What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-09 compared with 2021-11-09 · 781 added, 500 removed, 314 unchanged (80% of the section changed)

FINANCIAL STATEMENTS

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

APARTMENT INVESTMENT A ND MANAGEMENT COMPANY

CONDENSED CONSOLIDA TED BALANCE SHEETS

(In thousands, except share data)

September 30,

March 31, 2022

December 31, 2021

Buildings and improvements

5 unchanged sentences

Mezzanine investment

Interest rate options

Right-of-use lease assets

9 unchanged sentences

Total liabilities

Redeemable noncontrolling interest in consolidated real estate partnership

Redeemable noncontrolling interests in consolidated real estate partnerships

Commitments and contingencies (Note 4)

Common Stock, $ 0.01 par value, 510,587,500 shares authorized,

149,803,000 and 149,036,263 shares issued/outstanding at

September 30, 2021 and December 31, 2020, respectively

Common Stock, $ 0.01 par value, 510,587,500 shares authorized at both March 31, 2022 and December 31, 2021, and 149,689,847 and 149,818,021 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

6 unchanged sentences

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Rental and other property revenues

6 unchanged sentences

Mezzanine investment income, net

Unrealized gains (losses) on interest rate options

Other income (expense), net

(Loss) income before income tax benefit

Unrealized gains on interest rate options

Other (expense) income, net

Income before income tax benefit

Income tax benefit

Net (loss) income

Noncontrolling interests:

Net (income) loss attributable to redeemable noncontrolling

interest in consolidated real estate partnership

Net (income) loss attributable to noncontrolling interests

interests in consolidated real estate partnerships

Net loss (income) attributable to noncontrolling interests

in consolidated real estate partnerships

Net (income) loss attributable to common noncontrolling

Net income attributable to common noncontrolling

interests in Aimco Operating Partnership

Net (loss) income attributable to Aimco

Net (loss) income attributable to Aimco per common share – basic (Note 6)

Net (loss) income attributable to Aimco per common share – diluted (Note 6)

Weighted average common shares outstanding – basic

Weighted average common shares outstanding – diluted

Net income attributable to Aimco

Net income attributable to Aimco per common share –

basic (Note 6)

Net income attributable to Aimco per common share –

diluted (Note 6)

Weighted average common shares outstanding –

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

APARTMENT INVESTMENT A ND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2021 and 2020

For the Three Months Ended March 31, 2022 and 2021

(In thousands)

1 unchanged sentence

Noncontrolling

Retained Earnings

Accumulated Deficit

Aimco Predecessor Equity

Balances at June 30, 2020

Net income attributable to Aimco Predecessor

Net loss attributable to noncontrolling interests in consolidated partnerships

Balances at December 31, 2020

Net income attributable to Aimco

Net income attributable to noncontrolling interests in consolidated real estate partnerships

Net income attributable to common noncontrolling interests in Aimco Operating Partnership

Contributions from Aimco Predecessor, net

Balances at September 30, 2020

Balances at June 30, 2021

Redemption of Aimco Operating Partnership units

Cash paid on redemption of Aimco Operating Partnership units

Redemption of OP Units

Share-based compensation expense

Distribution to noncontrolling interests in consolidated real estate partnerships

Contributions to noncontrolling interests in consolidated real estate partnerships

Net income attributable to noncontrolling interests in consolidated partnerships

Net loss attributable to common noncontrolling interests in Aimco Operating Partnership

Net loss attributable to Aimco

Balances at September 30, 2021

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, 2021 and 2020

(In thousands)

Noncontrolling

Accumulated Deficit

Aimco Predecessor Equity

Other Common Stock issuances

Balances at March 31, 2021

Balances at December 31, 2021

Net income attributable to Aimco Predecessor

Net income attributable to noncontrolling interests in consolidated partnerships

Net income attributable to Aimco

Net loss attributable to noncontrolling interests in consolidated real estate partnerships

Net income attributable to common noncontrolling interests in Aimco Operating Partnership

Contributions from Aimco Predecessor, net

Balances at September 30, 2020

Balances at December 31, 2020

Redemption of Aimco Operating Partnership units

Cash paid on redemption of Aimco Operating Partnership units

Issuance of common stock in connection with share-base arrangements

Redemption of OP Units

Share-based compensation expense

1 unchanged sentence

Contributions from noncontrolling interests in consolidated real estate partnerships

Net income attributable to noncontrolling interests in consolidated real estate

Net loss attributable to common noncontrolling interests in Aimco Operating Partnership

Net loss attributable to Aimco

Balances at September 30, 2021

Common stock repurchased

Other Common Stock issuances

Redemption of redeemable noncontrolling interests in consolidated real estate partnerships

Balances at March 31, 2022

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

Adjustments to reconcile net (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

Income from unconsolidated real estate partnerships

Unrealized (gains) losses on interest rate options

Unrealized gains on interest rate options

Income tax benefit

Mezzanine investment income, net

Share based compensation

Amortization of debt issuance costs and other

Mezzanine investment, net

Share based compensation

Changes in operating assets and operating liabilities:

Other assets, net

Accounts payable, accrued liabilities and other

Accrued liabilities and other

Total adjustments

Net cash provided by operating activities

2 unchanged sentences

Capital expenditures (1)

Investment in IQHQ

Other investing activities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-recourse property debt

Proceeds from construction loans

Proceeds from non-recourse debt

Payments of deferred loan costs

Principal repayments on non-recourse property debt

Principal payments on finance leases

Purchase of interest rate option

Change in Aimco Predecessor investment, net

Purchase of interest rate options

Payments on financing leases

Common stock repurchased

Contributions from noncontrolling interests in consolidated

real estate partnerships

Contributions from redeemable noncontrolling interests in consolidated

real estate partnerships

Redemption of redeemable noncontrolling interests in consolidated

real estate partnerships

Other financing activities

Net cash provided by 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 END OF PERIOD

Capital expenditures net of accrued capital costs of $ 17.7 million and $ 0.6 million for the nine months ended September 30, 2021 and 2020, respectively.

Includes the acquisition of additional IQHQ shares.

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

END OF PERIOD

(1) Capital expenditures net of accrued capital costs of $ 40.4 million and $ 16.1 million for the three months ended March 31, 2022 and 2021 , respectively.

See notes to condensed consolidated financial statements.

AIMCO OP L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDA TED BALANCE SHEETS

(In thousands)

September 30,

March 31, 2022

December 31, 2021

Buildings and improvements

5 unchanged sentences

Mezzanine investment

Interest rate options

Right-of-use lease assets

9 unchanged sentences

Total liabilities

Redeemable noncontrolling interest in consolidated real estate partnership

Redeemable noncontrolling interests in consolidated real estate partnerships

Commitments and contingencies (Note 4)

Partners’ capital:

Partners’

General Partner and Special Limited Partner

Limited Partners

Partners’ capital attributable to Aimco Operating Partnership

Partners’

capital attributable to Aimco Operating Partnership

Noncontrolling interests in consolidated real estate partnerships

Total partners’ capital

Total liabilities and partners’ capital

Total partners’

Total liabilities and partners’

See notes to condensed consolidated financial statements.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS

(In thousands, except per unit data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Rental and other property revenues

6 unchanged sentences

Mezzanine investment income, net

Unrealized gains (losses) on interest rate options

Other income (expense), net

(Loss) Income before income tax benefit

Unrealized gains on interest rate options

Other expense, net

Income before income tax benefit

Income tax benefit

Net (loss) income

Net (income) loss attributable to redeemable noncontrolling

interest in consolidated real estate partnership

Net (income) loss attributable to noncontrolling interests in

consolidated real estate partnerships

Net (loss) income attributable to the Aimco Operating

Partnership per common unit – basic (Note 6)

Net (loss) income attributable to the Aimco Operating

Partnership per common unit – diluted (Note 6)

Weighted-average common units outstanding – basic

Weighted-average common units outstanding – diluted

See notes to condensed consolidated financial statements.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended September 30, 2021 and 2020

(In thousands)

General Partner

Limited Partner

Limited Partners

Partners’ Capital

Attributable to

Noncontrolling

Aimco Predecessor Capital

Total Partners’

Balances at June 30, 2020

Net income attributable to Aimco Predecessor

Net loss attributable to noncontrolling interests in

consolidated real estate partnerships

Contributions from Aimco Predecessor, net

Balances at September 30, 2020

Balances at June 30, 2021

Redemption of Aimco Operating Partnership units

Cash paid on redemption of Aimco Operating Partnership units

Share-based compensation expense

Distribution to noncontrolling interests in consolidated

real estate partnerships

Contributions from noncontrolling interests in consolidated partnerships

Net income attributable to noncontrolling interests in

consolidated real estate partnerships

Net loss attributable to the Aimco Operating Partnership

Balances at September 30, 2021

interests in consolidated real estate partnerships

Net loss (income) attributable to noncontrolling interests

in consolidated real estate partnerships

Net income attributable to the Aimco Operating

Partnership per common unit –

basic (Note 6)

Net income attributable to the Aimco Operating

Partnership per common unit –

diluted (Note 6)

Weighted-average common units outstanding –

See notes to condensed consolidated financial statements.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Nine Months Ended September 30, 2021 and 2020

CONDENSED CONSOLIDATED STATE MENTS OF PARTNERS’

For the Three Months Ended March 31, 2022 and 2021

(In thousands)

1 unchanged sentence

Limited Partner

Limited Partners

Partners’ Capital

Partners’

Attributable to

Aimco Operating

Noncontrolling

Aimco Predecessor Capital

Total Partners’

in Consolidated Real

Estate Partnerships

Partners’

Balances at December 31, 2020

Net income attributable to Aimco Predecessor

Net income attributable to Aimco Operating Partnership

Net income attributable to noncontrolling interests in consolidated real estate partnerships

Contributions from Aimco Predecessor, net

Balances at September 30, 2020

Redemption of OP Units

Share-based compensation expense

Distribution to noncontrolling interests in consolidated real estate partnerships

Balances at March 31, 2021

Balances at December 31, 2021

Redemption of Aimco Operating Partnership units

Cash paid on redemption of Operating Partnership units

Issuance of common stock in connection with share-base arrangements

Net income attributable to Aimco Operating Partnership

Net loss attributable to noncontrolling interests in consolidated real estate partnerships

Redemption of OP Units

Share-based compensation expense

Distribution to noncontrolling interests in consolidated

real estate partnerships

Contributions from noncontrolling interests in consolidated partnerships

Net loss attributable to noncontrolling interests in

consolidated real estate partnerships

Net loss attributable to the Aimco Operating Partnership

Balances at September 30, 2021

Distribution to noncontrolling interests in consolidated real estate partnerships

Contributions from noncontrolling interests in consolidated real estate partnerships

Repurchases of OP Units held by Aimco

Other OP Unit issuances

Redemption of redeemable noncontrolling interests in consolidated real estate partnerships

Balances at March 31, 2022

See notes to condensed consolidated financial statements.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

Adjustments to reconcile net (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

Income from unconsolidated real estate partnerships

Unrealized (gains) losses on interest rate options

Unrealized gains on interest rate options

Income tax benefit

Mezzanine investment income, net

Share based compensation

Amortization of debt issuance costs and other

Mezzanine investment, net

Share based compensation

Changes in operating assets and operating liabilities:

Other assets, net

Accounts payable, accrued liabilities and other

Accrued liabilities and other

Total adjustments

Net cash provided by operating activities

2 unchanged sentences

Capital expenditures (1)

Investment in IQHQ

Other investing activities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-recourse property debt

Proceeds from construction loans

Proceeds from non-recourse debt

Payments of deferred loan costs

Principal repayments on non-recourse property debt

Principal payments on finance leases

Purchase of interest rate option

Change in Aimco Predecessor investment, net

Purchase of interest rate options

Payments on financing leases

Common stock repurchased

Contributions from noncontrolling interests in consolidated

real estate partnerships

Contributions from redeemable noncontrolling interests in consolidated

real estate partnerships

Redemption of redeemable noncontrolling interests in consolidated

real estate partnerships

Other financing activities

Net cash provided by 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 END OF PERIOD

Capital expenditures net of accrued capital costs of $ 17.7 million and $ 0.6 million for the nine months ended September 30, 2021 and 2020, respectively.

Includes the acquisition of additional IQHQ shares.

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

END OF PERIOD

(1) Capital expenditures net of accrued capital costs of $ 40.4 million and $1 6.1 million for the three months ended March 31, 2022 and 2021 , respectively.

See notes to condensed consolidated financial statements.

1 unchanged sentence

AIMCO OP L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

Note 1 — Organization

Apartment Investment and Management Company (“Aimco”), a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”).

NOTES TO CONDENSED CONSOLID ATED FINANCIAL STATEMENTS

March 31, 2022

Note 1 —

Apartment Investment and Management Company (“Aimco”), a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”).

Aimco, through a wholly owned subsidiary, is the general and special limited partner of Aimco OP L.P.

(“Aimco Operating Partnership”).

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

The Separation

On December 15, 2020, Aimco completed the separation of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp.

(“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”).

P rior to the Separation, the condensed consolidated financial statements were prepared on a carve-out basis and reflect significant assumptions and allocations.

The condensed consolidated financial statements reflect our historical consolidated financial position, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States (“GAAP”).

The historical financial statements of Aimco do not represent the financial position and results of operations of one legal entity, but r ather a combination of entities under common control that have been “carved out” from Aimco Predecessor’s financial statements.

All significant intercompany balances have been eliminated in consolidation.

All separation related transactions between Aimco and Aimco Predecessor are considered effectively settled through partners’ capital in our condensed consolidated financial statements, other than the notes payable to AIR as discussed in Note 3.

The settlement of these transactions is reflected as contributions from Aimco Predecessor, net in our condensed consolidated statements of equity and partners’ capital and as a net change in Aimco Predecessor investment in financing activity in our condensed consolidated statements of cash flows.

As of September 30, 2021, Aimco owned 93.1 % of the legal interest in the common partnership units of Aimco Operating Partnership and 95.0 % of the economic interest in Aimco Operating Partnership.

(“Aimco Operating Partnership”).

Except as the context otherwise requires, “we,”

“our,”

and “us”

refer to Aimco, Aimco Operating Partnership, and their consolidated subsidiaries, collectively.

On December 15, 2020, Aimco completed the separation of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp.

(“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”).

Events noted in this filing as occurring before December 15, 2020, were those entered into by Aimco Predecessor.

As of March 31, 2022, Aimco owned 92.6 % of the legal interest in the common partnership units of Aimco Operating Partnership and 95.0 % of the economic interest in Aimco Operating Partnership.

The remaining 7.4 % legal interest is owned by limited partners.

As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.

We own or lease a portfolio of real estate investments focused primarily on the U.S.

multifamily sector.

These real estate investments include a portfolio of 24 operating apartment communities with 6,067 apartment homes, diversified by both geography and price point, in 12 states;

one commercial office building owned as part of a land assemblage;

a recently acquired operating community with 58 townhomes;

three residential apartment communities, with 1,331 planned apartment homes, a single family rental community, with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, that we are actively developing or redeveloping;

These real estate investments include:

a portfolio of 29 operating apartment communities ( 25 consolidated properties with 6,125 apartment homes and four unconsolidated operating properties), diversified by both geography and price point, in ten major U.S.

one commercial office building that is part of a land assemblage;

three residential apartment communities, with 1,331 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, we are actively developing or redeveloping;

land parcels held for development;

and three residential apartment communities, with 499 apartment homes, for which we have completed the redevelopment and are in lease-up, but have not achieved stabilization.

In addition, we own an interest in four unconsolidated operating apartment communities.

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

and three residential apartment communities with 499 apartment homes for which we have completed the redevelopment, but have not achieved stabilization.

Our real estate portfolio also includes one land parcel held for sale and an unconsolidated investment in land held for development.

In addition, we hold other opportunistic and alternative investments, including our Mezzanine Investment (as defined and described in Note 2 below);

our IQHQ investment (as defined and described in Note 3 below);

and our investment in real estate technology funds.

Note 2 —

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

1 unchanged sentence

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, 2021 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 .

In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The condensed consolidated balance sheets of Aimco and Aimco Operating Partnership as of December 31, 2021 have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements.

For further information, refer to the financial statements and notes thereto included in Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2020.

Except where indicated, the footnotes refer to both Aimco and Aimco Operating Partnership.

Principles of Consolidation

Aimco’s accompanying condensed consolidated financial statements include the accounts of Aimco, Aimco Operating Partnership, and their consolidated subsidiaries.

Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of Aimco Operating Partnership and its consolidated subsidiaries.

The accompanying condensed consolidated financial statements include the accounts of Aimco, Aimco Operating Partnership, and their consolidated subsidiaries.

Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of Aimco Operating Partnership and its consolidated subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

We consolidate a variable interest entity (“VIE”) in which we are considered the primary beneficiary.

The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

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

Certain reclassifications have been made to prior period amounts to conform to the current period condensed consolidated financial statement presentation with no effect on the Company’s previously reported results of operations, financial position, or cash flows.

The 2020 condensed consolidated statements of operations include allocations of general and administrative expenses from Aimco Predecessor.

We consider the basis on which expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented.

However, the allocations may not include all of the actual expenses that we would have incurred and may not reflect our consolidated results of operations, financial position, and cash flows had it been a stand-alone company during the periods presented.

Actual costs that might have been incurred had we been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions we might have performed ourselves or outsourced, and strategic decisions we might have made in areas such as information technology and infrastructure.

Following the Separation, AIR, through its subsidiaries, provides Aimco with certain property management and other services, and we perform certain functions using our own resources or purchase services from third parties.

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.

Common Noncontrolling Interests in Aimco Operating Partnership

Common noncontrolling interests in Aimco Operating Partnership consist of common Aimco Operating Partnership Units (“OP Units”) and are reflected in Aimco’s accompanying condensed consolidated balance sheets as common noncontrolling interests in Aimco Operating Partnership.

Aimco Operating Partnership’s income or loss is allocated to the holders of common OP Units, other than Aimco, based on the weighted-average number of common OP Units (including Aimco) outstanding during the period.

For all periods presented, the holders of common OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of approximately 5.0 % .

Substantially all of the assets and liabilities of Aimco are held by Aimco Operating Partnership.

Redeemable Noncontrolling Interest in Consolidated Real Estate Partnership

Redeemable noncontrolling interest consists of equity interests held by a limited partner in a consolidated real estate partnership that has a finite life.

We generally attribute to noncontrolling interests their share of income or loss of consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity accounts.

Redeemable Noncontrolling Interests in Consolidated Real Estate Partnerships

Redeemable noncontrolling interests consists of equity interests held by a limited partner in a consolidated real estate partnership that has a finite life.

During the first quarter of 2022, we acquired all the outstanding redeemable noncontrolling interests in two consolidated properties for $ 5.1 million.

At the time of redemption, the carrying amount of the redeemable non-controlling interests was $ 4.9 million.

Prior to our acquisition during the first quarter of 2022, we attributed to noncontrolling interests their share of income or loss of consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses.

Redeemable noncontrolling interests in consolidated real estate partnerships as of March 31, 2022, consists of our institutional partner’s equity interest in our Upton Joint Venture, which provides our partner with an accruing 9.7 % rate of return on their investment.

If a consolidated real estate partnership includes redemption rights that are not within our control, the noncontrolling interest is included as temporary equity.

If the redemption right is not currently redeemable but probable of being redeemable in the future, changes in redemption value are recognized each quarter with the change in value being reflected in additional paid-in-capital.

The assets of our consolidated real estate partnerships must first be used to settle the liabilities of the consolidated real estate partnerships.

The consolidated real estate partnerships’ creditors do not have recourse to the general credit of Aimco Operating Partnership.

The following table presents a reconciliation of our redeemable noncontrolling interest in consolidated real estate partnership from December 31, 2020, to September 30, 2021 (in thousands):

The consolidated real estate partnerships’

creditors do not have recourse to the general credit of Aimco Operating Partnership.

The following table presents a reconciliation of our redeemable noncontrolling interests in consolidated real estate partnerships from December 31, 2021 to March 31, 2022 (in thousands):

Balance at December 31, 2021

Balance at September 30, 2021

Revenue from Leases

The majority of lease payments we receive from our residents and tenants are fixed.

We receive variable payments from our residents and commercial tenants primarily for utility reimbursements and other services.

For the three and nine months ended September 30, 2021 and 2020, our total lease income was comprised of the following amounts for all operating leases (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Fixed lease income

Variable lease income

Total lease income

Lessee Arrangements

We, as lessee, and AIR, as lessor, have entered into finance leases on five properties currently under construction or in lease-up.

Four leases commenced January 1, 2021 , two of which have rent escalations that start at the point the property reaches stabilization.

Three of the leases have a term of 25 years and one has a term of 10 years.

During the nine months ended September 30, 2021, we, as lessee, and AIR, as lessor, entered into a finance lease for a 15 -acre plot of land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and 8 accessory dwelling units in June 2021.

The lease commenced on June 1, 2021 and has a term of 25 years.

We have provided AIR with residual value guarantees aggregating to $ 250.8 million, which provide that if the residual value of the leased assets are less than the specified residual value guarantees at the earlier of lease expiration or termination, we are required to pay the difference.

See Note 3 for further details.

As of September 30, 2021, operating and financing right-of-use lease assets of $ 5.2 million and $ 434.0 million, respectively, are included in the condensed consolidated balance sheets.

For the three months and nine months ended September 30, 2021, amortization related to our finance leases was $ 2.1 million and $ 5.5 million, respectively, net of amounts capitalized.

For the three months and nine months ended September 30, 2021, interest expense related to our finance leases was $ 2.2 million and $ 6.1 million, respectively, net of amounts capitalized.

As of September 30, 2021, Aimco’s operating leases and finance leases have weighted-average remaining terms of 7.6 years, and 38.6 years, respectively, and weighted-average discount rates of 3.1 % and 5.4 %, respectively.

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

Sublease Income

Operating Lease Future Minimum Rent

Financing Leases Future Minimum Payments

Remainder of 2021

Total lease liabilities

For the three and nine months ended September 30, 2021 , we capitalized $ 5.8 million and $ 18.5 million of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets.

No lease costs were capitalized on leased assets for the three and nine months ended September 30, 2020.

Capital contributions

Balance at March 31, 2022

Mezzanine Investment

On November 26, 2019, Aimco made a five-year , $ 275.0 million mezzanine loan to Maximus PM Mezzanine A LLC, the partnership owning the “Parkmerced Apartments”, located in southwest San Francisco (the “Mezzanine Investment”).

The loan bears interest at a 10 % annual rate, accruing if not paid from property operations.

The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, a related equity option to acquire a 30 % interest in the partnership owning Parkmerced Apartments and the interest rate option, or swaption, that provides partial protection against future refinancing risk through 2024 to Aimco.

On November 26, 2019, Aimco Predecessor made a five-year , $ 275.0 million mezzanine loan to the partnership owning the “Parkmerced Apartments”

located in southwest San Francisco (the “Mezzanine Investment”).

The loan bears interest at a 10 %

annual rate, accruing if not paid from property operations.

Ownership of the subsidiaries that originated and hold the mezzanine loan was retained by AIR following the Separation.

At the time of the Separation and as of the date of this filing, legal title of these subsidiaries had not yet transferred to Aimco.

1 unchanged sentence

We have the risks and rewards of ownership of the Mezzanine Investment and have recognized an asset related to our right to receive the Mezzanine Investment from AIR.

We recognize as income the net amounts recognized by AIR on its equity investment that are due to be paid to us when collected, which primarily represent the interest accrued under the terms of the underlying mezzanine loan.

The loan is subject to certain risks, including, but not limited to, those resulting from the ongoing disruption due to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portion of the loan not being repaid.

We recognize as income the net amounts recognized by AIR on its equity investment that are due to be paid to us when collected to the extent the income is supported by the change in AIR's claim to the net assets of the underlying borrower.

The income recognized primarily represents the interest accrued under the terms of the underlying mezzanine loan.

The loan is subject to certain risks, including, but not limited to, those resulting from the lingering disruption due to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portion of the loan not being repaid.

In the event we determine that a portion of the Mezzanine Investment is not recoverable, we will recognize an impairment.

5 unchanged sentences

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT.

For the three and nine months ended September 30, 2021 , we had consolidated net losses subject to tax of $ 7.9 million and $ 26.4 million, respectively.

For the three and nine months ended September 30, 2020 , we had consolidated net losses subject to tax of $ 5.7 million and $ 14.5 million, respectively.

For the three months ended September 30, 2021, we recognized income tax benefit of $ 2.0 million compared to $ 2.7 million, during the same period ended 2020.

The change is due primarily to lower losses at our TRS entities.

For the nine months ended September 30, 2021, we recorded income tax benefit of $ 9.9 million, compared to $ 6.7 million during the same period ended 2020.

The change is due primarily to income tax benefit associated with internal restructuring, changes to our effective state rate expected to apply to the reversal of our existing deferred items, and higher losses at our TRS entities.

For the three months ended March 31, 2022 and 2021, we had consolidated net losses subject to tax of $ 14.8 million and $ 9.5 million, respectively.

For the three months ended March 31, 2022 , we recognized income tax benefit of $ 4.1 million, compared to $ 5.1 million during the same period ended 2021.

The change is primarily due to an income tax benefit in 2021 of $ 2.7 million associated with internal restructuring costs and changes to our effective state tax rate, partially offset by higher GAAP losses at our TRS entities in 2022 .

Use of Estimates

9 unchanged sentences

Other assets were comprised of the following amounts (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

Other investments

Notes receivable

Prepaid expenses and real estate taxes

Unconsolidated real estate partnerships

Deferred costs, deposits, and other

Interest rate options

Assets held for sale

Deferred tax assets

Corporate fixed assets

Unconsolidated real estate partnerships

Investment in IQHQ

Prepaid expenses and other

Intangible lease assets, net

Due from affiliates

Accounts receivable, net of allowances of $ 1,378 and $ 1,467 respectively

Accounts receivable, net of allowances of $ 1,269 and $ 1,285 as of March 31, 2022 and December 31, 2021, respectively

Intangible assets, net

Total other assets, net

Note 3 —Significant Transactions

Transactions with AIR

In conjunction with the Separation, we entered into various separation and transition services agreements with AIR that provide for a framework of our relationship with AIR after the Separation, including:

(i) a separation agreement setting forth the mechanics of the Separation, the key provisions relating to the separation of our assets and liabilities from those of AIR, and certain organizational matters and conditions;

(ii) an employee matters agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation, benefits plans and programs, and other related matters (the “Employee Matters Agreement”);

(iii) agreements pursuant to which AIR will provide property management and related services to us (collectively, the “Property Management Agreements”);

(iv) an agreement pursuant to which AIR will provide us with customary administrative and support services on an ongoing basis (the “Master Services Agreement”);

and (v) a master leasing agreement where we may enter into leases with AIR with the option to develop, redevelop, or lease-up the subject leased properties, and under which we will have certain lease termination rights (the “Master Leasing Agreement”).

Assets held for sale primarily includes a land parcel acquired in the first quarter of 2022 that is described further in Note 3.

Accounting Pronouncements Adopted in the Current Year

During the first quarter of 2022, we adopted ASU 2021-05 establishing Topic 842, Lessors - Certain Leases with Variable Lease Payments in conjunction with our ongoing operations.

ASU 2021-05 requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-one loss, which was effective for us on January 1, 2022.

The adoption of this standard on January 1, 2022 , did not have a material impact on our condensed consolidated financial statements .

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting”

(“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the LIBOR or by another reference rate expected to be discontinued because of reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

In January 2021, the FASB issued Accounting Standards Update 2021-01 , “Reference Rate Reform (Topic 848):

Scope”

(“ASU 2021-01”), which clarified the scope and application of the original guidance.

We plan to adopt ASU 2020-04 and ASU 2021-01 when LIBOR is discontinued.

We are currently evaluating the potential impact of adopting this guidance, but do not expect it to have a material impact on our consolidated financial statements due to the fact that we hold one month LIBOR debt instruments which are not expected to be discontinued in 2022.

Note 3 —Significant Transactions

Acquisitions and Investments

During the first quarter of 2022:

Aimco’s Fort Lauderdale consolidated joint venture closed on the previously announced acquisition of three undeveloped land parcels located in downtown Fort Lauderdale for $ 49.0 million ($ 25.0 million at Aimco's 51 % share), funded primarily by a $ 40.0 million land loan ($ 20.4 million at Aimco's share).

The $ 49.0 million purchase price was allocated among the parcels based on third party appraisals.

At the time of the acquisition, one land parcel was subject to a sales agreement for disposition and closing on or before October 9, 2022.

Based on the facts and circumstances related to the sale, Aimco determined the land parcel meets the criteria for assets held for sale as of March 31, 2022.

Assets held for sale are reported at the carrying value of $ 10.1 million and included within Other assets, net in our condensed consolidated balance sheets.

Liabilities related to assets held for sale of $ 8.0 million are included in Accrued liabilities and other in our condensed consolidated balance sheets.

Aimco entered into a purchase agreement to acquire, for $ 100.0 million, a 9 -acre development site in Fort Lauderdale.

The site is located in the Flagler Village neighborhood with the ability to develop approximately three million square feet of mixed-use development, over time.

Due to certain transaction stipulations predefined in the purchase agreement, we reserved funds for the transaction by placing $ 70.0 million of cash , of which $ 20.0 million is held in escrow in the seller’s name, while $ 50.0 million is held in escrow in our name and included within restricted cash on the balance sheet at March 31, 2022.

Additionally, $ 30.0 million in letters of credit is held in escrow.

See Note 4 for information regarding commitments related to this pending acquisition.

Timing of the transaction closing is uncertain but the purchase agreement provides that it shall occur not later than February 24, 2025.

Concurrent with entering into the purchase agreement, Aimco entered into a short-term cancelable lease with the seller to obtain development rights of the 9-acre development site.

Together, the two contracts are treated as one financing lease as title transfers at the end of the lease arrangement.

Refer to Note 9 for details regarding the finance lease.

During the first quarter of 2022, Aimco funded the remaining $ 14.2 million of a total commitment of a $ 50.0 million passive equity investment in IQHQ Inc., a privately held life sciences real estate development company.

Joint Venture Transaction

During the first quarter of 2022, Aimco formed a joint venture for the construction of approximately one million square feet of mixed-use development in the Edgewater neighborhood of Miami, Florida.

Aimco has a 20 % share of the joint venture, which includes the initial contribution of an eighth of an acre of land that we purchased for $ 1.7 million in January 2022.

Aimco's total capital commitment to the venture is $ 8.0 million.

Aimco will serve as the development manager for the venture and expects to begin construction in 2023.

Note 4 —

Commitments and Contingencies

In connection with our development, redevelopment, and other capital additions activities, we have entered into various construction-related contracts and we have made commitments to complete development and redevelopment of certain real estate, pursuant to financing or other arrangements.

As of March 31, 2022 , our commitments related to these capital activities totaled approximately $ 217.9 million, most of which we expect to incur during the next 24 months.

As described in Note 3, Aimco is under contract to acquire, for $ 100.0 million, a nine -acre development site in Fort Lauderdale.

Aimco reserved funds for the transaction by placing $ 70.0 million of cash, of which $ 20.0 million is held in escrow in the seller's name and $ 50.0 million is held in escrow in Aimco's name.

Timing of the closing and the funding of the remaining $ 30.0 million commitment is uncertain, but the purchase agreement provides that the transaction closing shall occur not later than February 24, 2025.

Also as described in Note 3, we have a commitment to fund a total of $ 8.0 million associated with our Edgewater joint venture formed in the first quarter of 2022.

As of March 31, 2022 , our remaining commitment is $ 6.0 million, all of which we expect to incur over the next twelve months.

As of March 31, 2022 , we also have unfunded commitments in the amount of $ 3.2 million related to four investments in privately held entities that develop technology related to the real estate industry, the timing of which is uncertain.

We enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities.

Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

Legal Matters

From time to time, we may be a party to certain legal proceedings, incidental to the normal course of business.

While the outcome of the legal proceedings cannot be predicted with certainty, we believe there are no legal proceedings pending that would have a material effect upon our financial condition or results of operations.

Note 5 —

Agreements and Transactions With AIR

In conjunction with the Separation in December 2020, we entered into the following agreements with AIR that have significant operational and financial impacts to us.

Master Services Agreement

1 unchanged sentence

We are obligated to pay AIR the fully burdened costs in performing the services.

We may terminate any or all services on 60 days’ prior written notice, and AIR may terminate individual services, at any time after December 31, 2023.

During the three and nine months ended September 30, 2021, we incurred administrative and support fees of $ 0.7 million and $ 1.8 million, respectively, which are included in general and administrative expenses in our condensed consolidated statements of operations.

We did no t incur any fees for the three and nine months ended September 30, 2020.

We may terminate any or all services on 60 days’

prior written notice, and AIR may terminate individual services at any time after December 31, 2023.

During the three months ended March 31, 2022 and 2021 we incurred administrative and support fees o f $ 0.4 million, for both periods, which are included in general and administrative expenses in our condensed consolidated statements of operations.

Property Management Agreements

We entered into several Property Management Agreements with AIR, pursuant to which AIR will provide us with certain property management, property accounting and related services for the majority of our operating properties, and we will pay AIR a property management fee equal to 3 % of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services.

The initial term of each Property Management Agreement is one-year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’ prior written notice to the other party before the end of the term.

We entered into several Property Management Agreements with AIR, pursuant to which AIR provides us with certain property management, property accounting and related services for the majority of our operating properties, and we pay AIR a property management fee equal to 3 % of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services.

The initial term of each Property Management Agreement is one year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’

prior written notice to the other party before the end of the term.

Neither party is obligated to pay to the other party a termination fee or other penalty upon such termination.

During the three and nine months ended September 30, 2021, we recorded property management and property accounting fees of $ 1.3 million and $ 3.8 million, respectively, which we included in property operating expenses in our condensed consolidated statements of operations.

We did no t incur any fees for the three and nine months ended September 30, 2020.

Notes Payable to AIR

On December 14, 2020, we entered into $ 534.1 million of notes payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets, however, the assets secure existing senior loans of $ 243.4 million as of September 30, 2021.

The notes mature on January 31, 2024 and bear interest at 5.2 %, with accrued interest payable quarterly on January 1, April 1, July 1 and October 1, commencing on April 1, 2021.

For the three and nine months ended September 30, 2021, we recognized interest expense of $ 6.9 million and $ 20.8 million, respectively associated with the notes payable to AIR.

We made interest payments of $ 6.9 million in the quarter which are included in interest payments on notes payable to AIR in operating activities in the condensed consolidated statement of cash flows for the nine months ended September 30, 2021

During the three months ended March 31, 2022 and 2021, we recognized property management and property accounting fe es of $ 1.4 mill ion and $ 1.3 million, respectively, which we included in property operating expenses in our condensed consolidated statements of operations.

Master Leasing Agreement

The Master Leasing Agreement governs the current and any future leasing arrangements between us, as lessee and AIR, as lessor.

The initial term of the Master Leasing Agreement is 18 months (expiring on or about June 14, 2022), with automatic annual extensions (subject to each party’s right to terminate upon notice prior to the end of any such extension term).

The Master Leasing Agreement provides that each time the parties thereto wish to execute a lease for a particular property, such parties will cause their applicable affiliates to execute a stand-alone lease.

1 unchanged sentence

We have the right to terminate any such lease prior to the end of its term once the leased property is stabilized.

In connection with such an early termination, AIR will generally have an option (and not an obligation) to pay us an amount equal to the difference between the property’s fair value at stabilization and the initial value of the leasehold interest, at a five percent discount thereto;

if AIR does not exercise such option, we will have the right to cause such property to be sold to a third party, with AIR guaranteed to receive an amount equal to the difference between the property’s fair market value at stabilization and the initial value of the leasehold interest and we will retain any excess proceeds.

In the event of such sale of the property, we may also elect to purchase the property at a purchase price equal to the fair market value as agreed upon at the time of lease inception (and may subsequently sell the property to a third party, subject to AIR’s right of first refusal during the first year following our acquisition).

If AIR elects not to pay the fee for the development or redevelopment-related improvements, and we decline to purchase the property or cause its sale to a third party, we may elect to rescind our termination of the applicable lease and instead continue such lease in effect in accordance with its terms.

We, as lessee, and AIR, as lessor, have entered into leases of five properties currently under construction or in lease-up.

Four of the property leases commenced on January 1, 2021:

(i) North Tower at Flamingo Point in Miami Beach, Florida;

(ii) The Fremont Residences on the Anschutz Medical Campus in Aurora, Colorado;

(iii) Prism in Cambridge, Massachusetts;

and (iv) 707 Leahy Apartments in Redwood City, California.

According to the terms of the respective lease agreements, we had the option to complete the on-going development and redevelopment of such properties and their lease-ups, which we elected on January 1, 2021 .

The term of each lease is 25 years except for Prism, which has a lease term of 10 years.

During the nine months ended September 30, 2021, we, as lessee, and AIR, as lessor, entered into a 25 year finance lease for a 15 -acre plot of

land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and eight accessory dwelling units in June 2021.

The initial fair market values of the leased assets at the time of lease inception was determined to be $ 475.1 million in the aggregate.

In connection with the commencement of the leases, we assumed $ 70.8 million of estimated obligations pursuant to certain construction contracts.

As of September 30, 2021, the estimated obligations pursuant to the construction contracts assumed with these leases was $ 16.4 million.

Refer to Note 9 for additional information on leases in place as of March 31, 2022.

Notes Payable to AIR

On December 14, 2020, we entered into $ 534.1 million of Notes Payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets.

In addition, the assets secure certain existing senior loans of $ 241.8 million as of March 31, 2022 .

The notes mature on January 31, 2024 and bear interest at 5.2 %, with accrued interest payable on the first calendar day of each quarter.

For the three months ended March 31, 2022 and 2021, we recognized interest expense related to the Notes Payable to AIR of $ 6.9 mil lion for both periods.

Due to and from AIR

As of September 30, 2021, we have amounts due to and from AIR of $ 14.2 million and $ 3.2 million, respectively.

As of March 31, 2022, we have amounts due to and from AIR of $ 11.1 million and $ 3.7 million , respectively.

As of December 31, 2021 we had amounts due to and from AIR of $ 15.7 million and $ 4.8 million, respectively.

The amounts due to AIR primarily consist of invoices paid on our behalf and accrued interest on the Notes Payable to AIR.

1 unchanged sentence

Terry Considine Service Agreement/AIR Reimbursement

In conjunction with the Separation, we entered into an arrangement with AIR with respect to the services of Terry Considine, an Aimco board member and our former Chief Executive Officer, for services to be rendered by Mr.

Considine separate from his services as a board member, including, but not limited to:

As contemplated by the Separation and by Aimco and AIR, Terry Considine, an Aimco board member and our former Chief Executive Officer, has specific responsibilities to Aimco as a non-executive employee during 2022 to support the establishment and growth of the Aimco business, reporting directly to the board.

These responsibilities, separate from Mr.

Considine’s services as a board member, include:

(i) short and long term strategic direction and advice;

1 unchanged sentence

and (iii) advice and consultation with respect to strategic growth and acquisition activities.

We are obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr.

The Independent Directors set Mr.

Considine’s 2022 target total compensation (including base compensation, short-term incentive, and long-term incentive) for these responsibilities at $ 1.8 million, to be paid in equity.

Considine does not receive any additional compensation for serving on the board.

Additionally, Aimco is obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr.

Considine for the calendar year 2022 under the terms of his employment agreement with AIR that are in excess of $ 1.0 million, collectively.

During the three months ended September 30, 2021, the Independent Directors set Mr.

Considine’s target total compensation for 2021 (including base compensation, short-term incentive, and long-term incentive) at $ 1.8 million, to be paid out in cash and equity.

In addition, we estimate the total 2021 reimbursement to AIR to be $ 4.0 million for a combined total of $ 5.8 million.

For the three and nine months ended September 30, 2021, we recorded $ 1.2 million and $ 4.1 million of expense related to the arrangements and included in general and administrative expense in our condensed consolidated statements of operations.

As of September 30, 2021, $ 3.0 million is included in the amount due to AIR.

Guarantee Liability

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

On the date of Separation, we recognized a guarantee liability of $ 16.4 million based on an estimate of the expected future cash flows required to settle the legal liabilities, including, but not limited to, remediation, settlement and legal costs, discounted by an estimated market discount rate of 4.25 %.

The guarantee liability is systematically reduced as costs related to the legal liabilities are incurred, which we estimate will occur through 2023.

For the nine months ended September 30, 2021, the guarantee liability was reduced by $ 3.4 million.

As of September 30, 2021, the guarantee liability of $ 13.0 million is included in accrued liabilities and other in our condensed consolidated balance sheets.

Acquisitions from AIR

In February 2021, we acquired from AIR the Benson Hotel and Faculty Club.

In August 2021, we acquired from AIR the Eldridge Townhomes.

Refer to Note 5 for further details regarding these acquisitions.

Other Significant Transactions

Non-recourse Property Debt

On July 2, 2021, we entered into a $ 13.1 million ten-year non-recourse property note at a fixed interest rate of 4.20 % with a maturity date of August 1, 2031 that is secured by one of our operating properties.

We recorded deferred financing cost of $ 0.2 million, which will be amortized over the ten-year note.

On August 20, 2021, we entered into a $ 46.7 million ten-year non-recourse property note at a fixed interest rate of 2.78 % with a maturity date of September 1, 2031 that is secured by one of our operating properties.

We recorded deferred financing cost of $ 0.5 million, which will be amortized over the ten-year note.

Proceeds from the two non-recourse loans were used to fund the purchase of Eldridge Townhomes for $ 40.0 million and other investment opportunities.

Construction Loans

On April 15, 2021, we entered into a $ 150 million variable-rate non-recourse construction loan collateralized by our leasehold interest and AIR’s fee ownership interest in Flamingo North Tower.

The initial term of the loan is three years and bears interest at one month LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85 %.

As of September 30, 2021, we had $ 118.8 million of principal outstanding.

Certain consolidated subsidiaries have indemnified AIR for any losses it incurs as a result of a default on the loan by Aimco.

We recorded $ 3.8 million of deferred financing costs which will be amortized over the three year term of the loan.

On June 21, 2021, we entered into a $ 100.7 million variable-rate non-recourse construction loan collateralized by our fee ownership interest in Hamilton on the Bay.

The initial term of the loan is three years and bears interest at one month LIBOR plus 320 basis points subject to a minimum all-in per annum interest rate of 3.45%.

As of September 30, 2021, we had $ 25.0 million of principal outstanding.

We recorded $ 2.3 million of deferred financing costs which will be amortized over the three year term of the loan.

If LIBOR ceases to exist during the term of these agreements, the documents associated with these agreements contain language to address a transition to another bench mark rate.

It is anticipated LIBOR will be replaced with SOFR, however, if SOFR were to not be available the agreements contain alternate provisions.

Fort Lauderdale Consolidated Joint Venture

In July 2021, Aimco entered into a joint venture with Kushner Companies to purchase three undeveloped land parcels located in downtown Fort Lauderdale, Florida.

The total contract price for the land is $ 49 million ($ 25 million at Aimco’s 51 % share).

Current zoning allows for the development of approximately three million square feet of multifamily homes and commercial space.

The land purchase is expected to close in January 2022 .

We have paid $ 2.4 million of the $ 25 million commitment, related to our share of the contract price.

Note 4 — Commitments and Contingencies

As of September 30, 2021, our commitments related to these capital activities totaled approximately $ 294.2 million, most of which we expect to incur during the next 24 months.

We enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities.

Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

We have a commitment to fund an additional $ 25.4 million to IQHQ and currently expect to contribute this investment through the end of 2022.

During the nine months ended September 30, 2021, we contributed a total of $ 12.1 million.

We also have unfunded commitments related to three investments in privately held entities that develop technology related to the real estate industry (“RETV”).

During the nine months ended September 30, 2021, we contributed a total of $ 0.1 million to RETV, leaving an additional funding commitment in the amount of $ 1.0 million, the timing of which is uncertain.

Legal Matters

From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of business.

While the outcome of the legal proceedings cannot be predicted with certainty, the Company believes there are no legal proceedings pending that would have a material effect upon our financial condition or results of operations.

Note 5 — Acquisitions

During the three months ended September 30, 2021, we acquired from AIR the Eldridge Townhomes for $ 40 million based on an independent opinion of its value.

The Eldridge Townhomes are a 58 -unit townhome community located on 3.6 acres of land contiguous to our Elm Creek community in Elmhurst, Illinois, a western suburb of Chicago.

To fund the acquisition of Eldridge Townhomes, we used proceeds from debt placement on the unencumbered Evanston Place asset in Evanston, Illinois.

Number of townhomes

Purchase price

Consideration allocated to land

Consideration allocated to building and improvements

Consideration allocated to intangible assets (1)

Consideration allocated to below-market lease liabilities (2)

Total consideration

Intangible assets include in-place leases and leasing costs with a weighted-average term of six months.

Below-market leases have a weighted average term of six months.

During the nine months ended September 30, 2021, we acquired eight land parcels adjacent to our Hamilton on the Bay apartment community, located in Miami’s Edgewater neighborhood, for $ 19.3 million and we began major redevelopment of the existing apartment building at Hamilton on the Bay.

The scope of our investment will completely renew the waterfront high-rise, which benefits from spacious apartment homes (averaging 1,411 square feet) and an abundance of outdoor and amenity space that was previously underutilized.

In February 2021, we acquired The Benson Hotel and Faculty Club development property for $ 6.2 million, net of outstanding construction liabilities of $ 0.9 million.

The development property consists of land and initial construction costs.

The project is expected to be completed in the first quarter of 2023.

Note 6 — Earnings and Dividends per Share and Unit

We estimate the total 2022 reimbursement to AIR, pursuant to this arrangement, will be $ 4.0 million.

We estimate compensation associated with these arrangements to total $ 5.8 million for 2022.

For the three months ended March 31, 2022 and 2021, we recognized $ 1.4 million and $ 1.5 million of expense related to the arrangements, respectively, which amounts are included in general and administrative expense in our condensed consolidated statements of operations.

Note 6 —

Earnings and Dividends per Share and Unit

Aimco and Aimco Operating Partnership calculate basic earnings per share of common stock and basic earnings per common unit based on the weighted-average number of shares of common stock and common partnership units outstanding.

We calculate diluted earnings per share of common stock and diluted earnings per unit taking into consideration dilutive shares of common stock and common partnership unit equivalents and dilutive convertible securities outstanding during the period.

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

Each of our executives and AIR’s executives received one share of AIV stock and one share of AIR stock at the Separation date for unvested shares.

We include AIR’s executives’ rights to receive AIV shares upon vesting in our dilutive calculations.

Our common stock and common partnership unit equivalents include options to purchase shares of common stock, which, if exercised, would result in Aimco’s issuance of additional shares of common stock and Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares of common stock purchased under the options.

These equivalents also include unvested TSR restricted stock awards that do not meet the definition of participating securities, which would result in an increase in the number of shares of common stock and common partnership units outstanding equal to the number of the shares that vest.

Each of our executives and AIR’s executives received one share of Aimco stock and one share of AIR stock at the Separation date for unvested shares.

We include AIR’s executives’

rights to receive Aimco shares upon vesting in our dilutive calculations.

These equivalents also include unvested Performance-Based restricted stock awards that do not meet the definition of participating securities, which would result in an increase in the number of shares of common stock and common partnership units outstanding equal to the number of the shares that vest.

Common partnership unit equivalents also include unvested long-term incentive partnership units.

We include in the denominator securities with dilutive effect in calculating diluted earnings per share and per unit during these periods.

Our time-based restricted stock awards receive non-forfeitable dividends similar to shares of common stock and common partnership units prior to vesting, and our TSR LTIP I units and TSR LTIP II units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting and conversion.

Our time-based restricted stock awards receive non-forfeitable dividends similar to shares of common stock and common partnership units prior to vesting, and our Performance-Based LTIP I units and Performance-Based LTIP II units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting and conversion.

The unvested restricted shares and units related to these awards are participating securities.

We include the effect of participating securities in basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and undistributed earnings when the two-class method is more dilutive than the treasury stock method.

No such items were included in the computation of diluted loss per share for the three or nine months ended September 30, 2021 because the effect of inclusion would be anti-dilutive.

Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three and nine months ended September 30, 2021 and 2020, are as follows (in thousands, except per share and per unit data):

Three Months Ended September 30,

Nine Months Ended September 30,

Participating securities are included in the computation of diluted earnings per share for the three months ended March 31, 2022 and 2021, because their effects are dilutive.

Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three months ended March 31, 2022 and 2021, are as follows (in thousands, except per share and per unit data):

Three Months Ended March 31,

Earnings per share

Net (loss) income attributable to Aimco

Net (loss) income attributable to participating securities

Net (loss) income attributable to Aimco common stockholders

Net income attributable to Aimco

Net income allocated to Aimco participating securities

Net income attributable to Aimco common stockholders

Denominator - shares:

5 unchanged sentences

Earnings per unit

Net (loss) income attributable to Aimco Operating Partnership

Net (loss) income attributable to participating securities

Net (loss) income attributable to Aimco Operating Partnership's Common unit holders

Net income attributable to Aimco Operating Partnership

Net income allocated to Aimco Operating Partnership participating securities

Net income attributable to Aimco Operating Partnership's common unitholders

Denominator - units

4 unchanged sentences

Earnings per unit - diluted

Note 7 — Fair Value Measurements

Note 7 —

Fair Value Measurements

Recurring Fair Value Measurements

4 unchanged sentences

Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement, nor would we have any requirement to make a payment.

During the nine months ended September 30, 2021, we paid an upfront premium of $ 5.6 million (including transaction costs) for the option to enter into a $ 500 million notional amount interest rate swap at a future date.

During the year ended December 31, 2021, we paid upfront a premium of $ 5.6 million (including transaction costs) for the option to enter into a $ 500.0 million notional amount interest rate swap at a future date.

This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our Notes Payable to AIR and is intended to mitigate interest rate increases between now and January 2024.

1 unchanged sentence

Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement, nor would we have any requirement to make a payment.

From time to time we purchase interest rate caps to provide protection against increases in interest rates on our floating rate debt.

The fair value of these interest rate caps are included in the fair value table below.

From time to time we purchase interest rate swaps, caps, and other instruments to provide protection against increases in interest rates on our floating rate debt.

The fair value of these instruments are included in the fair value table below.

We measure at fair value on a recurring basis our interest rate options, which are presented in other assets in our condensed consolidated balance sheets.

Our interest rate options are classified within Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market information, including contractual terms, market

prices, and interest rate yield curves.

The fair value adjustment is included in earnings in Unrealized gains on interest rate options in our condensed consolidated statements of operations.

Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, and the upfront premium is reflected in purchase of interest rate option in our condensed consolidated statements of cash flows.

We have investments of $ 4.5 million in RETV consisting of three privately held entities that develop technology related to the real estate industry.

These investments are measured at net asset value (“NAV”) as a practical expedient.

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

As of September 30, 2021

We have investments of $ 5.1 million in property technology funds consisting of privately held entities that develop technology related to the real estate industry.

These investments are measured at net asset value (“NAV”) as a practical expedient.

Refer to Note 4 for further details of unfunded commitments.

The following table summarizes fair value for our interest rate options and our investments in real estate technology funds as of March 31, 2022, and December 31, 2021, (in thousands):

As of March 31, 2022

As of December 31, 2021

Interest rate options

Investment in RETV (1)

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

Investment in real estate technology funds (1)

(1) Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy.

Fair Value Disclosures

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and payables approximated their fair value as of September 30, 2021, and December 31, 2020, due to their relatively short-term nature and high probability of realization.

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and payables approximated their fair value as of March 31, 2022, and December 31, 2021, due to their relatively short-term nature and high probability of realization.

We estimate the fair value of our non-recourse property debt, construction loans, and Notes Payable to AIR using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, debt service coverage ratios, and loan to value ratios.

We classify the fair value of our non-recourse property debt and construction loans debt within Level 2 of the GAAP fair value hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.

The carrying amount of the notes payable to AIR approximated their fair value at both September 30, 2021 and December 31, 2020.

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

As of September 30, 2021

As of December 31, 2020

The carrying amount of the Notes Payable to AIR approximated their fair value at both March 31, 2022 and December 31, 2021.

The following table summarizes the carrying value and fair value of our non-recourse property debt and construction loans (in thousands):

As of March 31, 2022

December 31, 2021

Carrying Value

1 unchanged sentence

Non-recourse property debt

Construction loans debt

Note 8 — Variable Interest Entities

Construction loans

Note 8 —

Variable Interest Entities

We evaluate our investments in limited partnerships and similar entities in accordance with the consolidation guidance to determine whether each such entity is a VIE.

The accounting standards related to the consolidation of VIEs require qualitative assessments to determine whether we are the primary beneficiary.

The primary beneficiary analysis is based on power and economics.

We conclude that we are the primary beneficiary and consolidate the VIE if we have both:

(i) the power to direct the activities of the VIE that most significantly influence the VIE's economic performance, and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

Significant judgments and assumptions related to the determinations include, but are not limited to, estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

Aimco consolidates Aimco Operating Partnership, a VIE of which Aimco is the primary beneficiary.

1 unchanged sentence

Substantially all of the assets and liabilities of Aimco are that of Aimco Operating Partnership.

The VIEs that Aimco Operating Partnership consolidates own interests in real estate or commitments to acquire real estate.

We are the primary beneficiary of the VIEs because we have the power to direct the activities that most significantly impact the entities’ economic performance and have a substantial economic interest.

We have six unconsolidated VIEs for which we are not the primary beneficiary because we are not the decision maker.

The six unconsolidated VIE’s include four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California, the Mezzanine Investment, and one other that is insignificant to our condensed consolidated balance sheets for both periods presented.

The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of September 30, 2021 and December 31, 2020 (in thousands, except for VIE count):

September 30, 2021

The VIEs that Aimco Operating Partnership consolidates own interests in real estate.

We are the primary beneficiary of the VIEs because we have the power to direct the activities that most significantly impact the entities’

economic performance and have a substantial economic interest.

We have seven unconsolidated VIEs for which we are not the primary beneficiary because we are not the decision maker.

The seven unconsolidated VIEs include four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California, the Mezzanine Investment, our passive equity investment in IQHQ, and our investment in the Edgewater joint venture, formed in the first quarter of 2022 to develop a 2.8 -acre site in Miami's Edgewater neighborhood .

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

March 31, 2022

December 31, 2021

5 unchanged sentences

Right-of-use lease assets

Unconsolidated real estate partnerships

Other assets, net

3 unchanged sentences

Lease liabilities

As of September 30, 2021, two of our consolidated VIEs closed construction loans.

In conjunction with these loans, we made customary guarantees.

During the three months ended March 31, 2022, Aimco acquired all of the outstanding redeemable non-controlling interests in an entity classified as a consolidated VIE as of December 31, 2021.

The changes in consolidated VIE assets and liabilities from December 31, 2021 to March 31, 2022 in the table above are primarily due to the impact of declassification of the entity as a VIE.

As of March 31, 2022, one of our consolidated VIEs had an outstanding construction loan.

In conjunction with this loan, we made customary guarantees.

In certain situations, the lenders may have recourse to our general credit.

As of September 30, 2021, we estimate the maximum exposure equals the $ 143.7 million outstanding loan balances.

Other consolidated VIE’s creditors do not have recourse to our general credit.

As of March 31, 2022, we estimate the maximum exposure equals the $ 129.6 million outstanding loan balance.

Other consolidated VIEs' creditors do not have recourse to our general credit.

Unconsolidated Real Estate Partnerships

We own an interest in four apartment communities in San Diego, California of which we are not the primary beneficiary.

Our investment balance of $ 13.0 million as of September 30, 2021, represents our maximum exposure to loss in these VIE’s.

We also own a joint venture interest in a 2.8-acre development site in Miami’s Edgewater neighborhood.

Our investment balance of $ 15.1 million and $ 13.0 million as of March 31, 2022 and December 31, 2021, respectively, represents our maximum exposure to loss in these VIEs.

Mezzanine Investment

Our investment balance of $ 330 million as of September 30, 2021, reflected in Mezzanine investment in our consolidated balance sheets, represents our maximum exposure to loss in this VIE.

Note 9 — Business Segments

AIR owns an interest in a partnership that owns Parkmerced Apartments, of which it is not the primary beneficiary, and under the terms of the Separation Agreement, AIR is obligated to transfer ownership of the subsidiaries that hold this interest to us upon receipt of required third-party consents.

Our investment balance of $ 346.0 million and $ 337.8 million as of March 31, 2022 and December 31, 2021 , respectively, represents our indirect interest in notes receivable through our agreement with AIR and our maximum exposure to loss in this VIE.

Note 9 —

Lease Arrangements

Aimco as Lessor

The majority of lease payments we receive from our residents and tenants are fixed.

We receive variable payments from our residents and commercial tenants primarily for utility reimbursements and other services.

For the three months ended March 31, 2022 and 2021 , our total lease income was comprised of the following amounts for all residential and commercial property leases (in thousands):

Three Months Ended March 31,

Fixed lease income

Variable lease income

Total lease income

Aimco as Lessee

Lease Arrangements with AIR

We, as lessee, and AIR, as lessor, have entered into leases on five properties currently under construction or in lease-up.

The lease arrangements are governed by the Master Leasing Agreement described in Note 5 and are classified as financing leases.

We have provided AIR with residual value guarantees aggregating to $ 250.8 million, which provide that if the residual value of the leased assets is less than the specified residual value guarantees at the earlier of lease expiration or termination, we are required to pay the difference.

Ground Leases

During the year ended December 31, 2020, we entered into two 99-year ground leases for the land underlying the development site at Upton Place, a mixed-use development project which will create 689 apartment homes and approximately 100,000 square feet of commercial space in upper-northwest Washington, D.C.

These ground leases are classified as financing leases.

Other Finance Lease Arrangements

As described in Note 3, during the quarter ended March 31, 2022 , we entered into certain financing lease arrangements concurrent with a contract to acquire a development site in Fort Lauderdale.

At lease inception, $ 20.0 million in deposits were placed in the seller’s name, which subsequently reduced the financing lease right-of-use liability.

The related interest is capitalized as part of the financing right-of-use asset.

As of March 31, 2022 , the associated financing right-of-use assets and liabilities totaled $ 97.3 million and $ 75.1 million, respectively.

Together, as of March 31, 2022 and December 31, 2021, these financing leases had weighted-average remaining terms of 33.2 years and 38.5 years, respectively, and weighted-average discount rates of 5.0 % and 5.4 %, respectively.

As of March 31, 2022 , financing r ight-of-use assets and liabilities totaled $ 522.9 and $ 509.2 , respectively.

As of December 31, 2021 , financing lease right-of-use assets and liabilitie s totaled $ 429.8 and $ 435.1 , r espectively.

For the three months ended March 31, 2022, amortization related to finance leases was $ 3.2 million, net of amounts capitalized and, for the three months ended March 31, 2021, was $ 2.1 million, also net of amounts capitalized.

For the three months ended March 31, 2022 and 2021, we capitalized $ 2.8 million and $ 6.9 million of lease costs, respectively, associated with active development and redevelopment projects on certain of the underlying property and ground lease assets.

Operating Lease Arrangements

Aimco has operating leases primarily for corporate office space.

As of March 31, 2022 and December 31, 2021, Aimco's operating leases had weighted-average remaining terms of 7.1 years and 7.4 years, respectively.

As of both March 31, 2022 and December 31, 2021,the leases had weighted-average discount rates of 3.1 % .

We record operating lease expense on a straight-line basis over the lease term.

Total operating lease cost for three months ended March 31, 2022 and 2021 w as $ 0.4 m illion and $ 0.3 million, respectively.

As of March 31, 2022 and December 31, 2021,

operating lease right-of-use assets of $ 4.9 million and $ 5.1 m illion, respectively, are included in other assets in the consolidated balance sheets.

As of March 31, 2022 and December 31, 2021, operating lease liabilities of $ 12.3 million and $ 12.7 m illion, respectively, are included in accrued liabilities othe r in the consolidated balance sheets.

For finance and operating leases, when the rate implicit in the lease cannot be determined, we estimate the value of our lease liabilities using discount rates equivalent to the rates we would pay on a secured borrowing with terms similar to the leases.

We determine if an arrangement is or contains a lease at inception.

We have lease agreements with lease and non-lease components and have elected to not separate these components for all classes of underlying assets.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Office Space Sublease

We have a sublease arrangement to provide space within our corporate office for fixed rents which commenced on January 1, 2021 and expire on May 31, 2029 .

Annual Future Minimum Lease Payments

Combined minimum annual lease payments under operating and financing leases, a nd sublease income that offsets Aimco's operating lease rent, are as follows (in thousands):

Sublease Income

Operating Lease Future Minimum Rent

Financing Leases Future Minimum Payments

Remainder of 2022

Total lease liabilities

Note 10 —

Business Segments

We have three segments:

(i) Development and Redevelopment;

(ii) Operating Portfolio;

and (iii) Other.

Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land assemblages that are being held for development adjacent to our Hamilton on the Bay community and other land purchases.

Our Operating Portfolio segment includes 24 majority owned residential communities that have achieved stabilized level of operations as of January 1, 2020 and maintained it throughout the current year and comparable period.

We aggregate all our apartment communities that have reached stabilization into our Operating Portfolio.

Our Other segment consists of properties that are not included in our Developments and Redevelopment or Operating segment.

We realigned our segments during the fourth quarter 2020 and have restated historical periods to conform with current segment presentation.

Our chief operating decision maker (“CODM”) uses cash flow, construction timeline to completion and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment.

Our CODM uses proportionate property net operating income to assess the operating performance of our Operating Portfolio.

Proportionate property net operating income is defined as our share of rental and other property revenues, excluding reimbursements, less direct property

operating expenses, net of utility reimbursements, for consolidated communities.

(i) Development and Redevelopment, (ii) Operating, and (iii) Other.

Our Operating segment includes 24 residential apartment communities that have achieved stabilized level of operations as of January 1, 2021 and maintained it throughout the current year and comparable period.

We aggregate all our apartment communities that have reached stabilization into our Operating segment.

Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.

Our chief operating decision maker (“CODM”) uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment.

Our CODM uses proportionate property net operating income to assess the operating performance of our Operating segment.

Proportionate property net operating income is defined as our share of rental and other property revenues, excluding reimbursements, less direct property operating expenses, net of utility reimbursements, for consolidated communities.

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

As of September 30, 2021, our Development and Redevelopment segment includes five real estate investments:

Upton Place, Hamilton on the Bay, The Benson Hotel, land parcels adjacent to our Hamilton on the Bay community and land purchased in Colorado Springs, Colorado.

The Development and Redevelopment segment also includes our five leased properties of which, two are under construction and three are in lease-up but have not achieved stabilization.

Our Operating Portfolio segment includes 24 consolidated apartment communities with 6,067 apartment homes.

As of March 31, 2022, our Development and Redevelopment segment consists of 13 properties:

three residential apartment communities with 1,331 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, we are actively developing or redeveloping;

three residential apartment communities with 499 apartment homes for which we have completed the redevelopment, but have not achieved stabilization;

and, land parcels held for development.

Our Operating segment includes 24 consolidated apartment communities with 6,067 apartment homes.

Our Other segment includes our recent Eldridge Townhomes acquisition, stabilized but not owned for the comparable reporting period, and 1001 Brickell Bay Drive, our only office building.

The following tables present the revenues, proportionate property net operating income, and income before income tax benefit of our segments on a proportionate basis, excluding amounts related to our proportionate share of four apartment communities with apartment homes that we neither manage nor consolidate, for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Development and Redevelopment

Operating Portfolio

Proportionate

Adjustments (1)

Corporate and

Three months ended September 30, 2021:

Rental and other property revenues

Property operating expenses

Other operating expenses not allocated

to segments (2)

Total operating expenses

Proportionate property net operating

income (loss)

Other items included in income before

income tax benefit (3)

Income (loss) before income tax benefit

Development and Redevelopment

Operating Portfolio

Proportionate

Adjustments (1)

Corporate and

Three months ended September 30, 2020:

Rental and other property revenues

Property operating expenses

Other operating expenses not allocated

to segments (2)

Total operating expenses

Proportionate property net operating

income (loss)

Other items included in income before

income tax benefit (3)

Income (loss) before income tax benefit

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended March 31, 2022 and 2021 (in thousands):

Development and Redevelopment

Operating Portfolio

Proportionate

Adjustments (1)

Corporate and

Nine months ended September 30, 2021:

Proportionate and Other Adjustments

Corporate and Amounts Not Allocated to Segments

Three Months Ended March 31, 2022:

Rental and other property revenues

9 unchanged sentences

Development and Redevelopment

Operating Portfolio

Proportionate

Adjustments (1)

Corporate and

Nine months ended September 30, 2020:

Proportionate and Other Adjustments

Corporate and Amounts Not Allocated to Segments

Three Months Ended March 31, 2021:

Rental and other property revenues

8 unchanged sentences

Income (loss) before income tax benefit

Represents adjustments for the redeemable noncontrolling interest in consolidated real estate partnership’s share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation.

(1) Represents adjustments for redeemable noncontrolling interests in consolidated real estate partnerships' share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation.

Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results.

4 unchanged sentences

Development and Redevelopment

Operating Portfolio

As of September 30, 2021:

As of March 31, 2022:

Buildings and improvements

4 unchanged sentences

Development and Redevelopment

Operating Portfolio

As of December 31, 2021:

4 unchanged sentences

Non-recourse property debt, net

In addition to the amounts disclosed in the tables above, the Development and Redevelopment segment right-of-use lease assets and lease liabilities as of September 30, 2021 aggregated to $ 434.0 million and $ 435.9 million, respectively, related to our investments in Upton Place, North Tower of Flamingo Point, 707 Leahy, The Fremont, Prism, and Oak shore.

As of December 31, 2020, the Development and Redevelopment segment right-of-use lease assets and lease liabilities totaled $ 92.7 million and $ 86.8 million, respectively, related to our investment in Upton Place.

Note 10 – Subsequent Events

We have evaluated subsequent events through the date of this filing.

Based on the evaluation, there were no subsequent events to report.

In addition to the amounts disclosed in the tables above, the Development and Redevelopment segment right-of-use assets and lease liabilities as of March 31, 2022 aggregated to $ 522.9 million and $ 509.2 million, respectively, and as of December 31, 2021, aggregated to $ 429.8 million and $ 435.1 million, respectively.

As of March 31, 2022 , right-of-use assets and lease liabilities primarily relate to our investments in Upton Place, North Tower of Flamingo Point, 707 Leahy, The Fremont, Prism, Oak Shore, and Flagler Village.

Note 11 –

Subsequent Events

On May 3, 2022, we closed on the sale of our Pathfinder Village property located in Fremont, California, for $ 127.0 million.

Pathfinder Village was a stabilized property and included within our Operating segment.

Proceeds were used to repay existing debt obligations.

Subsequent to quarter-end, we monetized the $ 500.0 million notional amount swaption described in Note 7 for $ 13.7 million and recognized a gain of $ 7.1 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor”

for forward-looking statements in certain circumstances.

Certain information included in this Quarterly Report on Form 10-Q contains or may contain information that is forward-looking, within the meaning of the federal securities laws, including, without limitation, statements regarding:

the ongoing relationship between Aimco and AIR (the “Separate Entities”) following the Separation;

the impact of the COVID-19 pandemic, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results;

the effect of acquisitions, dispositions, developments, and redevelopments;

including our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment investments;

expectations regarding sales of our apartment communities and the use of proceeds thereof;

the availability and cost of corporate debt;

and our ability to comply with debt covenants, including financial coverage ratios.

These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties.

Risks and uncertainties that could cause actual results to differ materially from our expectations include, but are not limited to:

the effects of the coronavirus pandemic on Aimco’s business and on the global and U.S.

economies generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, geopolitical events which may adversely affect the markets in which our securities trade, and other macroeconomic conditions, including, among other things, supply chain challenges and rising interest rates, all of which heightens the impact of the other risks and factors described herein, and the impact on entities in which Aimco holds a partial interest, including its indirect interest in the partnership that owns Parkmerced Apartments, and the impact of coronavirus related governmental lockdowns on Aimco’s residents, commercial tenants, and operations;

real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets;

national and local economic conditions, including the pace of job growth and the level of unemployment;

the amount, location and quality of competitive new housing supply;

the timing and effects of acquisitions, dispositions, developments and redevelopments;

expectations regarding sales of apartment communities and the use of proceeds thereof;

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

supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete;

financing risks, including the availability and cost of financing;

the risk that cash flows from operations may be insufficient to meet required payments of principal and interest;

the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios;

legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes;

the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations;

possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of real estate presently or previously owned by Aimco;

the relationship between Aimco and Separate Entities after the Separation;

the ability and willingness of the Separate Entities and their subsidiaries to meet and/or perform their obligations under the contractual arrangements that were entered into among the parties in connection with the Separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities;

the ability to achieve some or all the benefits that we expect to achieve from the Separation;

and such other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (“SEC”).

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

Readers should carefully review our financial statements and the notes thereto, as well as Item 1A.

Risk Factors in Part II of this report.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Quarterly Report on Form 10-Q.

We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Readers should also carefully review the section entitled “Risk Factors”

described in Item 1A of Apartment Investment and Management Company’s and Aimco OP L.P.’s combined Annual Report on Form 10-K for the year ended December 31, 2021, and subsequent documents we file from time to time with the SEC.

As used herein and except as the context otherwise requires, “we,”

“our,”

and “us”

refer to Apartment Investment and Management Company (which we refer to as Aimco), Aimco OP L.P.

(which we refer to as Aimco Operating Partnership) and their consolidated subsidiaries, collectively.

Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States, or GAAP.

These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading.

Executive Overview

Our mission is to make real estate investments, primarily focused on the multifamily sector within the continental United States, where outcomes are enhanced through our human capital so that substantial value is created for investors, teammates, and the communities in which we operate.

Our value proposition includes our national platform organized around four regional and two satellite offices, consisting of a cohesive, talented, and tenured team and our proven investment process;

a diversified portfolio, consisting of high-performing in-process value-add investments, a deep and growing pipeline, alternative investments, and stabilized assets;

and our capital redeployment plan of reallocating Aimco equity to higher returning investments and prudent recycling of capital.

Our primary goal is outsized risk adjusted returns and accelerating growth for Aimco shareholders.

We have a talented leadership team with an average Aimco tenure of over 10 years and nearly 20 years of diverse real estate industry experience combined with a disciplined and proven investment process.

We benefit from a deep and growing investment pipeline with $1.0 billion of development and redevelopment projects currently underway, over $2.5 billion of future opportunities under Aimco-control and more being explored.

We add to this alternative investment strategies and a diversified portfolio of stabilized real estate to provide risk management and produce predictable cash flow.

We have more than $500.0 million of equity targeted for redeployment into high returning activities over the next 4-5 years offering investors a high performing, high return vehicle with expected annualized returns on equity from 12-16% once optimal capital allocation is achieved.

We are focused on providing superior total-return performance to shareholders, primarily through capital appreciation driven by accretive investment and active portfolio management over multi-year periods.

We plan to reinvest earnings to facilitate growth and, therefore, do not presently intend to pay a regular quarterly cash dividend.

Our financial objectives are to create value and produce superior, project-level, risk-adjusted returns on equity as measured by the investment period Internal Rate of Return (“IRR”) and the project-level Multiple on Invested Capital (“MOIC”).

We measure broader performance based on Net Asset Value (“NAV”) growth over time.

Our capital allocation strategy has been designed to leverage our investment platform and optimize risk adjusted returns for our shareholders.

Overall, we target a growth-oriented capital allocation, primarily weighted toward direct investment in “Value Add”

and “Opportunistic”

multifamily real estate.

From time to time, we will allocate a defined portion of our capital into alternative investments including passive debt and equity investments (both direct and indirect).

We may also utilize our established platform and existing relationships to generate fees through service offerings.

We have policies in place that support our strategy, guide our investment allocations, and manage risk, including to hold at all times a sizeable portion of its net equity in a diversified portfolio of “Core”

and “Core-Plus”

assets and before starting a project, require cash or committed credit necessary for completion.

Given our stated strategy, it is expected that at any point in time the value-creation process will be ongoing at numerous of our investments.

Over time, we expect the Aimco enterprise to produce superior returns on equity on a risk-adjusted basis and it is our plan to do so by:

Benefiting from a national platform while leveraging local and regional expertise

We have corporate headquarters in Denver, Colorado and Bethesda, Maryland.

Our investment platform is managed by experienced professionals based in four regions:

West Coast, Central and Mountain West, Mid-Atlantic and Northeast, and Southeast.

By regionalizing this platform, we are able to leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities.

Managing and investing in value-add and opportunistic real estate

Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies, across our national platform.

The Aimco Development and Redevelopment portfolio currently includes $1.0 billion of projects in construction and lease-up, located across five major U.S.

In addition, we currently have over $2.5 billion worth of pipeline opportunities under our control and have the opportunity to add to our investment pipeline based on strategic relationships and through sourcing by regional investment teams.

Generally, we seek direct investment opportunities in locations where barriers to entry are high, target customers can be clearly defined and where we have a comparative advantage over others in the market.

Managing and investing in other alternative investments

Our current allocation to alternative investments includes:

our indirect interest mezzanine loan to the Parkmerced partnership which owns 3,165 apartment homes and future development rights in San Francisco, California, and our passive equity investments in IQHQ, Inc.

(“IQHQ”), a privately held life sciences real estate development company, and in property technology funds consisting of entities that develop technology related to the real estate industry.

We expect to allocate a portion of our capital to passive debt and equity investments, both directly and at the entity level.

These prove attractive when warranted by risk adjusted returns, when we have special knowledge or expertise relevant to the particular investment or when the opportunity exists for positive asymmetric outcomes whether through strategic partnerships or otherwise.

In addition, from time to time, we will use our established platform and existing relationships to generate fees through service offerings to third party real estate investors, owners, and capital allocators.

Owning a portfolio of stabilized core and core plus real estate

Our entire portfolio of operating properties includes 29 apartment communities (25 consolidated properties and four unconsolidated properties) located in ten major U.S.

markets and with average rents in line with local market averages (generally defined as B class).

We also own one commercial office building that is part of an assemblage with an adjacent apartment building.

The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across a nationally diversified portfolio and with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment fundamentals and state and regional governance.

Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values.

Maintaining sufficient liquidity and utilizing safe financial leverage

At all times, we will guard our liquidity by maintaining sufficient cash and committed credit.

From time-to-time, we will allocate capital to financial assets designed to mitigate risks elsewhere in the Aimco enterprise.

Existing examples include our option to acquire an interest rate swap designed to protect against repricing risk on maturing Aimco liabilities and the use of rate caps to provide protection against increases in interest rates on in-place loans.

We expect to capitalize our activities through a combination of non-recourse property debt, construction loans, third-party equity, and the recycling of Aimco equity, including retained earnings.

We plan to limit the use of recourse leverage, with a strong preference towards non-recourse property-level debt in order to limit risk to the Aimco enterprise.

When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage Aimco equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.

Results for the Three Months Ended March 31, 2022

The results from the execution of our business plan during the three months ended March 31, 2022 are described below.

Financial Results and Recent Highlights

Net income attributable to Aimco common stockholders per share, on a fully dilutive basis, was $0.05 for the three months ended March 31, 2022, compared to net income per share of $0.14 for the three months ended March 31, 2021, due primarily to the change in fair market valuation of Aimco's interest rate options and entity investments.

The North Tower at Flamingo Point in Miami Beach, Florida reached stabilized occupancy in April, more than six months ahead of schedule and at rental rates more than 25% ahead of underwriting.

Demand for apartment homes at The Hamilton in the Edgewater neighborhood of Miami, Florida is strong.

Aimco has pre-leased 17 homes in anticipation of our initial apartment home deliveries scheduled to occur in the coming months, at rental rates ahead of underwriting.

Aimco secured two new development pipeline assets in South Florida with the potential to construct approximately four million square feet of phased, mixed-use developments.

For the three months ended March 31, 2022, revenue and net operating income from our Operating Properties were up 9.4% and 14.3%, respectively, year over year, with occupancy of 98.5%, up 90 basis points year over year.

Aimco ended the first quarter with $298.0 million of liquidity, including cash and capacity on its revolving credit facility, net of letters of credit outstanding.

Value Add, Opportunistic & Alternative Investments

Development and Redevelopment

Aimco generally seeks development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and where Aimco has a comparative advantage over others in the market.

Aimco’s Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.

Aimco currently has eight active development and redevelopment projects, located across five U.S.

markets, in varying phases of construction and lease-up.

These projects remain on track, as measured by project-level budget and schedule, lease-up metrics, and current market valuations.

During the three months ended March 31, 2022, we invested $65.7 million in development and redevelopment activities.

Updates include:

At the North Tower of Flamingo Point in Miami Beach, Florida, construction is largely complete and the property is 98% occupied.

The property reached stabilized occupancy in April, more than six months ahead of plan and at rental rates more than 25% ahead of underwriting.

The Fremont on the Anschutz Medical Campus in Aurora, Colorado was 92% leased or pre-leased as of April 30, 2022, and is expected to reach stabilized occupancy in the third quarter of 2022.

Prism in Cambridge, Massachusetts, and 707 Leahy in Redwood City, California, reached stabilized occupancy in the second half of 2021.

Pre-leasing began at The Hamilton in Miami, Florida in anticipation of initial apartment home deliveries scheduled to occur in the coming months.

As of April 30, 2022, 17 units has been pre-leased at rental rates ahead of underwriting.

At Upton Place in Northwest Washington, D.C., construction remains on schedule and on budget.

As of April 30, 2022, more than 80% of the 106,000 square feet of planned retail space has been leased to two anchor tenants, more than 18 months ahead of delivery and at terms ahead of underwriting.

Construction continues on schedule and on budget at The Benson Hotel and Faculty Club in Aurora, Colorado and at our single-family rental project, Oak Shore, in Corte Madera, California.

Alternative Investments

Aimco makes alternative investments where it has special knowledge or expertise relevant to the venture and opportunity exists for positive asymmetric outcomes.

Aimco’s current alternative investments include a mezzanine loan secured by a stabilized multi-family property with an option to participate in future multi-family development as well as three passive equity investments.

Updates include:

Aimco’s $346.0 million mezzanine loan is secured by the Parkmerced stabilized multi-family property plus phases two through nine of the site's future development opportunity.

Members of Aimco's borrower also own phase one and recently recapitalized it with an alternative investment firm with $57 billion under management.

The recapitalization provides the borrower with additional liquidity and added capacity to advance capital and service the first priority debt that is senior to the Aimco loan.

It is now expected that the neighboring San Francisco State University will return to full in-person learning this fall, increasing the demand for the apartments that serve as collateral for our loan.

Aimco funded the remaining $14.2 million of a total commitment of a $50.0 million passive equity investment in IQHQ Inc., a life sciences developer.

Investment Activity

Aimco is focused on development and redevelopment, funded through joint ventures.

Aimco will also consider opportunistic investments in related activities.

In the first quarter of 2022:

Aimco’s joint venture with The Kushner Companies closed on the previously announced acquisition of three undeveloped land parcels located in downtown Fort Lauderdale, Florida.

The total purchase price for the land was $49.0 million ($25.0 million at Aimco’s 51.0% share) and current zoning allows for the development of approximately three million square feet of multifamily homes and commercial space.

The venture is under contract to sell one of the parcels and expects to close this sale in the third quarter of 2022.

Aimco formed a joint venture for the construction of approximately one million square feet of mixed-use development in the Edgewater neighborhood of Miami, Florida.

Aimco has a 20.0% share of the joint venture, which includes the initial contribution of an eighth of an acre of land that we purchased for $1.7 million in January 2022.

The development site is situated as the gateway to our Edgewater land assemblage and our redevelopment of The Hamilton.

Aimco will serve as the development manager for the venture and expects to begin construction in 2023.

Aimco entered into a contract to acquire, for $100.0 million, a nine-acre development site in Fort Lauderdale, Florida.

The site is located in the rapidly growing Flagler Village neighborhood and allows for approximately three million square feet of phased, mixed-use development, which could contain up to 1,500 residential units at full build-out.

Pursuant to the agreement, Aimco reserved funds for the transaction by placing $70.0 million of cash and $30.0 million in letters of credit into escrow.

In conjunction with the purchase, we entered into a financing lease with the seller to obtain the development rights.

Aimco plans to form a joint venture or joint ventures to execute the planned development activity.

Operating Property Results

Aimco owns a diversified portfolio of stabilized apartment communities located in ten major U.S.

markets with average rents in line with local market averages .

Aimco also owns one commercial office building that is part of an assemblage with an adjacent apartment building.

Highlights for the three months ended March 31, 2022 include:

Revenue in the first quarter of 2022 was $35.8 million, up 9.4% year over year, resulting from a $155 increase in average monthly revenue per apartment home to more than $2,000, and a 90-basis point increase in Average Daily Occupancy to 98.5%.

Expense in the first quarter of 2022 was $11.2 million, up 0.2% year over year.

1001 Brickell Bay Drive, a waterfront office building in Miami, Florida, is owned as part of a larger assemblage with substantial development potential.

At the end of the first quarter 2022, the building was 83% occupied, up from 72% at the same time last year.

Balance Sheet and Financing Activity

Aimco is highly focused on maintaining a strong balance sheet, including having at all times ample liquidity.

As of March 31, 2022, Aimco had access to $297.5 million, including $109.0 million of cash on hand, $68.6 million of restricted cash, and the capacity to borrow up to $120.0 million on our revolving credit facility.

Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.

Financial Results of Operations

We have three segments:

(i) Development and Redevelopment, (ii) Operating, and (iii) Other.

We aggregate all our apartment communities that have reached stabilization into our Operating segment.

Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.

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 i n Item 1.

Three Months Ended March 31, 2022 compared with the Three Months Ended March 31, 2021

Net income decreased by $12.0 million, or 59.4% during the three months ended March 31, 2022, compared to the same periods in 2021, as described more fully below.

Property Results

As of March 31, 2022, our Development and Redevelopment segment included five properties that were under construction and three properties in lease-up.

Our Operating segment included 25 communities with 6,125 apartment homes, and our Other segment included our recent Eldridge Townhomes acquisition, and one office building.

We use proportionate property net operating income to assess the operating performance of our segments.

Proportionate property net operating income is defined as our share of rental and other property revenues, less direct property operating expenses, but

excluding utility reimbursements, for the consolidated communities.

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

excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, notes receivable, our investment in IQHQ and the Mezzanine Investment;

excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.

Please refer to Note 10 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.

Proportionate Property Net Operating Income

The results of our segments for the three months ended March 31, 2022 and 2021, as presented below, are based on segment classifications as of March 31, 2022:

Three Months Ended March 31,

(in thousands)

Rental and other property revenues, before utility reimbursements:

Development and Redevelopment

Property operating expenses, net of utility reimbursements:

Development and Redevelopment

Proportionate property net operating income:

Development and Redevelopment

For the three months ended March 31, 2022, compared to the same period in 2021:

Development and Redevelopment proportionate property net operating income increased by $4.0 million, due primarily to the delivery and lease up of units at newly constructed or redeveloped apartment communities.

Operating proportionate property net operating income increased by $3.1 million, or 14.3%.

The increase was attributable primarily to a $3.1 million, or 9.4% increase in rental and other property revenues due to higher average revenues of $155 per apartment home, and a 90-basis point increase in occupancy.

Other proportionate property net operating income increased by $1.5 million, or 69.4%.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our segments include property management costs, casualty losses, and, if applicable, the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our segments for purposes of evaluating segment performance.

Depreciation and Amortization

For the three months ended March 31, 2022, depreciation and amortization expense increased by $2.4 million, or 11.6% when compared to the same period in 2021, primarily due to additional assets being placed into service.

General and Administrative Expenses

For the three months ended March 31, 2022, compared to the same period in 2021, general and administrative expenses increased by $3.2 million, or 50.1%.

General and administrative expense for the three months ended March 31, 2021 was prior to the full build out of Aimco’s platform and are not representative of Aimco’s anticipated expenses.

Additionally, General and administrative expense includes $1.0 million of expenses to be reimbursed to AIR, per agreement upon separation, for consulting services, with respect to strategic growth, direction, and advice, in the three months ended March 31, 2022 and 2021.

This agreement is expected to conclude at year end.

Interest Expense

For the three months ended March 31, 2022, compared to the same period in 2021, interest expense increased by $1.9 million, or 15.2%, mainly due to increased borrowings of property debt and construction loans to support our expanding property development and redevelopment activities.

Mezzanine Investment Income, Net

On November 26, 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to the partnership owning the “Parkmerced Apartments”

located in southwest San Francisco (the “Mezzanine Investment”).

The loan bears interest at a 10% annual rate, accruing if not paid from property operations.

Ownership of the subsidiaries that originated and hold the mezzanine loan was retained by AIR following the Separation.

The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, once required third-party consents to transfer are received.

Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on the mezzanine loan to us.

As of March 31, 2022, the total receivable including accrued and unpaid interest was $346.0 million.

During the three months ended March 31, 2022, we recognized $8.2 million of income in connection with the mezzanine loan, compared to $7.5 million during the three months ended March 31, 2021.

In the event we determine that a portion of the related Mezzanine Investment is not recoverable, we will recognize an impairment.

Unrealized Gains on Interest Rate Options

We adjust our interest rate options to fair value on a quarterly basis.

As a result of the mark to market adjustment, we recognized unrealized gains of $18.8 million and $25.3 million during the three months ended March 31, 2022 and 2021, respectively.

Other Income (Expense), Net

Other income, net, includes costs associated with our risk management activities, partnership administration expenses, valuation changes associated with equity investments, fee income, and certain non-recurring items.

For the three months ended March 31, 2022, compared to 2021, other expenses, net increased by $4.9 million, or 1351.0%, due primarily to valuation changes in our investments in property technology funds consisting of privately held entities that develop technology related to the real estate industry.

Income Tax Benefit

Certain of our operations, including our Development and Redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities.

Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.

Our income tax benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities.

Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in income tax benefit in our condensed consolidated statements of operations.

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT.

For the three months ended March 31, 2022 and 2021, we had consolidated net losses subject to tax of $14.8 million and $9.5 million, respectively.

For the three months ended March 31, 2022, we recognized income tax benefit of $4.1 million compared to $5.1 million during the same period in 2021.

The change is primarily due to an income tax benefit of $2.7 million in 2021 associated with internal restructuring and changes to our effective state tax rate, partially offset by higher GAAP losses at our TRS entities in 2022.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions.

We believe that the critical accounting policies that involve our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements relate to the impairment of long-lived assets and capitalized costs.

Our critical accounting policies are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2021.

There have been no significant changes in our critical accounting policies from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Non-GAAP Measures

We use EBITDAre and Adjusted EBITDAre in managing our business and in evaluating our financial condition and operating performance.

These key financial indicators are non-GAAP measures and are defined and described below.

We provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP.

Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and rating agencies as a supplemental measure of our ability to incur and service debt because they are recognized measures of performance by the real estate industry and allow for comparison of our credit strength to different companies.

EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of liquidity.

There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts.

Nareit defines EBITDAre as net income computed in accordance with GAAP, before interest expense, income taxes, depreciation, and amortization expense, further adjusted for:

gains and losses on the dispositions of depreciated property;

impairment write-downs of depreciated property;

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

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

EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate investment trusts.

We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of net income attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and unrealized gain on interest rate options, which we believe allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry.

Additionally, we exclude interest income recognized on our Mezzanine Investment that was accrued but not paid.

The reconciliation of net income to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2022 and 2021, is as follows (in thousands):

Three Months Ended March 31,

Interest expense

Income tax benefit

Depreciation and amortization

Adjustment related to EBITDAre of unconsolidated partnerships

Net (income) loss attributable to redeemable noncontrolling interests

in consolidated real estate partnerships

Net (income) loss attributable to noncontrolling interests

in consolidated real estate partnerships

EBITDAre adjustments attributable to noncontrolling interests

Mezzanine investment income, net (1)

Unrealized gains on interest rate options

Adjusted EBITDAre

(1) Includes the portion of accrued and unpaid income recognized during the year

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations.

Our primary sources of liquidity are cash flows from operations and borrowing capacity under our loan agreements.

As of March 31, 2022, our available liquidity was $297.5 million, which consisted of:

$109.0 million in cash and cash equivalents;

$68.6 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance;

$120.0 million of available capacity to borrow under our revolving secured credit facility.

We have commitments for, and expect to spend, approximately $217.9 million on development and redevelopment projects underway, with $240.1 million undrawn on our construction loans as of March 31, 2022 and limited partner equity commitments of $15.8 million.

Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, and future investments.

Additionally, our third-party property managers may enter into commitments on our behalf to purchase goods and services in connection with the operation of our apartment communities and our office building.

Those commitments generally have terms of one year or less and reflect expenditure levels comparable to historical levels.

We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next twelve months.

In the event that our cash and cash equivalents, revolving secured credit facility, and cash provided by operating activities are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional property financing activity and proceeds from apartment community sales.

We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property financing activity, cash generated from operations, and the recycling of Aimco equity.

Our revolving secured credit facility matures in December 2023, prior to consideration of its two one-year extension options.

Leverage and Capital Resources

The availability and cost of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing.

Currently, financing is readily available.

Any adverse changes in the lending environment could negatively affect our liquidity.

We have taken steps to mitigate a portion of our repricing risk.

However, if property or development financing options become unavailable, we may consider alternative sources of liquidity, such as reductions in capital spending or apartment community dispositions.

As of March 31, 2022, 42% of our leverage consisted of property-level, non-recourse, amortizing debt.

Approximately 83% of our property-level debt is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates, and inflation.

As of March 31, 2022, the weighted-average interest rate on our property-level debt was 3.2%, and the remaining term to maturity was 5.1 years.

While our primary source of leverage is property-level debt, we also have a secured $150.0 million credit facility with a syndicate of financial institutions, the Notes Payable to AIR, and construction loans.

As of March 31, 2022, we had no outstanding borrowings under our revolving secured credit facility.

We had a $30.0 million letter of credit outstanding related to a contract to purchase a 9-acre development site in Fort Lauderdale;

consequently, we had capacity to borrow up to $120.0 million under our secured credit facility.

Under our revolving secured credit facility, we have agreed to maintain a fixed charge coverage ratio of 1.25X minimum tangible net worth of $625.0 million, and maximum leverage of 60.0% as defined in the credit agreement.

We are currently in compliance and expect to remain in compliance with these covenants during the next twelve months.

As of March 31, 2022, 44% of our leverage consisted of the Notes Payable to AIR, with a fixed interest rate of 5.2% and a term to maturity of 1.8 years, and 15% consisted of our variable-rate non-recourse construction loans.

Changes in Cash, Cash Equivalents, and Restricted Cash

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

Operating Activities

For the three months ended March 31, 2022, net cash provided by operating activities was $6.5 million.

Our operating cash flow is primarily affected by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment communities and general and administrative costs.

Cash provided by operating activities for the three months ended March 31, 2022 increased by $4.2 million compared to the same period ended in 2021 due to timing of balance sheet position changes.

Investing Activities

For the three months ended March 31, 2022, our net cash used in investing activities of $111.4 million consisted primarily of capital expenditures and cash used in the $49.0 million purchase of undeveloped land parcels in Fort Lauderdale and construction costs on our development properties.

Total capital additions totaled $49.7 million and $31.7 million during the three months ended March 31, 2022 and 2021, respectively.

We have generally funded capital additions with available cash and cash provided by operating activities and construction loans.

We also funded the remaining $14.2 million of our total commitment of $50.0 million passive equity investment in IQHQ, a life sciences developer.

We exclude the amounts of capital spending related to commercial spaces and to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures.

We have also excluded from these measures indirect capitalized costs, which are not yet allocated to communities with capital additions, and their related capital spending categories.

Financing Activities

Net cash from financing activities for the three months ended March 31, 2022 increased by $65.8 million compared to the three months ended March 31, 2021, due primarily to draws on construction loans, and proceeds from non-recourse property loans totaling $55.6 million.

In addition, we received $17.6 million of contributions to our consolidated real estate partnerships.

Using available cash, we made payments of $24.5 million on our finance leases, which primarily consist of $22.2 million of payments for our finance lease arrangements relating to our development site in Fort Lauderdale.

Future Capital Needs

We expect to fund any future acquisitions, development and redevelopment, and other capital spending principally with operating cash flows, short-term borrowings, and debt and equity financing.

Our near-term business plan does not contemplate the issuance of equity.

QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK

Our chief market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing property debt, including the Notes Payable to AIR, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads.

We use long-dated, fixed-rate, non-recourse property debt in order to avoid the refunding and repricing risks of short-term borrowings.

We use working capital primarily to fund short-term uses.

We make limited use of derivative financial instruments and we do not use them for trading or other speculative purposes.

As of March 31, 2022, on a consolidated basis, we had approximately $86.9 million of variable-rate property-level debt outstanding in addition to two variable rate construction loans that totaled $184.8 million.

We estimate that a change in 30-day LIBOR of 100 basis points with constant credit risk spreads would reduce or increase interest expense by approximately $2.7 million.

In 2020, we paid an upfront premium of $12.1 million for the option to enter into a $1.5 billion notional amount interest rate swap at a future date.

This interest rate option, or swaption, provides partial protection against exposure to rising interest rates between now and October 2024.

During the first quarter of 2021, we paid an upfront premium of $5.6 million (including transaction costs) for the option to enter into a $500.0 million notional amount interest rate swap at a future date.

This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our Notes Payable to AIR, and is intended to mitigate interest rate increases between now and January 2024.

Also during the first quarter of 2021, we paid an upfront premium of $0.3 million for interest rate caps for the entire amounts on our Flamingo and The Hamilton construction loans.

These interest rate caps, provide protection if one month LIBOR exceeds 3.0% during the initial term of the loans.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements