660~~

—

~~(1)AIR's investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets includes $21.2~~$21.3 million related to two immaterial unconsolidated investments.

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The Company recognizes earnings or losses from our investments in unconsolidated ~~joint ventures~~real estate partnerships consisting of our proportionate share of the net earnings or losses of the joint ventures. In addition, we earn various fees for providing property management, construction, and corporate services to the Joint Venture Entities. The table below presents earnings or losses attributable to our investments in unconsolidated ~~joint ventures,~~real estate partnerships, which is included in loss from unconsolidated real estate partnerships in our combined condensed consolidated statements of operations (in thousands):

Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Virginia JV $ (1,113) $ (87) $ (3,004) $ (2,974)
Core JV (7,930) — (7,930) —
Value-Add JV (1,347) — (1,333) —
Total $ (10,390) $ (87) $ (12,267) $ (2,974)


	Three Months Ended March 31,
		2024		2023
Virginia JV		$	(73)	$	(1,035)
Value-Add JV		(239)		—
Core JV		(6,538)		—
Total		$	(6,850)	$	(1,035)

Note 7 — Commitments and Contingencies

Legal Matters

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

Environmental

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

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We have determined that our legal obligations to remove or remediate certain potentially hazardous materials may be conditional asset retirement obligations (“AROs”), 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 AROs cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. AROs that are reasonably estimable as of ~~September 30, 2023,~~March 31, 2024, are immaterial to our condensed consolidated financial statements.

Note 8 ~~— Earnings and Dividends per Share and per Unit~~

~~Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit are as follows (in thousands, except per share and per unit data):~~

Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Earnings per share
Numerator:
Basic net income attributable to AIR common stockholders $ 663,596 $ 1,760 $ 650,700 $ 574,363
Effect of dilutive instruments 1,570 — 4,710 4,807
Dilutive net income attributable to AIR common stockholders $ 665,166 $ 1,760 $ 655,410 $ 579,170
Denominator – shares:
Basic weighted-average common shares outstanding 147,474 153,811 148,372 155,488
Dilutive common share equivalents outstanding 2,571 246 2,320 1,952
Dilutive weighted-average common shares outstanding 150,045 154,057 150,692 157,440
Earnings per share – basic $ 4.50 $ 0.01 $ 4.39 $ 3.69
Earnings per share – diluted $ 4.43 $ 0.01 $ 4.35 $ 3.68
Earnings per unit
Numerator:
Basic net income attributable to the AIR Operating Partnership’s common unitholders $ 705,982 $ 1,897 $ 691,945 $ 611,416
Effect of dilutive instruments 1,570 — 4,710 4,935
Dilutive net income attributable to the AIR Operating Partnership’s common unitholders $ 707,552 $ 1,897 $ 696,655 $ 616,351
Denominator – units:
Basic weighted-average common units outstanding 157,366 163,866 158,138 165,578
Dilutive common unit equivalents outstanding 2,571 246 2,320 1,951
Dilutive weighted-average common units outstanding 159,937 164,112 160,458 167,529
Earnings per unit – basic $ 4.49 $ 0.01 $ 4.38 $ 3.69
Earnings per unit – diluted $ 4.42 $ 0.01 $ 4.34 $ 3.68

~~For the three and nine months ended September 30, 2023 and 2022, dividends and distributions paid per share of Common Stock and per common unit were $0.45 and $1.35, respectively.~~

The number of common share equivalent securities excluded from the diluted earnings per share calculation was approximately 4.0 million and 3.4 million for the three and nine months ended September 30, 2023, respectively. The number of common share equivalent securities excluded from the diluted earnings per share calculation was approximately 1.9 million for the three months ended September 30, 2022. There were no anti-dilutive securities for the nine months

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ended September 30, 2022. These securities, which include preferred OP Units redeemable for Common Stock for the comparable period in 2022, were excluded from the earnings per share calculation as they were anti-dilutive.

~~Note 9~~ — Fair Value Measurements

We estimate the fair value of certain assets and liabilities using pricing models that rely on observable market information, including contractual terms, market prices, and interest rate yield curves. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value, as described below:

•Level 1 – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

•Level 2 – Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

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Recurring Fair Value Measurements

The following table summarizes investments measured at fair value on a recurring basis, which are presented in other assets, net, and accrued liabilities and other in our condensed consolidated balance sheets (in thousands):

As of September 30, 2023 As of December 31, 2022
Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3
Interest rate option (1) $ — $ — $ — $ — $ 53,481 $ — $ 53,481 $ —
Interest rate swaps - pay-fixed, receive floating $ 29,898 $ — $ 29,898 $ — $ 32,222 $ — $ 32,222 $ —
Interest rate swaps - pay-floating, receive fixed $ (3,035) $ — $ (3,035) $ — $ — $ — $ — $ —
Interest rate swaps - forward starting $ 3,333 $ — $ 3,333 $ — $ — $ — $ — $ —
Treasury rate locks $ — $ — $ — $ — $ 319 $ — $ 319 $ —

~~(1)~~During the second quarter of 2023, the interest rate swap option asset and offsetting liability associated with the Parkmerced mezzanine investment was settled, resulting in equal decreases in other assets, net and accrued liabilities and other in the condensed consolidated balance sheets.


	As of March 31, 2024								As of December 31, 2023
	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
Interest rate swaps - pay-fixed, receive floating	$	14,026	$	—	$	14,026	$	—	$	14,679	$	—	$	14,679	$	—
Interest rate swaps - pay-floating, receive fixed	$	—	$	—	$	—	$	—	$	465	$	—	$	465	$	—
Interest rate swaps - forward starting	$	1,574	$	—	$	1,574	$	—	$	331	$	—	$	331	$	—

Financial Assets and Liabilities Not Measured at Fair Value

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximated their estimated fair value as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, due to their relatively short-term nature and high probability of realization. The carrying value of our revolving credit facility and term loans, which we classify as Level 2 in the GAAP fair value hierarchy, approximated their estimated fair value as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, as they bear interest at floating rates which approximate market rates.

We classify the fair value of our non-recourse property debt, unsecured notes payable, seller financing notes receivable, and preferred equity investment within Level 2 of the GAAP fair value hierarchy, as summarized in the following table (in thousands):


		As of September 30, 2023				As of December 31, 2022
		Carrying Value		Fair Value		Carrying Value		Fair Value
	As of March 31, 2024										As of March 31, 2024			As of December 31, 2023
	Carrying Value									Carrying Value		Fair Value	Carrying Value		Fair Value
Non-recourse property debt	Non-recourse property debt	$	2,244,776	$	1,938,885	$	1,994,651	$	1,753,222
Unsecured notes payable	Unsecured notes payable	$	400,000	$	363,609	$	400,000	$	371,368
Seller financing note receivable, net (1)	Seller financing note receivable, net (1)	$	32,246	$	30,723	$	31,611	$	32,286
Preferred equity investment (2)	Preferred equity investment (2)	$	22,398	$	22,486	$	—	$	—

(1)During the year ended December 31, 2022, we provided $40.0 million of seller financing as partial consideration for the sale of our New England portfolio. The contractual interest rate on the note is 4.5%. The difference between the stated rate and the market interest rate as of

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the date of sale resulted in a discount recorded of $8.5 million. The seller financing note and related discount are included in other assets, net in our condensed consolidated balance sheets.

(2)In conjunction with the Value-Add JV transaction, AIR received a preferred equity investment within the joint venture. The contractual interest rate on the preferred equity investment is 7.25%. The difference between the stated rate and the effective interest rate as of the date of the transaction resulted in a discount recorded of $5.9 million. The preferred equity investment and related discount are included in investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets.

Note 109 — Derivative Financial Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

Our objectives in using interest rate derivatives are to add predictability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps and treasury locks as part of our interest rate management strategy. Interest rate swaps primarily involve the receipt of variable-rate and fixed-rate amounts from a counterparty in exchange for us making fixed-rate or variable-rate payments over the life of the agreements without exchange of the underlying notional amounts.

Changes in fair value of derivatives designated as cash flow hedges are recognized in accumulated other comprehensive income and subsequently reclassified into earnings as an increase or decrease to interest expense. During the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, we reclassified gains of ~~$14.2 million and $23.7~~$2.1 million out of accumulated other comprehensive income into interest expense, respectively, inclusive of the Company's acceleration of the reclassification of amounts in accumulated other comprehensive income given that certain hedged forecasted transactions are not expected to occur. During the third quarter of 2023, the Company accelerated a gain of $11.5 million into earnings due to the early payoff of the hedged term loans previously designated.expense. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we reclassified ~~losses of $0.7 million and $2.7~~$4.2 million out of accumulated other comprehensive income, net into interest ~~expense, respectively.~~expense. As of ~~September 30, 2023,~~March 31, 2024, we estimate that during the next 12 months, we will reclassify into earnings approximately ~~$7.4~~$6.1 million of the unrealized gain in accumulated other comprehensive income.

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Changes in fair value of derivatives not designated in a hedge relationship, or economic hedges, are recognized in gain (loss) on derivative instruments, net, in our condensed consolidated statements of operations once realized. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, we recorded gains of $14.1 million and $23.3 million, respectively. During the three and nine months ended September 30, 2022, no amounts were recognized related to derivatives not designated in a hedge relationship.

During the second quarter of 2023, we de-designated $830 million of notional value pay-fixed, receive-floating interest rate swaps. As a result, the accumulated unrealized gains at time of de-designation of $29.5 million was expected to be reclassified into earnings over the remaining term of the forecasted transactions. During the three months ended September 30, 2023, $2.6 million of this balance was reclassified out of accumulated other comprehensive income into interest expense, and $11.5 million was accelerated into gain (loss) on derivative instruments ~~net, as described above. The remaining balance of $15.4~~was $9.6 million ~~is included within accumulated other comprehensive income as of September 30, 2023~~ and ~~will be reclassified into earnings over the remaining term of the forecasted transaction.~~$(2.1) million, respectively.

During the three months ended ~~September 30, 2023,~~March 31, 2024, we terminated ~~six~~five interest rate swap positions not designated as hedging instruments. ~~Three~~Two of the terminated instruments were pay-fixed, receive-floating interest rate swaps with a notional value of $80 million, and two were offsetting pay-floating, receive-fixed interest rate swaps with a notional value of ~~$230~~$80 million. One of the terminated instruments was a forward starting interest rate swap entered into in anticipation of additional fixed-rate property debt with a notional value of $50 million and ~~three were offsetting~~was replaced by a new forward starting interest rate swap with a notional value of $42 million. Additionally, AIR entered into one forward starting interest rate swap with a notional value of $51.7 million, and restructured one pay-fixed, receive-floating interest rate swap, to better align the maturity date with the related term loans. As a result of these transactions, AIR received $6.2 million in cash during the three months ended March 31, 2024.

During the three months ended March 31, 2024, AIR entered into three pay-fixed, receive floating interest rate swaps, with a notional value of ~~$230 million. Upon termination, AIR received $11.1~~$200 million, ~~in cash.~~economically hedging $200 million of our $260 million revolving credit facility borrowings outstanding as of March 31, 2024, at 4.9%.

As of ~~September 30, 2023,~~March 31, 2024, AIR had a notional value of ~~$600~~$675 million of pay-fixed, receive-floating interest rate swaps that are not designated as hedging instruments, and a notional value of ~~$50~~$94 million of forward starting ~~interest rate swaps that are not designated as hedging instruments. These derivative instruments are partially offset by a notional value of $250 million of pay-floating, receive-fixed~~ interest rate swaps that are not designated as hedging instruments. Accordingly, the changes in the fair value of these derivatives are recognized in gain (loss) on derivative instruments, net, in our condensed consolidated statements of operations. As a result of the $250 million of pay-floating, receive-fixed interest rate swaps that are not designated as hedging instruments, we expect to receive monthly fixed interest income representing the spread between the offsetting pay-fixed and receive-fixed legs of our interest rate swap positions over a weighted-average term of 2.6 years.

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Subsequent to September 30, 2023, AIR entered into a notional value $125 million pay-fixed, receive-floating interest rate swap, which economically hedges the remaining $125 million of variable-rate term loans, which results in the $475 million in term loans having an effective interest rate of 4.3%.

The following table summarizes our derivative financial instruments (dollars in thousands):


	As of March 31, 2024
	Number of	Aggregate Notional		Derivative Assets (included in Other Assets, net)		Derivative Liabilities (included in Accrued Liabilities and Other)
	Instruments	Amount		Fair Value


Derivatives not designated as hedging instruments:
Interest rate swaps, pay-fixed, receive floating	8	$	675,000	$	14,123	$	(97)
Interest rate swaps, forward starting	2	$	93,700	$	1,574	$	—

As of September 30, 2023
Number of Aggregate Notional Derivative Assets
(included in Other Assets, net) Derivative Liabilities
(included in Accrued Liabilities and Other)
Instruments Amount Fair Value
Derivatives not designated as hedging instruments:
Interest rate swap, floating to fixed 7 $ 600,000 $ 29,898 $ —
Interest rate swap, fixed to floating 3 $ 250,000 $ — $ (3,035)
Interest rate swap, forward starting 1 $ 50,000 $ 3,333 $ —


	As of December 31, 2023
	Number of	Aggregate Notional		Derivative Assets (included in Other Assets, net)		Derivative Liabilities (included in Accrued Liabilities and Other)
	Instruments	Amount		Fair Value
Derivatives not designated as hedging instruments:
Interest rate swaps, pay-fixed, receive floating	7	$	555,000	$	15,266	$	(587)
Interest rate swaps, pay-floating, receive fixed	2	$	80,000	$	472	$	(7)
Interest rate swaps, forward starting	1	$	50,000	$	331	$	—

As of December 31, 2022
Number of Aggregate Notional Derivative Assets
(included in Other Assets, net) Derivative Liabilities
(included in Accrued Liabilities and Other)
Instruments Amount Fair Value
Derivatives designated as hedging instruments:
Treasury rate locks 1 $ 100,000 $ 319 $ —
Interest rate swaps, floating to fixed 10 $ 830,000 $ 32,222 $ —
Subsequent to the three months ended March 31, 2024, AIR terminated one forward starting interest rate swap with a notional value of $51.7 million.

Note 1110 — Variable Interest Entities

Consolidated Entities

AIR consolidates the AIR Operating Partnership, a VIE of which AIR is the primary beneficiary. AIR, through the AIR Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Substantially all of the assets and liabilities of AIR are those of the AIR Operating Partnership.

The AIR Operating Partnership consolidates (i) three VIEs that own interests in one or more apartment communities and are typically structured to generate a return for their partners through the operation and ultimate sale of the communities and (ii) one VIE related to a lessor entity that owns an interest in a property leased to a third party. The

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AIR Operating Partnership is the primary beneficiary in the limited partnerships in which it is the sole decision maker and has a substantial economic interest.

The table below summarizes apartment community information regarding VIEs consolidated by the AIR Operating Partnership:

September 30, 2023 (1) December 31, 2022
VIEs with interests in apartment communities 3 5
Apartment communities owned by VIEs 14 16
Apartment homes in communities owned by VIEs 4,866 5,369

~~(1)~~During the nine months ended September 30, 2023, the number of our VIEs with interests in apartment communities decreased due to our Core JV partner's acquisition of an indirect 47% interest through the Core JV in one consolidated limited partnership with 175 apartment homes, and our purchase of the remaining non-controlling interest in a consolidated limited partnership with 328 apartment homes, which was subsequently contributed to the Core JV during the third quarter.


	March 31, 2024	December 31, 2023
VIEs with interests in apartment communities	3	3
Apartment communities owned by VIEs	14	14
Apartment homes in communities owned by VIEs	4,866	4,866

Assets of the AIR Operating Partnership’s consolidated VIEs must first be used to settle the liabilities of such consolidated VIEs. These consolidated VIEs’ creditors do not have recourse to the general credit of the AIR Operating

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Partnership. Assets and liabilities of VIEs, excluding those of the AIR Operating Partnership, are summarized in the table below (in thousands):

September 30, 2023 December 31, 2022
ASSETS:
Net real estate $ 1,024,555 $ 1,066,482
Cash and cash equivalents $ 42,133 $ 54,319
Restricted cash $ 1,970 $ 2,378
Other assets, net $ 21,216 $ 20,944
LIABILITIES:
Non-recourse property debt, net $ 1,200,279 $ 1,212,065
Accrued liabilities and other $ 40,007 $ 35,365

~~Unconsolidated Entities~~

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 do not consolidate this partnership. As of September 30, 2023 and December 31, 2022, the investment balance of $158.3 million and $158.7 million, respectively, is included in other assets, net, in our condensed consolidated balance sheets. Subsequent to the December 2020 separation, all risks and rewards of ownership are retained by the third party; however, as legal transfer has not occurred, there is an equal and offsetting liability included in accrued liabilities and other in our condensed consolidated balance sheets. Accordingly, there is no net effect on AIR’s stockholders’ equity or the AIR Operating Partnership’s partners’ capital.

~~Please see~~ ~~Note 6~~ fo~~r further discussion regarding our unconsolidated joint ventures.~~


	March 31, 2024		December 31, 2023
ASSETS:
Net real estate	$	1,008,068	$	1,013,770
Cash and cash equivalents	47,570		41,219
Restricted cash	2,386		2,179
Other assets, net	29,288		22,546
LIABILITIES:
Non-recourse property debt, net	$	1,192,891	$	1,196,280
Accrued liabilities and other	41,244		34,903

Note 1211 — Business Segments

We have two segments: Same Store and Other Real Estate. Our Same Store segment includes communities that are owned and managed by AIR and have reached a stabilized level of operations. Our Other Real Estate segment includes four properties acquired in ~~2022, four properties previously leased to Aimco, and four properties~~2023, one property acquired in ~~2023.~~2024, and two properties undergoing planned property capital investment.

Our chief operating decision maker (“CODM”) uses proportionate property net operating income (“NOI”) to assess the operating performance of our communities. Proportionate property NOI reflects our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues in accordance with GAAP.

As of ~~September 30, 2023,~~March 31, 2024, our Same Store segment included 6369 apartment communities with ~~22,794~~24,271 apartment homes and our Other Real Estate segment included 127 apartment communities with ~~3,829~~2,744 apartment homes.

The following tables present the total revenues, property operating expenses, proportionate property net operating income (loss), and income (loss) before income tax expense of our segments on a proportionate basis, excluding amounts related to communities sold. To reflect how the CODM evaluates the business, prior period segment information has been recast to conform with our reportable segment composition as of ~~September 30, 2023~~March 31, 2024 (in thousands):

Same
Store Other
Real Estate Proportionate
and Other
Adjustments (1) Corporate and
Amounts Not
Allocated to
Segments (2) Consolidated
Three months ended September 30, 2023:
Total revenues $ 151,619 $ 29,543 $ 11,981 $ 4,164 $ 197,307
Property operating expenses 40,353 8,158 9,076 489 58,076
Other operating expenses not allocated to segments (3) — — — 100,695 100,695
Total operating expenses 40,353 8,158 9,076 101,184 158,771
Proportionate property net operating income (loss) 111,266 21,385 2,905 (97,020) 38,536
Other items included in income before income tax expense (4) — — — 676,571 676,571
Income before income tax expense $ 111,266 $ 21,385 $ 2,905 $ 579,551 $ 715,107

2722

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		Same Store		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)		Consolidated
Nine months ended September 30, 2023:
	Same Store											Same Store	Other Real Estate	Proportionate and Other Adjustments (1)	Corporate and Amounts Not Allocated to Segments (2)	Consolidated
Three Months Ended March 31, 2024:
Total revenues	Total revenues	$	445,881	$	86,104	$	80,124	$	11,568	$	623,677
Property operating expenses		117,014		28,010		37,850		7,248		190,122
Total revenues
Total revenues
Property management and operating expenses
Other operating expenses not allocated to segments (3)	Other operating expenses not allocated to segments (3)	—		—		—		320,567		320,567
Total operating expenses	Total operating expenses	117,014		28,010		37,850		327,815		510,689
Proportionate property net operating income (loss)	Proportionate property net operating income (loss)	328,867		58,094		42,274		(316,247)		112,988
Other items included in income before income tax expense (4)	Other items included in income before income tax expense (4)	—		—		—		594,085		594,085
Income before income tax expense		$	328,867	$	58,094	$	42,274	$	277,838	$	707,073
Income (loss) before income tax expense

Same
Store Other
Real Estate Proportionate
and Other
Adjustments (1) Corporate and
Amounts Not
Allocated to
Segments (2) Consolidated
Three months ended September 30, 2022:
Total revenues $ 142,009 $ 14,025 $ 32,402 $ 12,435 $ 200,871
Property operating expenses 37,349 4,783 13,468 8,409 64,009
Other operating expenses not allocated to segments (3) — — — 110,290 110,290
Total operating expenses 37,349 4,783 13,468 118,699 174,299
Proportionate property net operating income (loss) 104,660 9,242 18,934 (106,264) 26,572
Other items included in income before income tax expense (4) — — — (23,130) (23,130)
Income (loss) before income tax expense $ 104,660 $ 9,242 $ 18,934 $ (129,394) $ 3,442


		Same Store		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)		Consolidated
Nine months ended September 30, 2022:
	Same Store											Same Store	Other Real Estate	Proportionate and Other Adjustments (1)	Corporate and Amounts Not Allocated to Segments (2)	Consolidated
Three Months Ended March 31, 2023:
Total revenues	Total revenues	$	411,052	$	16,437	$	93,187	$	45,173	$	565,849
Property operating expenses		111,316		5,799		38,559		21,005		176,679
Total revenues
Total revenues
Property management and operating expenses
Other operating expenses not allocated to segments (3)	Other operating expenses not allocated to segments (3)	—		—		—		300,720		300,720
Total operating expenses	Total operating expenses	111,316		5,799		38,559		321,725		477,399
Proportionate property net operating income (loss)	Proportionate property net operating income (loss)	299,736		10,638		54,628		(276,552)		88,450
Other items included in income before income tax expense (4)	Other items included in income before income tax expense (4)	—		—		—		528,955		528,955
Income from before income tax expense		$	299,736	$	10,638	$	54,628	$	252,403	$	617,405
Income (loss) before income tax expense

(1)Represents adjustments to: (i) ~~include~~exclude AIR’s proportionate share of the results of unconsolidated apartment communities, which is excluded in the related consolidated amounts, and (ii) ~~exclude~~include the noncontrolling interests in consolidated real estate partnerships’ proportionate share of the results of communities, which is included in the related consolidated amounts. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP.

(2)Includes: (i) the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any, (ii) property management revenues, which are not part of our segment performance measure, property management expenses and casualty gains and losses, which are included in consolidated property management and operating expenses and are not part of our segment performance measure, and (iii) the depreciation of capitalized costs of non-real estate assets.

(3)Includes depreciation and amortization, general and administrative expenses, and other expenses, net, and may also include write-offs of deferred leasing commissions, which are not included in our measure of segment performance.

(4)Includes interest income, interest expense, loss on extinguishment of debt, gain on dispositions of real estate, provision for impairment loss, ~~and~~ loss from unconsolidated real estate ~~partnerships.~~partnerships, and gain on derivative instruments, net.

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


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Same Store	Same Store	$	4,119,544	$	4,610,356
Other Real Estate	Other Real Estate	1,575,415		1,211,136
Corporate and other assets (1)	Corporate and other assets (1)	704,290		730,391
Total consolidated assets	Total consolidated assets	$	6,399,249	$	6,551,883

(1)Includes the assets not allocated to our segments including: (i) corporate ~~assets;~~asset and (ii) ~~the mezzanine loan investment where the rights and obligations of ownership have been assigned to Aimco; and (iii)~~ properties sold or classified as held for sale.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ capital additions related to our segments were as follows (in thousands):


		2023		2022
	2024					2024	2023
Same Store	Same Store	$	114,844	$	109,768
Other Real Estate	Other Real Estate	13,530		1,422
Total capital additions	Total capital additions	$	128,374	$	111,190

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Note 12 — Subsequent Events

On April 7, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Apex Purchaser LLC (“Buyer 1”), Aries Purchaser LLC (“Buyer 2”), Astro Purchaser LLC (“Buyer 3”), and Astro Merger Sub, Inc. (“Merger Sub”), which are affiliates of Blackstone Real Estate Partners X (“Blackstone”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, upon the closing of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”) and each share of the Company’s Class A common stock (“Company Common Stock”) (other than those held by the Company or any of its subsidiaries, or by Buyer 1, Buyer 2, Buyer 3 or Merger Sub (the “Cancelled Shares”)) that is issued and outstanding immediately prior to the Merger will be automatically canceled and converted into the right to receive an amount in cash equal to $39.12 (the “Common Stock Merger Consideration”), without interest. Additionally, substantially concurrently with the consummation of the Merger, the Company shall effect the redemption of, or make an irrevocable deposit pursuant to the terms of the Class A preferred stock, $0.01 par value per share, of the Company (“Company Preferred Stock”) in respect to the amount required to redeem, all outstanding shares of the Company Preferred Stock at a redemption price payable in cash, by or on behalf of the Company, in an amount equal to $100,000 per share of Company Preferred Stock plus accumulated, accrued and unpaid dividends thereon (“Preferred Stock Redemption Payment”) and from and after the consummation of the Merger, the Company Preferred Stock shall no longer be outstanding and all rights of the holders thereof will terminate, except for the right to receive the Preferred Stock Redemption Payment.

The Merger was unanimously approved by the Company’s Board of Directors and is expected to close in the third quarter of 2024, subject to approval by the Company’s stockholders and other customary closing conditions. Pursuant to the terms of the Merger Agreement, the Company may not pay dividends, including its quarterly dividend, effective immediately except as necessary to preserve its tax status as a real estate investment trust, and any such dividends would result in an offsetting decrease to the Common Stock Merger Consideration. Subject to and upon consummation of the Merger, the Company’s Class A common stock will no longer be listed on the New York Stock Exchange.

The issued and outstanding equity interests of the AIR Operating Partnership, including the Partnership Common Units, each class of Partnership Preferred Units, Partnership LTIP Units and Class I High Performance Partnership Units (each as defined in the Merger Agreement), will be unaffected by the Merger and will remain issued and outstanding and will continue to have the rights and privileges set forth in the Partnership LPA (as defined in the Merger Agreement). At or prior to the consummation of the Merger, the Partnership LPA will be amended by AIR-GP, Inc. (the “General Partner”) in substantially the form attached to the Merger Agreement (the “LPA Amendment”) to provide that, following the closing, (i) the AIR Operating Partnership will pay cash to those of holders of Partnership Units (as defined in the Merger Agreement) who elect to redeem their Partnership Units in accordance with the terms of the Partnership LPA (and will not exercise its right to pay for such redeemed Partnership Units in shares of Company Common Stock), (ii) any Partnership Units redeemed on the Closing Date (as defined in the Merger Agreement) or within ten (10) days thereafter will be valued at an amount equal to the Common Stock Merger Consideration minus the aggregate amount of all distributions per Partnership Common Unit declared or paid to the holders of Partnership Common Units during the period commencing on the Closing Date and ending on the date a notice of redemption is received and (iii) any Partnership Units redeemed after the tenth (10th) day following the Closing Date will be valued by the General Partner in good faith on the basis of such information as it considers, in its reasonable judgment, as appropriate.

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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. This Quarterly Report on Form 10-Q contains information that is forward-looking within the meaning of the federal securities laws, including, without limitation, statements regarding: the payment of dividends and distributions in the future; our ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding consumer demand, growth in revenue and strength of other performance metrics and models; the effect of and expectations regarding acquisitions and ~~dispositions;~~dispositions, including the Merger; expectations regarding acquisitions as well as sales and the formation of joint ventures and the use of proceeds thereof; the availability and cost of corporate debt; our ability to comply with debt covenants; and risks related to the provision of property management services to third parties and our ability to collect property management and asset management related fees.

These forward-looking statements are based on management’s current expectations, estimates and assumptions and subject to risks and uncertainties, that could cause actual results to differ materially from such forward-looking statements, including, but not limited to: 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 inflation, the pace of job growth, the level of unemployment, and recession; the amount, location, and quality of competitive new housing supply, which may be impacted by global supply chain disruptions; the timing and effects of acquisitions and ~~dispositions;~~dispositions, including the Merger; changes in operating costs, including energy costs; negative economic conditions in our geographies of operation; ~~loss~~the ability of AIR to hire and retain key ~~personnel;~~personnel, including in connection with the Merger; AIR’s ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; financing risks, including interest rate changes and the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by ~~AIR. Other~~AIR; risks associated with the Merger, including our ability to complete the Merger on the anticipated terms and timing, or at all, including our ability to obtain the required stockholder approval, and our ability to satisfy the other conditions to the completion of the Merger; potential litigation relating to the Merger that could be instituted against AIR or its directors, managers or officers, including the effects of any outcomes related thereto; the risk that disruptions from the Merger will harm AIR’s business, including current plans and operations, including during the pendency of the Merger; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; certain restrictions during the pendency of the Merger that may impact AIR’s ability to pursue certain business opportunities or strategic transactions; unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, outbreaks of war or hostilities or a pandemic, as well as management’s response to any of the aforementioned factors; the possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger, including in circumstances requiring AIR to pay a termination fee; and those other risks and uncertainties ~~are~~ described in this Quarterly Report on Form 10-Q, as well as the section entitled “Risk Factors” in Item 1A of AIR’s and AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, and subsequent filings with the ~~SEC.~~SEC, including the proxy statement that will be filed in connection with the Merger.

Certain of these risks, as well as other risks associated with the Merger, will be more fully discussed in the proxy statement that will be filed with the SEC in connection with the Merger. There can be no assurance that the Merger will be completed, or if it is completed, that it will close within the anticipated time period. These factors should not be construed as exhaustive and should be read in conjunction with the other forward-looking statements. The forward-looking statements relate only to events as of the date on which the statements are made. AIR does not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this quarterly report that could cause actual results to differ. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect AIR.

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

These forward-looking statements reflect management’s judgment as of this date, and we assume no obligation to revise or update them to reflect future events or circumstances.

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Certain financial and operating measures found herein and used by management are not defined under GAAP. These measures are defined and reconciled to the most directly comparable GAAP measures under the Non-GAAP Measures heading and include: NAREIT Funds from Operations, Pro forma Funds from Operations, ~~Run-Rate Funds from Operations, Run-Rate~~ Adjusted Funds from Operations, and the measures used to compute our leverage ratios.

Executive Overview

We created AIR to be the most efficient and effective way to invest in U.S. multi-family real estate, due to our ~~simplified~~simple business model, diversified portfolio of stabilized apartment communities, and low leverage. ~~The Board of Directors has set the following strategic objectives:~~

•~~Pursue a simple, efficient, and predictable business model with a low-risk premium.~~

•~~Maintain a high quality and diversified portfolio of stabilized multi-family properties.~~

•~~Continuously improve our best-in-class property operations platform, the “AIR Edge,” to generate above-market organic growth.~~

•~~Maintain an efficient cost structure to keep net general and administrative expenses less than or equal to 15-basis points of gross asset value.~~

•~~Maintain a flexible, low levered balance sheet with access to public debt markets.~~

•~~Enhance portfolio quality through a disciplined approach to capital allocation, targeting accretive opportunities on a leverage neutral basis.~~

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•~~Form private capital partnerships as a source of equity capital for accretive growth.~~

•~~Continue our commitment to corporate responsibility with transparent and measurable goals.~~

We own and operate a portfolio of stabilized apartment communities, diversified by both geography and price point, in 10 states and the District of Columbia. As of ~~September 30, 2023,~~March 31, 2024, our portfolio included 7576 apartment communities with ~~26,623~~27,015 apartment homes, in which we held an average ownership of approximately ~~81%~~82%. ~~We also have one land parcel~~

On April 7, 2024, the Company entered into the Merger Agreement with Buyer 1, Buyer 2, Buyer 3 and ~~one indirect land interest that we lease~~Merger Sub, which are affiliates of Blackstone. Pursuant to ~~third parties.~~

~~Our business is organized around four areas of strategic focus: operational excellence; portfolio management; balance sheet;~~the terms and ~~team and culture. The results from~~subject to the ~~execution of our strategy are further described~~conditions set forth in the ~~sections~~Merger Agreement, upon the closing of the Merger, each share of Company Common Stock (other than the Cancelled Shares) that ~~follow.~~is issued and outstanding immediately prior to the Merger will be automatically canceled and converted into the right to receive the Common Stock Merger Consideration, without interest. Additionally, substantially concurrently with the consummation of the Merger, the Company shall effect the redemption of, or make an irrevocable deposit pursuant to the terms of the Company Preferred Stock in respect to the amount required to redeem, all outstanding shares of the Company Preferred Stock at a redemption price payable in cash, by or on behalf of the Company, in an amount equal to the Preferred Stock Redemption Payment and from and after the consummation of the Merger, the Company Preferred Stock shall no longer be outstanding and all rights of the holders thereof will terminate, except for the right to receive the Preferred Stock Redemption Payment.

~~Operational Excellence~~

InThe Merger was unanimously approved by the Company’s Board of Directors and is expected to close in the third quarter of ~~2023, Pro forma FFO increased 10.3% year-over-year~~2024, subject to approval by the Company’s stockholders and other customary closing conditions. Pursuant to the terms of the Merger Agreement, the Company may not pay dividends, including its quarterly dividend, effective immediately except as necessary to preserve its tax status as a real estate investment trust, and any such divided would result in an offsetting decrease to the Common Stock Merger Consideration. Subject to and upon consummation of ~~same store revenue growth~~the Merger, the Company’s Class A common stock will no longer be listed on the New York Stock Exchange.

The issued and outstanding equity interests of ~~6.8%~~the AIR Operating Partnership, including the Partnership Common Units, each class of Partnership Preferred Units, Partnership LTIP Units and Class I High Performance Partnership Units will be unaffected by the Merger and will remain issued and outstanding and will continue to have the rights and privileges set forth in the Partnership LPA. The LPA Amendment, which ~~drove higher net operating income~~will be effected at or prior to the consummation of ~~6.3%~~the Merger, will provide that, following the Closing, (i) the AIR Operating Partnership will pay cash to those of holders of Partnership Units who elect to redeem their Partnership Units in accordance with the terms of the Partnership LPA (and will not exercise its right to pay for such redeemed Partnership Units in shares of Company Common Stock), ~~primarily driven by~~(ii) any Partnership Units redeemed on the Closing Date or within ten (10) days thereafter will be valued at an ~~increase~~amount equal to the Common Stock Merger Consideration minus the aggregate amount of ~~5.6% in residential rents.~~

~~Portfolio Performance~~

~~Approximately 20%~~all distributions per Partnership Common Unit declared or paid to the holders of ~~AIR’s capital is invested in acquisitions made since 2021. Acquisition properties experience a rate of NOI growth~~Partnership Common Units during the ~~first few years~~period commencing on the Closing Date and ending on the date a notice of ~~AIR management that~~redemption is ~~much higher than~~received and (iii) any Partnership Units redeemed after the ~~same store portfolio rate. Two-thirds~~tenth (10th) day following the Closing Date will be valued by the General Partner in good faith on the basis of ~~these investments were made prior to July 2022; therefore, comparative~~such information ~~is available. These properties' year-over-year NOI growth was up 17.4%, increasing year-over-year NOI growth rate of the total Acquisition and Same Store portfolios by 170 basis points to 7.2%.~~

~~Third Quarter 2023 Paired Trades~~

As previously announced, AIR contributed 10 properties to the Core JV, retaining a 53% interest. In exchange for the 47% interest sold, AIR received $505 million of gross consideration. AIR also completedas it considers, in its ~~strategic exit from New York City through the sale of a property for $21 million in gross proceeds.~~

~~In turn, AIR improved its portfolio through reinvesting $287 million in three new properties. In comparison to the property interests sold, the acquired properties:~~

•~~have 11% higher average rents at $2,751 per month;~~

•~~were constructed in the last two years (in contrast to 26 years for the interests sold); and~~

•~~require annual capital replacement spending that is $2,600 per unit lower than the interests sold.~~

~~AIR used the remaining proceeds to:~~

•~~repurchase 2.2 million shares for $77.8 million (reflecting an average price of $34.57 per share, and a forward NOI yield of approximately 6.3%).~~

•~~reduce leverage, with an average interest cost of 6.1%, by approximately $161 million.~~

~~Balance Sheet and Liquidity~~

During the third quarter of 2023, AIR refinanced $154 million of borrowings on AIR's revolving credit facility and $325 million of term loans maturing in 2023 and 2024, with new fixed rate property debt. The new debt has a weighted-average life of 5.3 years and a weighted-average interest rate of ~~5.2%; 30-basis points greater than the short-term debt repaid.~~

~~Today, AIR has:~~

•~~Near-term exposure to rising interest rates limited to:~~

▪~~$79 million on our share of the Virginia JV debt due to the maturity in January 2024 of the in-place interest rate cap; plus~~

▪~~$26 million on our revolving credit facility~~

•~~No debt maturities until the second quarter of 2025;~~

•~~Available liquidity of $2.1 billion;~~

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•~~$5.3 billion of properties unencumbered by non-recourse debt; and~~

•~~Limited refunding risk with the ability to fund all maturities through 2027 from cash on hand, and a 10-year commitment to make $1 billion of property loans with up to 10-year maturities.~~

At year-end, AIR anticipates Net Leverage to Adjusted EBITDAre to be below 6.0x; consistent with its target range of 5.0x to 6.0x. As of September 30, 2023, AIR's leverage is temporarily elevated due to the timing of third quarter acquisitions.

~~Dividend and Equity Capital Markets~~

~~On October~~ ~~30, 2~~023, the AIR Board of Directors declared a quarterly cash dividend of $0.45 per share of Common Stock, payable on November 30, 2023 to shareholders of record on November 17, 2023. In setting the 2023 dividend rate, the Board of Directors targeted a 75% payout ratio of Pro forma FFO, in 2023 equivalent to approximately 86% of Run-Rate AFFO.

~~Team and Culture~~

Our team and culture are keys to our success. We have a relentless focus on productivity and innovation. We continuously seek to reduce costs through the use of additional automation and continued technological investment, and by avoiding costs, for example by retention of residents. We apply this same focus to our general and administrative expenses, expecting these costs to be lower,reasonable judgment, as ~~a percentage of the gross asset value of our investments, than are our peers.~~

We are defined by a commitment to our mission, vision, and values. We strive to provide an exceptional living experience for residents and a great place to work for teammates, to be a good neighbor in the communities we serve, and a good steward for our investors. We are accountable to teammates in return for their hard and meaningful work of providing homes for others. We see our workforce as a team, and not employees only. Our view is relational, and not transactional, reflecting a longer view of the benefits of a cohesive and caring team.

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. The Compensation and Human Resources Committee of the Board of Directors is responsible for succession planning in all leadership positions, both in the short-term and the long-term, with particular focus on CEO succession.

Our focus on our team and culture is widely recognized. In 2023, AIR was named a Kingsley Excellence Elite Five multifamily company and a winner of the 2023 Kingsley Excellence Awards for customer service for the second year in a row. Of the winners, AIR ranked second among all operators, and first among publicly traded REITs. AIR is committed to world-class customer service, which we deliver through listening to, learning from, and responding to our residents every day. We also benefit from the support of great leadership, contributions from exceptional teammates, and a strong culture. These strengths are confirmed by such awards as AIR's 2023 Top Workplaces USA Award (the second consecutive year), a 10-time winner of Top Workplace in Colorado (by the Denver Post), Top Workplace in Philadelphia (by The Philadelphia Inquirer), and in South Florida (by the Sun Sentinel) as well as two time winner of Built in 2023 Best Places to Work in Colorado, Los Angeles, Miami, and Washington, D.C., and the Denver Business Journal Healthiest Employer in Colorado for the third year in a row. We take seriously our responsibility to care for our customers, our neighbors, and each other as teammates. We are grateful for these recognitions and consider them confirmation of our success.

We are committed to transparency, and continuous improvement, as measured by Global Real Estate Sustainability Benchmark (“GRESB”). Strong progress was made by AIR in 2023 in advancing its commitments to responsibility beyond governance, achieving a GRESB score of 82 out of 100, placing AIR in the top 20% of residential companies in the Americas. We also published our 2022-2023 Corporate Responsibility Report highlighting our commitment to community and continued progress on our goals.appropriate.

Results of Operations

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

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.1.

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Financial Highlights

Net ~~income~~loss attributable to common stockholders per common share, on a dilutive basis was ~~$4.43 and $4.35~~$(0.05) for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024 compared to ~~$0.01 and $3.68~~$(0.08) for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, due primarily to:

•Same Store revenue growth of ~~6.8%~~4.3% which resulted in higher ~~net operating income ("NOI")~~NOI of 6.3%, primarily driven by an increase of ~~5.6%~~3.4% in residential rents, for the three months ended September 30, 2023 compared to 2022. Additionally, acquisitions are growing faster than Same Store. For example, the Class of 2022 had revenue growth of 9.9%, which resulted in higher NOI of 20.1% for the three months ended September 30, 2023 compared to 2022,

•~~Higher gains on dispositions of real estate,~~

•~~Gains~~gain on derivative instruments, and

•~~Lower~~lower loss on extinguishment of debt, offset partially by

•~~Lower interest income~~higher loss from ~~the note receivable from Aimco, which was repaid in the second and third quarters of 2022, and the $17.4 million prepayment penalty received from Aimco in connection with these repayments, and~~unconsolidated real estate partnerships.

•~~Higher interest expense due to higher interest rates and higher outstanding property debt balances.~~

Pro forma FFO per share was $0.64 and $1.76 for the three and nine months ended September 30, 2023, respectively, compared to $0.58 and $1.81 for the three and nine months ended September 30, 2022, respectively, due primarily to the below factors.

•Same Store revenue growth of 6.8% which resulted in higher NOI of 6.3% primarily driven by an increase of 5.6% in residential rents for the three months ended September 30, 2023 compared to 2022. Additionally, acquisitions are growing faster than Same Store. For example, the Class of 2022 had revenue growth of 9.9% which resulted in higher NOI of 20.1% for the three month ended September 30, 2023 compared to 2022, and

•~~Gains on derivative instruments as noted above, offset partially by~~

•~~A decrease in interest income as noted above, and~~

•~~An increase in interest expense as noted above.~~

For the three and nine months ended September 30, 2023, Pro forma FFO includes $0.05 per share of non-recurring items including derivative gains that were accelerated through the repayment of certain previously hedged term loans, partially offset by higher than anticipated casualty and legal costs. After consideration of these non-recurring items Run-Rate FFO per share was $0.59 and $1.72 for the three and nine months ended September 30, 2023, respectively.

For the three and nine months ended September 30, 2022, Pro forma FFO includes $0.03 and $0.22 per share, respectively, of non-recurring items including the impact from the Aimco note receivable prepayment. After consideration of these non-recurring items Run-Rate FFO per share was $0.55 and $1.59 for three and nine months ended September 30, 2022, respectively.

Additionally, Run-Rate AFFO per share was $0.52 and $1.51 for three and nine months ended September 30, 2023, respectively, compared to $0.50 and $1.42 for three and nine months ended September 30, 2022, respectively. Our 2023 capital allocation decisions have resulted in paired trades in which we have purchased apartment communities with an anticipated higher rate of NOI growth and lower recurring capital needs and sold partial interests in apartment communities with lower anticipated rates of NOI growth and higher capital needs.

Results of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2023,~~March 31, 2024, Compared to ~~2022~~2023

Property Operations

Transactions

33During the three months ended March 31, 2024, we acquired one apartment community located in Raleigh, North Carolina with 384 apartment homes.

~~Table~~Subsequent to March 31, 2024, we acquired one apartment community located in Bethesda, Maryland with 359 apartment homes and 50,500 square feet of ~~Contents~~

commercial space for $150.0 million. In connection with the acquisition, AIR placed $97.3 million of non-recourse property debt on the property. AIR anticipates that this property will be contributed to the Core JV, and AIR will receive cash consideration of $24.8 million and a reduction in its share of property debt of $45.7 million.

Proportionate Property Net Operating Income

Our proportionate share of financial information includes our share of unconsolidated real estate partnerships and excludes the noncontrolling interest partners’ share of consolidated real estate partnerships. We believe proportionate information benefits the users of our financial information by providing the amount of revenues, expenses, assets, liabilities, and other items attributable to our stockholders.

We use proportionate property NOI to assess the operating performance of our communities. Proportionate property NOI reflects our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues in accordance with GAAP.

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

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Please see Note 121 1 to the condensed consolidated financial statements in Item 1 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.


		Three Months Ended September 30,				Historical Change
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)	(dollars in thousands)	2023		2022		$		%
Rental and other property revenues, before utility reimbursements:	Rental and other property revenues, before utility reimbursements:
Rental and other property revenues, before utility reimbursements:
Rental and other property revenues, before utility reimbursements:
Same Store
Same Store
Same Store	Same Store	$	151,619	$	142,009	$	9,610	6.8	%
Other Real Estate	Other Real Estate	29,543		14,025		15,518		nm
Other Real Estate
Other Real Estate
Total
Total
Total	Total	181,162		156,034		25,128		16.1	%
Property operating expenses, net of utility reimbursements:	Property operating expenses, net of utility reimbursements:
Property operating expenses, net of utility reimbursements:
Property operating expenses, net of utility reimbursements:
Same Store
Same Store
Same Store	Same Store	40,353		37,349		3,004		8.0	%
Other Real Estate	Other Real Estate	8,158		4,783		3,375		nm
Other Real Estate
Other Real Estate
Total
Total
Total	Total	48,511		42,132		6,379		15.1	%
Proportionate property net operating income:	Proportionate property net operating income:
Proportionate property net operating income:
Proportionate property net operating income:
Same Store
Same Store
Same Store	Same Store	111,266		104,660		6,606		6.3	%
Other Real Estate	Other Real Estate	21,385		9,242		12,143		nm
Other Real Estate
Other Real Estate
Total	Total	$	132,651	$	113,902	$	18,749	16.5	%
Total
Total

For the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022,~~2023, excluding changes attributable to changes in ownership, our Same Store proportionate property NOI increased by 6.3%. This increase was attributable primarily to a ~~$9.6~~3.4% increase in residential rates, a 50 basis point increase in Average Daily Occupancy, and a 40 basis point increase in other residential income, resulting in a $7.0 million, or ~~6.8%~~4.3%, increase in rental and other property ~~revenues due to a 5.6% increase in residential rental rates, and a 1.2% increase in other rental income, partially offset by a 0.6% decrease in~~ ~~ADO.~~revenues.

Other Real Estate proportionate property NOI for the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022,~~2023, increased by ~~$12.1~~$3.5 million, due primarily to the contribution from ~~four~~three properties acquired in 2023 ~~four properties~~subsequent to March 31, 2023 and one property acquired in ~~2022, and NOI contribution from the four properties acquired on September 1, 2022, when their respective master leases were canceled.~~

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Nine Months Ended September 30, Historical Change
(dollars in thousands) 2023 2022 $ %
Rental and other property revenues, before utility reimbursements:
Same Store $ 445,881 $ 411,052 $ 34,829 8.5 %
Other Real Estate 86,104 16,437 69,667 nm
Total 531,985 427,489 104,496 24.4 %
Property operating expenses, net of utility reimbursements:
Same Store 117,014 111,316 5,698 5.1 %
Other Real Estate 28,010 5,799 22,211 nm
Total 145,024 117,115 27,909 23.8 %
Proportionate property net operating income:
Same Store 328,867 299,736 29,131 9.7 %
Other Real Estate 58,094 10,638 47,456 nm
Total $ 386,961 $ 310,374 $ 76,587 24.7 %

~~For the nine months ended September 30, 2023, compared to 2022, excluding changes attributable to changes in ownership, our Same Store proportiona~~te property NOI increased by 9.7%. This increase was attributable primarily to a $34.8 million, or 8.5%, increase in rental and other property revenues due to an 8.1% increase in residential rental rates, and an 0.8% increase in other residential income, partially offset by a 0.7% decrease in ADO.

~~Other Real Estate proportionate property NOI for the nine months ended September 30, 2023, compared to 2022,~~ increased by $47.5 million, due primarily to contribution from four properties acquired in 2023, four properties acquired in 2022, and NOI contribution from the four properties acquired on September 1, 2022, when their respective master leases were canceled.2024.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our segments include offsite costs associated with property management, casualty losses, and the results of apartment communities sold or held for sale, which we do not allocate to our segments for purposes of evaluating segment performance. For the three months ended March 31, 2024, compared to 2023, non-segment real estate operations increased by $1.6 million, due primarily to an increase in property management revenues and a decrease in casualty losses.

Other Revenues

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022, non-segment real estate operations decreased by~~2023, other revenues increased $1.2 million, ~~and $21.8 million, respectively,~~ due primarily to ~~$5.9 million~~fees earned for providing property management services for the Value-Add JV and ~~$22.1 million of lower NOI attributable to sold properties due to decreased disposition activity, with dispositions of nine additional properties during 2022 compared to 2023.~~the Core JV.

~~Additionally, for~~Property operating expenses

For the three months ended ~~September 30,~~March 31, 2024, compared to 2023, property operating expenses decreased $8.2 million, or 12.2%, due primarily to the contribution of apartment communities to two unconsolidated joint ventures subsequent to the first quarter of 2023; the Core JV and the Value-Add JV, and a decrease in ~~non-segment real estate operations was offset partially by $4.7 million of lower~~ casualty ~~losses due to receipt of third-party casualty recoveries in 2023.~~losses.

Depreciation and Amortization

For the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022,~~2023, depreciation and amortization expense decreased ~~$11.4~~$15.9 million, or ~~12.6%~~16.6%, due primarily to the reduction in depreciation associated with properties sold ~~properties,~~subsequent to March 31, 2023, offset partially by properties acquired subsequent to ~~September 30, 2022.~~March 31, 2023.

For the nine months ended September 30, 2023, compared to 2022, depreciation and amortization expense increased $10.3 million, or 4.1%, due primarily to properties acquired subsequent to September 30, 2022, offset partially by the reduction in depreciation associated with sold properties.

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General and administrative expenses

For the three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022,~~2023, general and administrative expenses ~~decreased $2.0~~increased by $3.2 million, or ~~26.1%~~44.0%, due primarily to ~~lower~~one-time personnel ~~costs.~~

~~For the nine months ended September 30, 2023, compared~~costs, that are not expected to ~~2022,~~recur. Future increases in general and administrative expenses ~~were relatively flat.~~

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are anticipated to be limited.

Other expenses, net

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

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022,~~2023, other expenses, net, increased by ~~$3.2~~$7.6 million, ~~and $8.6 million, respectively,~~ due primarily to higher legal expenses incurred and ~~one-time severance payments. Additionally, for the nine months ended September 30, 2023, other expenses, net further increased~~a reduction in short duration income due to ~~incremental ground lease expense associated with an acquired property.~~

~~Interest Income~~

~~For~~ the three and nine months ended September 30, 2023, compared to 2022, interest income decreased by $6.7 million, or, 69.6%, and $42.6 million, or 87.4%, respectively, due primarily to $17.4 million of lower interest income associated with the 2022 prepaymentsale of our ~~notes receivable from Aimco. Interest income decreased further due to lower interest income associated with properties leased to Aimco through September 1, 2022, when the leases were canceled.~~

~~Interest Expense~~

For the three months ended September 30, 2023, compared to 2022, interest expense decreased $9.8 million, or 29.9%, due primarily to the the impact of hedged derivative activity on interest expense, lower balances on our revolving credit facility, and repayment of $325 million of term loans.

For the nine months ended September 30, 2023, compared to 2022, interest expense increased $15.8 million, or 19.6%, due primarily to higher rates on our term loans and revolving credit facility, interest expense associated with our senior unsecured notes issuedNew England portfolio in the second quarter of 2022, and higher outstanding property debt balances; offset partially by the impact of hedged derivative activity on interest expense, lower balances on our revolving credit facility, and repayment of $325 million of term loans.2023.

Loss on Extinguishment of Debt

During the three months ended ~~September 30, 2023 and 2022,~~March 31, 2024, we ~~did not incur a~~recorded no loss on extinguishment of debt.

~~For~~ During the ~~nine~~three months ended ~~September 30,~~March 31, 2023, ~~compared to 2022, loss on extinguishment of debt decreased by $21.6~~we recognized $2.0 million due to ~~higher~~ prepayment penalties incurred from the early payment of property debt in ~~2022.~~

~~Gains on Dispositions and Impairments of Real Estate~~

During the three months ended September 30, 2023, we recognized a $692.9 million gain on dispositions of real estate and impairments of real estate due primarily to the gain associated with sale of a partial interest in 10 properties in connection with the Core JV.

~~During the nine months ended September 30, 2023, we recognized a $675.5 million gain on dispositions and impairments of real estate due primarily to:~~

•~~$698.8 million of gain on dispositions of real estate from the sale of 10 properties in connection with the Core JV;~~

•~~$0.5 million of gain in connection with the formation of the Value-Add JV; offset partially by~~

•A non-cash impairment loss on real estate of $23.6 million due to the evaluation of the expected hold period of three apartment communities included in our Other Real Estate reporting segment, which are now sold.

During the three months ended September 30, 2022, there were no apartment communities sold. During the nine months ended September 30, 2022, we recognized $587.6 million of gain on dispositions of real estate related to the sale of 12 apartment communities. During the three and nine months ended September 30, 2022, we did not recognize any real estate impairment losses.2023.

Gain (loss) on Derivative Instruments

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, we recognized ~~$14.1~~$9.6 million ~~and $23.3 million, respectively,~~ of gains onand $2.1 million of losses, respectively, due to the mark-to-market adjustment of certain derivative instruments that ~~are~~were not designated ~~as cash flow hedges primarily related to mark-to-~~

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market valuation changes and cancellation of certain interest swaps and treasury locks during the period. During the three and nine months ended September 30, 2022, we did not recognize any gains on derivative instruments.in a hedge relationship.

Loss from Unconsolidated Real Estate Partnerships

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~2022,~~2023, loss from unconsolidated real estate partnerships increased ~~$10.3 million~~$5.8 million. Subsequent to the first quarter of 2023, AIR formed two joint ventures; the Core JV and ~~$9.3 million, respectively.~~the Value-Add JV. During the ~~third quarter of 2023,~~three months ended March 31, 2024, our unconsolidated joint ventures generated NOI of ~~$11.1~~$14.1 million. This incremental NOI was offset by higher depreciation expense due to ~~valuing~~ the step-up in value for properties in the Core JV and the Value-Add ~~JV's at~~JV to fair market value.

~~Income Tax Expense~~

~~Certain of our operations, including property management, are conducted through taxable REIT subsidiaries (“TRS entities”).~~

Our income tax expense calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities for which the tax consequences have been realized or will be realized in future periods. Income taxes related to these items, as well as changes in valuation allowance, are included in income tax expense in our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2023, compared to 2022, income tax expense increased $4.5 million and $4.9 million, respectively, due primarily to the recognition of an income tax liability resulting from the formation of the Core JV.

Critical Accounting 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 our long-lived assets.

Our critical accounting estimates are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. There have been no other significant changes in our critical accounting estimates from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Non-GAAP Measures

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

NAREIT Funds From Operations, Pro forma Funds From Operations, ~~Run-Rate FFO~~ and ~~Run-Rate~~ Adjusted Funds From Operations

Many of our investors focus on multiples of Funds From Operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), referred to herein as “NAREIT FFO.” These investors also focus on NAREIT FFO, as adjusted for non-cash, unusual, or non-recurring items. We refer to this metric as Pro forma Funds From Operations (“Pro forma FFO”) and use it as a measure

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NAREIT FFO is a non-GAAP 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 assets generally appreciate over time or maintain 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 (loss) computed in accordance with GAAP, excluding: (i) depreciation and amortization related to real estate; (ii) gains and losses from sales and impairment of depreciable assets and land used in our primary business; and (iii) income taxes directly associated with a gain or loss on the sale of real estate; and adjustments for our share of FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are

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calculated on the same basis to determine NAREIT FFO. We calculate NAREIT FFO attributable to AIR common stockholders (diluted) by subtracting dividends on Preferred Stock and preferred units and amounts allocated from NAREIT FFO to participating securities.

~~In addition to~~These investors also focus on NAREIT FFO, ~~we use~~as adjusted for non-cash, unusual, or non-recurring items. We refer to these metrics as Pro forma ~~FFO, Run-Rate FFO~~Funds From Operations (“Pro forma FFO”) and ~~Run-Rate~~ Adjusted Funds From Operations (“AFFO”). Pro forma FFO is used to measure short-term, operational, performance and ~~current period performance. Pro forma FFO~~ represents NAREIT FFO as defined above, excluding certain amounts that are unique or occur infrequently. ~~Run-Rate FFO represents Pro forma FFO as defined above, excluding certain amounts that are unique or occur infrequently. Run-Rate~~ AFFO represents Pro forma FFO as defined above, reduced by Capital Replacements and is a measure of current period performance.

NAREIT FFO, Pro forma FFO, ~~Run-Rate FFO~~ and ~~Run-Rate~~ AFFO should not be considered alternatives to net income (loss) 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. 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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NAREIT FFO, Pro forma FFO, ~~Run-Rate FFO,~~ and ~~Run-Rate~~ AFFO are calculated as follows (in ~~thousands, except per share data)~~thousands):

Three Months Ended Nine Months Ended
September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Net income attributable to AIR common stockholders $ 663,596 $ 1,760 $ 650,700 $ 574,363
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest 87,169 85,057 260,930 240,436
Gain on dispositions and impairments of real estate, net of noncontrolling partners’ interest (690,992) — (673,520) (587,453)
Income tax adjustments related to gain on dispositions and other tax-related items 4,400 (348) 4,400 (1,448)
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities 38,773 (5,250) 25,962 21,327
NAREIT FFO attributable to AIR common stockholders $ 102,946 $ 81,219 $ 268,472 $ 247,225
Adjustments:
Gain on derivative instruments (1) (12,436) — (21,688) —
Non-cash straight-line rent (2) 3,068 3,660 9,248 4,944
Business transformation and transition related costs (3) 897 1,419 1,420 3,881
Loss on extinguishment of debt (4) — — 2,008 23,636
Casualty losses and other (5) (272) 4,389 1,855 4,635
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities 541 (581) 454 (1,887)
Pro forma FFO attributable to AIR common stockholders $ 94,744 $ 90,106 $ 261,769 $ 282,434
Cash swap acceleration income, net of common noncontrolling interests in AIR OP and participating securities (10,854) — (10,854) —
Aimco note prepayment, net of common noncontrolling interests in AIR OP and participating securities — (4,673) — (34,456)
Casualty and Legal expense in excess of run-rate, net of common noncontrolling interests in AIR OP and participating securities 2,665 — 4,628 —
Run Rate FFO attributable to AIR common stockholders $ 86,555 $ 85,433 $ 255,543 $ 247,978
Capital Replacements, net of common noncontrolling interests in AIR OP and participating securities (7,476) (6,706) (26,449) (22,912)
Leasing Commissions, net of common noncontrolling interests in AIR OP and participating securities (1,712) (1,632) (5,029) (4,227)
Run-Rate AFFO attributable to AIR common stockholders $ 77,367 $ 77,095 $ 224,065 $ 220,839
Weighted-average common shares outstanding – basic 147,474 153,811 148,372 155,488
Dilutive common share equivalents 299 246 143 269
Total shares and dilutive share equivalents 147,773 154,057 148,515 155,757
Net income attributable to AIR per share – diluted $ 4.43 $ 0.01 $ 4.35 $ 3.68
NAREIT FFO per share – diluted $ 0.70 $ 0.53 $ 1.81 $ 1.59
Pro forma FFO per share – diluted $ 0.64 $ 0.58 $ 1.76 $ 1.81
Run-Rate FFO per share - diluted $ 0.59 $ 0.55 $ 1.72 $ 1.59
Run-Rate AFFO per share - diluted $ 0.52 $ 0.50 $ 1.51 $ 1.42


	Three Months Ended March 31,
		2024		2023
Net loss attributable to AIR common stockholders		$	(6,570)	$	(11,457)
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest		86,184		90,012



Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities		(5,480)		(5,922)
NAREIT FFO attributable to AIR common stockholders		$	74,134	$	72,633
Adjustments:
(Gain) loss on derivative instruments (1)		(1,361)		2,144
Non-cash straight-line rent (2)		3,068		3,090
Business transformation and transition related costs (3)		1,824		213

Loss on extinguishment of debt (4)		—		2,008
Casualty losses and other (5)		872		1,846
Blackstone transaction costs (6)		3,200		—
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities		(455)		(626)
Pro forma FFO attributable to AIR common stockholders		$	81,282	$	81,308
Capital Replacements, net of common noncontrolling interests in AIR OP and participating securities		(9,141)		(9,678)
AFFO attributable to AIR common stockholders		$	72,141	$	71,630

(1)During 2023 ~~in anticipation of future financing transactions,~~and 2024, we entered into treasury locks and interest rate swaps that did not qualify for hedge accounting under GAAP. Changes in the fair value of these instruments are included in net ~~income~~loss attributable to AIR common stockholders. Any non-cash changes in fair value are excluded in the determination of Pro forma FFO.

(2)In 2018 and 2022, we assumed 99-year ground leases with scheduled rent increases. Due to the terms of the leases, GAAP rent expense will exceed cash rent payments until 2076 and 2079, respectively. We include the cash rent payments for these ground leases in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. The rent expense for these leases is included in other expenses, net, in our condensed consolidated statements of operations.

(3)During 2023 and 2022, we incurred consulting, placement, legal, and other transformation related costs as we fully implement AIR’s business model, including projects intended to increase efficiency and reduce costs in future periods. As we engage in and finalize our

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finance transformation initiative that modernizes our systems and processes, including a new ERP system, we expect to continue to incur these costs ~~throughout 2023.~~during the first half of 2024. We have excluded these costs from Pro forma FFO because we believe they are not related to ongoing operating performance.

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(4)During 2023, ~~and 2022,~~ we incurred debt extinguishment costs related to the prepayment of debt. ~~In 2023, these~~These costs are related to the prepayment of high-cost, floating-rate debt. We excluded these costs from Pro forma FFO because we believe they are not representative of future cash flows.

(5)During 2023, we incurred significant casualty losses related to fire damage at our Palazzo East at Park La Brea apartment community. During 2021, we incurred significant casualty losses due to Hurricane Ida-induced flooding in downtown Philadelphia causing damage to our Park Towne Place apartment community, whose clean-up costs extended into 2022. During the third quarter of 2023, we recorded a net gain upon receipt of third-party funds, upon closing the 2021 Park Towne Place claim. AIR excludes individually significant casualty losses from the computation of Pro forma FFO when the expected gains or losses are atypical and costs are greater than $1 million. Individual casualty losses less than $1 million are included in Pro forma FFO. ~~In 2023, these "normal" casualty losses are~~

(6)During 2024, we entered into a Merger Agreement with Blackstone which is expected to ~~exceed historical averages and AIR's expectation entering the year by $1.7 million. AIR has excluded casualty losses that exceeded our beginning of year expectations~~close in the ~~determination~~third quarter of ~~Run-Rate FFO.~~

~~Please see~~2024. In connection with the ~~Results of Operations section for discussion of the factors affecting our~~Merger Agreement, we incurred one-time transactions costs which have been excluded from Pro forma FFO ~~for 2023.~~because we believe they are not representative of ongoing operating performance.

Leverage Ratios

We target Net Leverage to Adjusted EBITDAre of ~6.0x, which equates to approximately 36% on a loan-to-value basis, an amount considered low within the multifamily sector where participants typically consider borrowing levels of between ~~5.0x~~40% and ~~6.0x.~~65%. We anticipate the Net Leverage to Adjusted EBITDAre ratio will vary based on the timing of transactions. We also focus on Proportionate Debt to Adjusted EBITDAre. 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 balance sheets of companies within the same industry, and they are believed to be similar to measures used by rating agencies to assess entity credit quality.

Our leverage ratios for the three months ended ~~September 30, 2023,~~March 31, 2024, are presented below:


			Annualized Current Quarter
Proportionate Debt to Adjusted EBITDAre			~~6.2x~~6.8x
Net Leverage to Adjusted EBITDAre			~~6.3x~~6.9x

Proportionate Debt, as used in our leverage ratios, is a non-GAAP measure and includes our share of the long-term, non-recourse property debt, outstanding borrowings under our revolving credit facility, term loans, and unsecured notes. Proportionate Debt excludes unamortized debt issuance costs because these amounts represent cash expended in earlier periods and do not reduce our contractual obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand, excluding ~~tenant~~resident security deposits included in restricted cash, assuming the remaining amounts of cash and restricted cash would be used to reduce our outstanding leverage.

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

Preferred equity represents the redemption amounts for AIR’s Preferred Stock and the AIR Operating Partnership’s Preferred Partnership Units and, although perpetual in nature, are another component of our overall leverage.

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The reconciliation of total indebtedness to Proportionate Debt and Preferred Equity, as used in our leverage ratios, is as follows (in thousands):


	~~September 30, 2023~~March 31, 2024
Total indebtedness	$	~~3,128,234~~3,349,049
Adjustments:
Debt issuance costs related to non-recourse property debt and term loans	~~17,292~~15,793

Proportionate share adjustments related to debt obligations	~~60,530~~63,518
Cash and restricted cash	~~(134,170)~~(114,737)
~~Tenant~~Resident security deposits included in restricted cash	11,548		~~11,890~~
Proportionate share adjustments related to cash and restricted cash	~~10,791~~6,410
Proportionate Debt	~~3,094,567~~$	3,331,581
Perpetual Preferred Stock	2,000
Preferred noncontrolling interests in AIR Operating Partnership	77,140
Net Leverage	$	~~3,173,707~~3,410,721

We calculated Adjusted EBITDAre used in our leverage ratios based on annualized current quarter amounts. EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and

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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 facilitate comparison of credit strength between AIR and other companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net ~~income~~loss as determined in accordance with GAAP as indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts. NAREIT defines EBITDAre as net income computed in accordance with GAAP, before interest expense, income taxes, and depreciation and amortization expense, which we have further adjusted for:

•gains and losses on dispositions of depreciated property;

•impairment write-downs of depreciated property; and

•adjustments to reflect our share of EBITDAre of investments in unconsolidated entities and consolidated entities with non-controlling interests.

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 for the effect of the following items for the reasons set forth below:

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

•the amount by which GAAP rent expense exceeds cash rent payments for two long-term ground leases until 2076 and 2079 is excluded. The excess of GAAP rent expense over the cash payments for these leases does not reflect a current obligation that affects our ability to service debt; and

•applicable Pro forma FFO adjustments to NAREIT FFO under the heading “NAREIT Funds From Operations, ~~and~~ Pro forma Funds From Operations, and Adjusted Funds From Operations,” excluding items that are not included in EBITDAre, to exclude certain amounts that are unique or occur infrequently.

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The reconciliation of net ~~income~~loss to EBITDAre and Adjusted EBITDAre, as used in our leverage ratios, is as follows (in thousands):


	Three Months Ended ~~September 30, 2023~~March 31, 2024
Net ~~income~~loss	$	~~710,512~~ (4,278)
Adjustments:
Interest expense	~~22,888~~35,282
Income tax expense	319		~~4,595~~
Depreciation and amortization	~~79,023~~79,754
~~Gain on dispositions of real estate~~	~~(692,861)~~


Net income attributable to noncontrolling interests in consolidated real estate partnerships	~~(2,525)~~(1,101)
EBITDAre adjustments attributable to noncontrolling interests and unconsolidated real estate partnerships	~~13,437~~11,135
EBITDAre	$	~~135,069~~121,111
Pro forma FFO and other adjustments, net (1)	~~177~~54
Quarterly Adjusted EBITDAre	$	~~135,246~~121,165
Adjusted EBITDAre, before ~~removal of~~ annualization impact for non-recurring items	$	~~540,984~~484,660
One-time adjustments to annualized EBITDA (2)	~~Removal of annualization impact for non-recurring items (2)~~8,298		~~(38,313)~~
Adjusted EBITDAre	$	~~502,671~~492,958

(1)Includes pro forma adjustments to NAREIT FFO under the heading, ~~NAREIT~~“NAREIT Funds From Operations, Pro forma Funds From Operations, and ~~Pro forma~~Adjusted Funds From ~~Operations,~~Operations”, excluding items that are not included in EBITDAre such as prepayment penalties, net. EBITDAre has also been adjusted by ~~$0.9 million to reflect the disposition of two properties and the Core Joint Venture, as if the transactions closed on July 1, 2023, and an adjustment of $11.5~~$8.2 million non-cash gain on derivative ~~instruments.~~instruments and $0.3 million to reflect the acquisition of one property as if the transaction closed on January 1, 2024.

(2)~~Third~~First quarter ~~2023~~2024 EBITDAre ~~benefits from $12.8~~includes $2.4 million of ~~items~~expenses, net, that are not expected to recur in the future. As such, ~~they were not~~their annualized inimpact has been added to the computation of Adjusted EBITDAre.

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Liquidity and Capital Resources

Liquidity

Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flows from operations. Additional sources are proceeds from dispositions of apartment communities, proceeds from refinancing existing property debt, borrowings under new property debt, borrowings under our credit facilities, and proceeds from equity offerings. As of ~~September 30, 2023,~~March 31, 2024, our available liquidity was ~~$2.1~~approximately $1.7 billion, which consisted of:

•$~~95.7~~80.6 million of our share of cash and cash equivalents;

•$~~15.8~~16.2 million of our share of restricted cash, excluding amounts related to tenant security deposits, which consists primarily of escrows held by lenders for capital additions, property taxes, and insurance; and

•$~~970.0 million~~1.6 billion of available capacity to borrow under our revolving credit facility after consideration of letters of ~~credit;~~credit and

•~~$1.0 billion of~~ committed property level financing through our secured credit facility with Fannie Mae.

Additional liquidity may also be provided through future secured and unsecured financings. As a result of the announced Merger with Blackstone, AIR is generally prohibited from creating, incurring, assuming, replacing, prepaying, or guaranteeing any indebtedness for borrowed money or issuing or materially amending the terms of any indebtedness.

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

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communities, and cash generated from operations. Additionally, we expect to meet our liquidity requirements associated with our debt maturities.

There have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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. 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 debt.

If financing options become unavailable for our future debt needs, we may consider alternative sources of liquidity, such as reductions in capital spending, issuance of equity securities (including OP Units), or proceeds from the sale of apartment ~~community dispositions.~~communities.

The combination of secured and unsecured debt, preferred OP Units, 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 was ~~6.9~~6.1 years as of ~~September 30, 2023,~~March 31, 2024, inclusive of extension options, with a weighted-average interest rate of ~~4.3%~~4.4%. We have sufficient committed credit to repay all debt coming due through the first quarter of 2027.

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no greater than 0.60 to 1.00, and a minimum unsecured interest coverage ratio no less than 1.50 to 1.00. We believe we were in compliance with these covenants as of ~~September 30, 2023~~March 31, 2024 and expect to remain in compliance during the next 12 months.

Changes in Cash, Cash Equivalents, and Restricted Cash

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

Operating Activities

For the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, net cash provided by operating activities was ~~$301.7~~$76.9 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities, and changes in working capital items. Cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, decreased by ~~$49.7~~$12.0 million compared to the same period in ~~2022,~~2023, due primarily to ~~lower net operating income associated with sold~~the contribution of apartment communities to two unconsolidated joint ventures subsequent to the first quarter of 2023; the Core JV and the Value-Add JV, offset partially ~~offset~~ by ~~increased~~a net increase in NOI contribution from ~~properties recently acquired.~~properties.

Investing Activities

For the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, our net cash used in investing activities ~~of $270.0~~was $113.4 million and $191.3 million, respectively, and consisted primarily of purchases of real estate and capital expenditures, offset partially by proceeds from dispositions of real estate and distributions from unconsolidated real estate partnerships. Net cash provided by investing activities of $252.9 million for the same period in 2022 consisted primarily of proceeds from dispositions of real estate and proceeds from the partial repayment of the notes receivable from Aimco, which was repaid in the second and third quarters of 2022, offset partially by purchases of real estate and capital expenditures.

Capital additions totaled ~~$128.4~~$27 million and ~~$111.2~~$33 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.

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

•capital replacements, expenditures that are necessary to help preserve the value of and maintain ~~functionality~~building infrastructure at the communities;

•capital enhancements, which may include kitchen and bath remodeling, energy conservation projects, and investments in more durable, longer-lived materials designed to position assets for higher rental levels in their respective markets;

•initial capital expenditures, which represent capital additions contemplated in the underwriting at our recently acquired communities. These amounts are considered in the underwriting of the acquisition and are therefore included with the purchase price when determining expected returns;

•casualty, which represents capitalized costs incurred in connection with the restoration of an apartment community after a casualty event; and

•other, which represents capitalized costs in connection with tenant improvements, entitlement, and planning.

We exclude the amounts of capital spending related to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures in order to view the spend for the continuing portfolio.

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


		Nine Months Ended
		September 30, 2023		September 30, 2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Capital Replacements	Capital Replacements	$	24,605	$	19,965
Capital Enhancements	Capital Enhancements	65,244		61,795
Initial Capital Expenditures	Initial Capital Expenditures	32,620		22,157
Casualty	Casualty	5,036		3,649
Other	Other	869		3,624
Total capital additions	Total capital additions	$	128,374	$	111,190
Plus: additions related to apartment communities sold and held for sale	Plus: additions related to apartment communities sold and held for sale	12,674		37,962
Consolidated capital additions	Consolidated capital additions	$	141,048	$	149,152
Plus: net change in accrued capital spending	Plus: net change in accrued capital spending	(193)		1,963
Total capital expenditures per condensed consolidated statements of cash flows	Total capital expenditures per condensed consolidated statements of cash flows	$	140,855	$	151,115

For the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ we capitalized ~~$1.0~~$— million and ~~$1.1~~$0.4 million of interest costs, respectively, and ~~$12.7~~$3.6 million and ~~$12.6~~$4.0 million of indirect costs, respectively.

Financing Activities

Net cash ~~used in~~provided by financing activities of ~~$199.0~~$33.7 million for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 consisted primarily of net ~~repayments~~borrowings on our revolving credit facility, ~~the repayment of term loans, payment of dividends, and repurchases of Common Stock and OP Units,~~ offset partially by ~~net proceeds from non-recourse property debt.~~the payment of dividends. Net cash used in financing activities of ~~$582.5~~$84.0 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 consisted primarily of net repayments of ~~non-recourse debt~~our revolving credit facility and ~~term loans,~~the payment of dividends, ~~and distributions, and repurchases of Common Stock and OP Units,~~partially offset ~~partially~~ by net proceeds from ~~the issuance of unsecured notes payable.~~non-recourse property debt.

Future Capital Needs

We expect to fund any future acquisitions, debt maturities, and other capital spending principally with proceeds from apartment community sales (including the formation of joint ventures), secured and unsecured borrowings, the issuance of equity securities (including OP Units), and operating cash flows. We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for ~~2023~~2024 and beyond.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our ~~chief~~primary market risks are refunding risk, that is the availability of property debt ~~corporate debt,~~ or other cash sources to refund maturing property debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. During 2023, we refinanced a portion of our corporate debt with fixed rate property debt and we extended our debt maturities, with no debt maturities until the second quarter of 2025. We use short-term debt financing and working capital primarily to fund short-term uses and generally expect to refinance such borrowings with cash from operating activities, proceeds from apartment community sales, long-term debt, or equity financings. Our objective in managing these risks is to reduce fluctuations in earnings and cash flows associated with changes in interest rate movements. We use derivative financial instruments, principally interest rate swaps and treasury rate locks, to reduce our exposure to interest rate risk. We do not hold or issue derivatives for speculative purposes and closely monitor the credit quality of the institutions with which we transact.

As of ~~September 30, 2023,~~March 31, 2024, on a consolidated basis, we had $475.0 million of outstanding borrowings on our term loans, and ~~$25.8~~$260.0 million of variable-rate borrowings under our revolving credit facility. After consideration of our interest rate swap derivatives, which ~~reduce~~reduces our total variable rate exposure by ~~$350~~$675 million, we estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease interest expense by ~~$1.5~~$0.6 million, net, on an annual basis.

As of ~~September 30, 2023,~~March 31, 2024, we had ~~$134.2~~$114.7 million of cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may partially mitigate the effect of an increase in variable rates on our variable-rate debt discussed above.

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As of ~~September 30, 2023,~~March 31, 2024, we had ~~one~~two undesignated forward starting interest rate ~~swap~~swaps with a notional value of ~~$50.0~~$93.7 million that was entered into in anticipation of future debt. We estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease interest expense by ~~$0.5~~$0.9 million, net, on an annual basis.

We estimate the fair value of debt instruments as described in Note 9 8 to the condensed consolidated financial statements in Item 1. The estimated fair value of total indebtedness, including our non-recourse property debt, term loans, revolving credit facility, and unsecured notes payable, was approximately ~~$2.8~~$3.1 billion as of ~~September 30, 2023.~~March 31, 2024.

ITEM 4. CONTROLS AND PROCEDURES

AIR

Disclosure Controls and Procedures

AIR’s management, with the participation of AIR’s chief executive officer and chief financial officer, has evaluated the effectiveness of AIR’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, AIR’s chief executive officer and chief financial officer have concluded that, as of the end of such period, AIR’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

~~There~~During the three months ended March 31, 2024, the Company implemented a new financial and accounting system that improves the efficiency and effectiveness of the Company’s operational and financial accounting processes. As with any new system the Company implements, the design of the internal controls has been evaluated for effectiveness. Other than these new controls, there has been no change in AIR’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~third~~first quarter of ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, AIR’s internal control over financial reporting.

The AIR Operating Partnership

Disclosure Controls and Procedures

The AIR Operating Partnership’s management, with the participation of the chief executive officer and chief financial officer of AIR, who are the equivalent of the AIR Operating Partnership’s chief executive officer and chief financial officer, respectively, has evaluated the effectiveness of the AIR Operating Partnership’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, the chief executive officer and chief financial officer of AIR have concluded that, as of the end of such period, the AIR Operating Partnership’s disclosure controls and procedures are effective.

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Changes in Internal Control Over Financial Reporting

~~There~~During the three months ended March 31, 2024, the Company implemented a new financial and accounting system that improves the efficiency and effectiveness of the Company’s operational and financial accounting processes. As with any new system the Company implements, the design of the internal controls has been evaluated for effectiveness. Other than these new controls, there has been no change in the AIR Operating Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~third~~first quarter of ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, the AIR Operating Partnership’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

AsExcept as set forth below, as of the date of this report, there have been no material changes from the risk factors in AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

The Merger may not be completed on the terms or timeline currently contemplated or at all

The completion of the Merger is subject to certain conditions, including (i) approval by our common stockholders; (ii) receipt by Parent (as defined in the Merger Agreement) of an opinion to the effect that, commencing with our initial taxable year ended December 31, 2020 through our hypothetical short taxable year ended on the closing date immediately prior to the closing, we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Code (without regard to the effects of the closing, any action (or inaction) taken after the closing, or the distribution requirements of Section 857(b) of the Code for the hypothetical short taxable year) and (iii) other closing conditions set forth in the Merger Agreement. While it is currently anticipated that the Merger will be completed in the third quarter of 2024, there can be no assurance that such conditions will be satisfied in a timely manner or at all, or that an effect, change, development, circumstance, occurrence or event will not transpire that could delay or prevent these conditions from being satisfied.

If the Merger is completed, our stockholders will forgo the opportunity to benefit from potential future appreciation in the value of the Company.

The Merger Agreement provides for the holders of record of our outstanding Class A common stock (other than holders of the Cancelled Shares) to receive cash consideration of $39.12 per share, without interest, upon closing of the Merger. If the Merger is consummated, stockholders will no longer hold interests in the Company and, therefore, will not be entitled to benefit from any potential future appreciation in the value of the Company. In the absence of the Merger, the Company could have various opportunities to enhance its value, including, but not limited to, entering into a transaction that values the shares of common stock higher than the value provided for in the Merger Agreement. Therefore, if the Merger is completed, stockholders will forgo future appreciation, if any, in the value of the Company and the opportunity to participate in any other potential transactions that may have resulted in a higher price per share than the price to be paid in the Merger.

If the Merger is not consummated by 5:00 p.m. (Eastern Time) on October 7, 2024 (or, if extended, by 5:00 p.m. (Eastern Time) on January 7, 2025), or in certain other circumstances, either of us or Parent may terminate the Merger Agreement.

We or Parent may terminate the Merger Agreement if the Merger has not been consummated by 5:00 p.m. (Eastern Time) on October 7, 2024, except that such date may be extended at the option of Parent or us, by written notice to the other party, to 5:00 p.m. (Eastern Time) on January 7, 2025, if a governmental order restraining, enjoining, rendering illegal or prohibiting consummation of the Merger (which has arisen as a result of a proceeding initiated by a governmental authority) remains in effect. Subject to the terms and conditions of the Merger Agreement, we or Parent also may terminate the Merger Agreement (i) by mutual written consent; (ii) if there is a final and non-appealable law or governmental order permanently restraining, enjoining, or otherwise prohibiting consummation of the Merger; (iii) if our common stockholders fail to approve the Merger; (iv) if the other party has breached its representations or covenants in a way that would prevent satisfaction of certain closing conditions; (v) with respect to us, and in accordance with the Merger Agreement, in order to enter into certain superior proposals made by third parties; or (vi) with respect to Parent, if (A) prior to receipt of the required company stockholder approval, our Board of Directors has made a change in its recommendation to our stockholders in accordance with the Merger Agreement that the stockholders vote in favor of the Merger, (B) our Board of Directors has failed to publicly recommend against any tender offer or exchange offer within 10 business days after the commencement of such tender offer or exchange offer, (C) prior to receipt of the required company stockholder approval, our Board of Directors failed to publicly reaffirm its recommendation to our stockholders that they vote in favor of the Merger within 10 business days after an acquisition proposal by a third party has been publicly announced, or (D) we or one of our subsidiaries enters into an alternative acquisition agreement.

The Merger may not be completed, which may adversely affect our business and could negatively affect our stock price.

If the Merger is not completed for any reason, the trading price of our common stock may decline to the extent that the market price of our common stock reflects positive market assumptions that the Merger will be completed and the related benefits will be realized. We may also be subject to additional risks if the Merger is not completed, including:

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a.the requirement in the Merger Agreement that upon a termination of the Merger Agreement, under certain circumstances, we will be required to pay Parent a termination fee of $183 million, except that the termination fee will be $92 million if (1) a third party submits a Qualified Proposal (as defined in the Merger Agreement) no later than 11:59 p.m. (Eastern time) on May 12, 2024 and which our Board of Directors determines, no later than May 12, 2024, after consultation with its outside legal counsel and financial advisor, constitutes or could reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement) and (2) we terminate the Merger Agreement in order to enter into a definitive agreement with such third party providing for the implementation of a Superior Proposal on or prior to May 27, 2024;

b.incurring substantial costs related to the Merger, such as legal, accounting, financial advisory, and integration costs that have already been incurred or will continue to be incurred until closing or until the Merger is not completed;

c.reputational harm including relationships with business partners due to the adverse perception of any failure to successfully complete the Merger; and

d.potential disruption to our business and distraction of our workforce and management team to pursue other opportunities that could be beneficial to the Company, in each case without realizing any of the benefits of having the Merger completed.

The pendency of the Merger could adversely affect our business and operations, including with business partners, and may result in the departure of key personnel. In connection with the Merger, some of our business partners may delay or defer decisions or may end their relationships with us, which could negatively affect our revenues, earnings, and cash flows, regardless of whether the Merger is completed. In addition, due to operating restrictions in the Merger Agreement, the Company may be unable, during the pendency of the Merger to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions, and otherwise pursue other actions.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of the Company or could result in a competing acquisition proposal being at a lower price than it might otherwise be.

The Merger Agreement contains provisions that, subject to limited exceptions, restrict the Company’s ability to solicit or negotiate any alternative acquisition proposal. With respect to any written, bona fide acquisition proposal that we receive, Parent generally has an opportunity to offer to modify the terms of the Merger Agreement in response to such proposal before our Board of Directors may withdraw or modify its recommendation to stockholders in response to such acquisition proposal or terminate the Merger Agreement to enter into a definitive agreement with respect to such acquisition proposal. Upon termination of the Merger Agreement under certain circumstances relating to an acquisition proposal, the Company may be required to pay to Parent a termination fee of $183 million, except that the termination fee will be $92 million if (1) a third party submits a Qualified Proposal no later than 11:59 p.m. (New York City time) on May 12, 2024 and which our Board of Directors determines, no later than May 12, 2024, after consultation with our outside legal counsel and financial advisor, constitutes or could reasonably be expected to lead to a Superior Proposal and (2) we terminate the Merger Agreement in order to enter into a definitive agreement with such third party providing for the implementation of a Superior Proposal on or prior to May 27, 2024.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of our business from considering or making a competing acquisition proposal, even if the potential competing acquirer was prepared to pay consideration with a higher per share cash value than the market value proposed to be received or realized in the Merger, or might cause a potential competing acquirer to propose to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee and expense reimbursement that may become payable in certain circumstances under the Merger Agreement.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ~~AND ISSUER PURCHASES OF EQUITY SECURITIES~~

AIR

Unregistered Sales of Equity Securities

From time to time, we may issue shares of Common Stock in exchange for OP Units. Such shares are issued based on an exchange ratio of one share for each common OP Unit. We may also issue shares of Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended ~~September 30, 2023,~~March 31, 2024, we

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did not issue any shares of Common Stock in exchange for OP Units or limited partnership interests in consolidated real estate partnerships.

Repurchases of Equity Securities

AIR’s Board of Directors has authorized a share repurchase program of its outstanding ~~capital~~Class A common stock for $500 million. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions. There were no share repurchases during the three months ended March 31, 2024. As of ~~September 30, 2023,~~March 31, 2024, there was ~~$105.5~~$500 million remaining available for future share repurchases under this authorization.

Fiscal period Total
Number of
Shares
Repurchased Average
Price Paid
per Unit Total Number of
Shares Repurchased as Part
of Publicly Announced
Plans or Programs Maximum Dollar Value
of Shares that May Yet
Be Repurchased Under
Plans or Programs
(in thousands) (1)
July 1 – July 31, 2023 — $ — — $ 183,290
August 1 – August 31, 2023 2,249,800 $ 34.57 2,249,800 $ 105,507
September 1 – September 30, 2023 — $ — — $ 105,507
Total 2,249,800 $ 34.57 2,249,800
Under the terms of the Merger Agreement, the Company is prohibited from repurchasing any shares of its outstanding Class A common stock without Blackstone’s consent. The Company does not expect to complete any additional repurchases during the term of the Merger Agreement.

The AIR Operating Partnership

Unregistered Sales of Equity Securities

The AIR Operating Partnership did not issue nor repurchase any unregistered OP Units during the three months ended ~~September 30, 2023.~~March 31, 2024.

Repurchases of Equity Securities

The AIR Operating Partnership’s Partnership Agreement generally provides that after holding common OP Units for one year, limited partners other than AIR have the right to redeem their common OP Units for cash or, at our election, shares of AIR Common Stock on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended ~~September 30, 2023,~~March 31, 2024, no common OP Units were redeemed in exchange for Common Stock.

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The following table summarizes the AIR Operating Partnership’s repurchases or redemptions of common OP Units in exchange for cash during the three months ended ~~September 30, 2023:~~March 31, 2024:

Fiscal period Total
Number of
Units
Repurchased Average
Price Paid
per Unit Total Number of
Units Repurchased as Part
of Publicly Announced
Plans or Programs Maximum Number
of Units that May Yet
Be Repurchased Under
Plans or Programs (1)
July 1 – July 31, 2023 12,505 $ 35.52 N/A N/A
August 1 – August 31, 2023 26,289 $ 34.99 N/A N/A
September 1 – September 30, 2023 11,926 $ 33.77 N/A N/A
Total 50,720 $ 34.83


Fiscal period	Total Number of Units Repurchased	Average Price Paid per Unit		Total Number of Units Repurchased as Part of Publicly Announced Plans or Programs	Maximum Number of Units that May Yet Be Repurchased Under Plans or Programs (1)
January 1 – January 31, 2024	27,985	$	33.69	N/A	N/A
February 1 – February 29, 2024	76,848	$	33.60	N/A	N/A
March 1 – March 31, 2024	3,447	$	30.98	N/A	N/A
Total	108,280	$	33.54

(1)The terms of the AIR Operating Partnership’s Partnership Agreement do not provide for a maximum number of OP Units that may be repurchased, and other than the express terms of its Partnership Agreement, the AIR Operating Partnership has no publicly announced plans or programs of repurchase.

Dividend and Distribution Payments

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

In connection with the pending Blackstone transaction described above, payment of additional quarterly dividends has been suspended, effective immediately, other than for the purpose of meeting REIT status, and any such dividends would result in an offsetting decrease to the Common Stock Merger Consideration. Subject to and upon consummation of the Merger, the Company’s Class A common stock will no longer be listed on the New York Stock Exchange.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

The following exhibits are filed with this report:


EXHIBIT NO.						DESCRIPTION

2.1						Agreement and Plan of Merger, dated as of April 7, 2024, by and among Apartment Income REIT Corp., Apex Purchaser LLC, Aries Purchaser LLC, Astro Purchaser LLC and Astro Merger Sub Inc.* (Exhibit 2.1 to AIR’s Current Report on Form 8-K dated April 8, 2024, is incorporated herein by this reference)

3.1						Amended and Restated Charter of Apartment Income REIT Corp.* (Exhibit 3.1 to AIR’s Current Report on Form 8-K dated September 22, 2023, is incorporated herein by this reference)

3.2						Certificate of Correction to the Articles of Amendment and Restatement of Apartment Income REIT Corp., dated April 11, 2024* (Exhibit 3.1 to AIR’s Current Report on Form 8-K, dated April 12, 2024, is incorporated herein by this reference)

3.3						Amended and Restated Bylaws of Apartment Income REIT Corp.* (Exhibit 3.1 to AIR’s Current Report on Form 8-K dated May 22, 2023, is incorporated herein by this reference)

3.4						First Amendment to the Amended and Restated Bylaws of Apartment Income REIT Corp., dated April 7, 2024* (Exhibit 3.1 to AIR’s Current Report on Form 8-K, dated April 8, 2024, is incorporated herein by this reference)

10.1						Seventh Amended and Restated Partnership Agreement of Apartment Income REIT, L.P. (Exhibit 10.1 to AIR’s Quarterly Report on Form 10-Q dated May 4, 2022, 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 – Apartment Income REIT Corp.

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 – Apartment Income REIT Corp.

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 AIR 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 AIR 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 – Apartment Income REIT Corp.

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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 AIR Operating Partnership

101						The following materials from AIR’s and the AIR Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2023,~~March 31, 2024, 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;~~loss; (iv) condensed consolidated statements of equity and partners’ capital; (v) condensed consolidated statements of cash flows; and (vi) notes to condensed consolidated financial statements.

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

* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule or exhibit, or any section thereof, upon request by the SEC.

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SIGNATURES

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


	APARTMENT INCOME REIT CORP.

	By:	/s/ Molly H.N. Syke
		Molly H.N. Syke
		Vice President and Chief Accounting Officer



	APARTMENT INCOME REIT, L.P.

	By:	AIR-GP, Inc., its General Partner

	By:	/s/ Molly H.N. Syke
		Molly H.N. Syke
		Vice President and Chief Accounting Officer

Date: ~~November 3, 2023~~May 8, 2024

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	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Number of apartment communities	2		3
Number of apartment homes	620		1,115

Purchase price	$	154,500	$	452,500
Capitalized transaction costs	1,270		6,739
Total consideration (1)	$	155,770	$	459,239

Land	$	19,226	$	118,564
Building and improvements	130,937		318,364
Intangible assets (2)	5,768		17,845
Mark-to-market on debt assumed	—		7,370
Below-market lease liabilities (2)	(161)		(2,904)
Total consideration (1)	$	155,770	$	459,239


	September 30, 2023 (1)	December 31, 2022
VIEs with interests in apartment communities	3	5
Apartment communities owned by VIEs	14	16
Apartment homes in communities owned by VIEs	4,866	5,369


	Nine Months Ended September 30,				Historical Change
(dollars in thousands)	2023		2022		$		%
Rental and other property revenues, before utility reimbursements:
Same Store	$	445,881	$	411,052	$	34,829	8.5	%
Other Real Estate	86,104		16,437		69,667		nm
Total	531,985		427,489		104,496		24.4	%
Property operating expenses, net of utility reimbursements:
Same Store	117,014		111,316		5,698		5.1	%
Other Real Estate	28,010		5,799		22,211		nm
Total	145,024		117,115		27,909		23.8	%
Proportionate property net operating income:
Same Store	328,867		299,736		29,131		9.7	%
Other Real Estate	58,094		10,638		47,456		nm
Total	$	386,961	$	310,374	$	76,587	24.7	%


Fiscal period	Total Number of Shares Repurchased	Average Price Paid per Unit		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Repurchased Under Plans or Programs (in thousands) (1)
July 1 – July 31, 2023	—	$	—	—	$	183,290
August 1 – August 31, 2023	2,249,800	$	34.57	2,249,800	$	105,507
September 1 – September 30, 2023	—	$	—	—	$	105,507
Total	2,249,800	$	34.57	2,249,800

Balance at January 1, ~~2023~~2024

~~77,143~~77,140

Preferred distributions

~~(4,710)~~(1,570)

~~Redemption of preferred units and other~~

Net income allocated to preferred units

~~4,710~~1,570

Balance at ~~September 30, 2023~~March 31, 2024