On May 6, 2022, Apartment Income REIT Corp., a Maryland corporation (the “Company”), and its operating partnership, Apartment Income REIT, L.P., a Delaware limited partnership (“AIR OP”), entered into equity distribution agreements (the “Sales Agreements”) with each of Citigroup Global Markets Inc., BofA Securities, Inc., Evercore Group L.L.C, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Regions Securities LLC, Scotia Capital (USA) Inc., TD Securities (USA) LLC and Wells Fargo Securities, LLC (or certain of their respective affiliates) in their capacity as Agents, as Forward Sellers and/or as Forward Purchasers, in each case as described below, relating to (i) the issuance and sale by the Company to or through the Agents, from time to time, of shares (the “Issuance Shares”) of the Company’s Class A common stock, par value $0.01 per share (“Common Stock”), and (ii) the sale by the Forward Sellers, as agents on behalf of the Forward Purchasers, of Common Stock (the “Forward Shares” and, together with the Issuance Shares, the “Securities”), with the Securities to be sold under the Sales Agreements not to exceed an aggregate gross sales price of $500,000,000 (the “ATM Program”). We refer to these entities, when acting in their capacity as principals or sales agents for the Company, individually as a “Agent” and collectively as the “Agents,” when acting in their capacity as counterparties to forward sale agreements, individually as a “Forward Purchaser” and collectively as the “Forward Purchasers,” and when acting in their capacity as agents for the Forward Purchasers, individually as a “Forward Seller” and collectively as the “Forward Sellers.”
The Sales Agreements contemplate that, in addition to the issuance and sale of Common Stock by the Company to or through the Agents, acting as principals or sales agents, the Company may also enter into one or more forward sale transactions under separate master forward confirmations (the “Master Forward Confirmations”) and related supplemental confirmations with each of the Forward Purchasers. In connection with each such forward sale transaction, we expect that the relevant Forward Purchaser or one of its affiliates will use commercially reasonable efforts to attempt to borrow from third parties and, through the relevant Forward Seller, sell a number of Forward Shares equal to the number of shares of Common Stock underlying such forward sale transaction in order to hedge such Forward Purchaser’s exposure under such forward sale transaction.
The sales, if any, of the Issuance Shares will be made through the Sales Agents acting as sales agents for the Company or directly to the Agents acting as principals. If the Company sells Issuance Shares to any Agent as principal, it will enter into a separate terms agreement with such Agent. The sales, if any, of the Forward Shares will be made through the Forward Sellers, acting as agents for the applicable Forward Purchasers. The sales, if any, of the Securities will be made by any method permitted by law deemed to be an “at the market” offering, as defined in Rule 415 under the Securities Act of 1933, including sales made directly on the New York Stock Exchange, on any other existing trading market for the Common Stock or to or through a market maker, or by any other method permitted by law, including but not limited to, privately negotiated transactions, which may include block trades. Actual sales will depend on a variety of factors to be determined by the Company from time to time. The Company has no obligation to sell any of the Securities under the Sales Agreements, and may at any time, subject to certain conditions and notice requirements, suspend sales under the Sales Agreements.
The Sales Agreements provide that each Sales Agent will be entitled to compensation of up to 2.0% of the gross sales price per share of all Issuance Shares sold through it as sales agent. The Sales Agreements also provide that each Forward Seller will be entitled to commissions at a mutually agreed rate of up to 2.0% of the volume-weighted average of the sales prices per share of the borrowed shares of the Common Stock sold through such Forward Seller during the applicable forward hedge selling period for such Forward Shares (subject to certain adjustments), which commissions will be in the form of a reduced initial forward sale price under the related forward sale transaction.
The foregoing description of the Sales Agreements is a summary and is qualified in its entirety by reference to the form of Sales Agreement, which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Master Forward Confirmations and related supplemental confirmations is qualified in its entirety by reference to the form of Master Forward Confirmation, which is included as Exhibit D to Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
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