What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2023-11-06 · 200 added, 713 removed, 436 unchanged (68% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30, 2023

March 31, 2024

December 31, 2023

5 unchanged sentences

Restricted cash

Mezzanine investment

Interest rate options

5 unchanged sentences

Non-recourse property debt, net

Construction loans, net

Non-recourse construction loans, net

Total indebtedness

1 unchanged sentence

Lease liabilities - finance leases

Mezzanine investment - participation sold

Accrued liabilities and other

2 unchanged sentences

Commitments and contingencies (Note 3)

Equity ( 510,587,500 shares authorized at both September 30, 2023 and December 31, 2022):

Common Stock, $ 0.01 par value, 141,994,719 and 146,524,941 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Equity ( 510,587,500 shares authorized at both March 31, 2024 and December 31, 2023):

Common Stock, $ 0.01 par value, 140,210,798 and 140,576,102 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Retained earnings

Retained earnings (deficit)

Total Aimco equity

6 unchanged sentences

(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

Interest expense

Mezzanine investment income (loss), net

Realized and unrealized gains (losses) on interest rate options

Realized and unrealized gains (losses) on equity investments

Gain on dispositions of real estate

Lease modification income

Income from unconsolidated real estate partnerships

11 unchanged sentences

Net income (loss) attributable to Aimco per common

share –

basic (Note 4)

share – basic (Note 4)

Net income (loss) attributable to Aimco per common

share –

diluted (Note 4)

Weighted-average common shares outstanding –

share – diluted (Note 4)

Weighted-average common shares outstanding – basic

Weighted-average common shares outstanding – diluted

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2023 and 2022

(In thousands, except per share data)

Noncontrolling

Retained Earnings (Accumulated Deficit)

Balances at June 30, 2022

Net income (loss)

Redemption of OP Units

Share-based compensation expense

Contributions from noncontrolling interests in consolidated real estate partnerships

Distributions to noncontrolling interests in consolidated real estate partnerships

Purchase of noncontrolling interests in consolidated real estate partnerships

Common stock repurchased

Cash dividends

Balances at September 30, 2022

Balances at June 30, 2023

Net income (loss)

Redemption of OP Units

Share-based compensation expense

Contributions from noncontrolling interests in consolidated real estate partnerships

Distributions to noncontrolling interests in consolidated real estate partnerships

Common stock repurchased

Other common stock issuances

Balances at September 30, 2023

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, 2023 and 2022

For the Three Months Ended March 31, 2024 and 2023

(In thousands, except per share data)

4 unchanged sentences

Net income (loss)

Redemption of OP Units

Redemption of OP Units held by third parties

Share-based compensation expense

1 unchanged sentence

Distributions to noncontrolling interests in consolidated real estate partnerships

Purchase of noncontrolling interests in consolidated real estate partnerships

Common stock repurchased

Other common stock issuances

Redemption of redeemable noncontrolling interests in consolidated real estate partnerships

Cash dividends

Balances at September 30, 2022

Balances at March 31, 2023

Balances at December 31, 2023

Net income (loss)

Redemption of OP Units

Redemption of OP Units held by third parties

Share-based compensation expense

2 unchanged sentences

Common stock repurchased

Other common stock issuances

Balances at September 30, 2023

Other common stock issuances, net of withholding taxes

Balances at March 31, 2024

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Depreciation and amortization

Mezzanine investment (income) loss, net

Realized and unrealized (gains) losses on interest rate options

2 unchanged sentences

Share-based compensation

Loss on extinguishment of debt, net

Lease modification income

Gain on dispositions of real estate

Income from unconsolidated real estate partnerships

1 unchanged sentence

Changes in operating assets and operating liabilities:

Other assets, net

Net cash received from lease incentive

Accrued liabilities and other

Operating assets, net

Operating liabilities, net

Total adjustments

1 unchanged sentence

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate

Capital expenditures (1)

Proceeds from disposition of real estate

Investment in IQHQ

Redemption of IQHQ investment

Distributions received from unconsolidated real estate partnerships

Investment in unconsolidated real estate partnerships

Purchase of treasury bill

Other investing activities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-recourse property debt

Proceeds from construction loans

Proceeds from sale of participation in Mezzanine Investment

Payments of deferred loan costs

Proceeds from non-recourse construction loans

Principal repayments on non-recourse property debt

Principal repayments on construction loans

Principal repayments on Notes Payable to AIR

Purchase of interest rate options

Proceeds from interest rate options

Payments on finance leases

Payments of prepayment premiums

Common stock repurchased

Dividends paid on common stock

Redemption of redeemable noncontrolling interests

Payments related to withholding taxes for share-based compensation

Distributions to redeemable noncontrolling interests

2 unchanged sentences

Contributions from redeemable noncontrolling interests

Redemption of OP units

Redemption of noncontrolling interest in real estate partnership

Redemption of OP Units held by third parties

Other financing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

NET DECREASE IN CASH, CASH EQUIVALENTS,

4 unchanged sentences

END OF PERIOD

(1) Accrued capital expenditures wer e $ 54.3 mil lion and $ 31.4 m illion as of September 30, 2023 and 2022, respectively.

(1) Accrued capital expenditures wer e $ 39.8 mil lion and $ 43.8 m illion as of March 31, 2024 and 2023, respectively.

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

September 30, 2023

March 31, 2024

December 31, 2023

5 unchanged sentences

Restricted cash

Mezzanine investment

Interest rate options

5 unchanged sentences

Non-recourse property debt, net

Construction loans, net

Non-recourse construction loans, net

Total indebtedness

1 unchanged sentence

Lease liabilities - finance leases

Mezzanine investment - participation sold

Accrued liabilities and other

2 unchanged sentences

Commitments and contingencies (Note 3)

Partners’

Partners’ capital:

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’

Total liabilities and partners’

Total partners’ capital

Total liabilities and partners’ capital

See notes to condensed consolidated financial statements.

2 unchanged sentences

(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

Interest expense

Mezzanine investment income (loss), net

Realized and unrealized gains (losses) on interest rate options

Realized and unrealized gains (losses) on equity investments

Gain on dispositions of real estate

Lease modification income

Income from unconsolidated real estate partnerships

9 unchanged sentences

Net income (loss) attributable to Aimco Operating

Partnership per common unit –

basic (Note 4)

Partnership per common unit – basic (Note 4)

Net income (loss) attributable to Aimco Operating

Partnership per common unit –

diluted (Note 4)

Weighted-average common units outstanding –

See notes to condensed consolidated financial statements.

AIMCO OP L.P.

CONDENSED CONSOLIDATED S TATEMENTS OF PARTNERS’

For the Three Months Ended September 30, 2023 and 2022

(In thousands)

General Partner

Limited Partner

Partners’

Attributable to

Aimco Operating

Noncontrolling

in Consolidated Real

Estate Partnerships

Partners’

Balances at June 30, 2022

Net income (loss)

Redemption of OP Units

Share-based compensation expense

Contributions from noncontrolling interests in consolidated real estate partnerships

Distributions to noncontrolling interests in consolidated real estate partnerships

Purchase of noncontrolling interests in consolidated real estate partnerships

Repurchases of OP Units held by Aimco

Cash dividends

Balances at September 30, 2022

Balances at June 30, 2023

Net income (loss)

Redemption of OP Units

Share-based compensation expense

Contributions from noncontrolling interests in consolidated real estate partnerships

Distributions to noncontrolling interests in consolidated real estate partnerships

Repurchases of OP Units held by Aimco

Balances at September 30, 2023

Partnership per common unit – diluted (Note 4)

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’

For the Nine Months Ended September 30, 2023 and 2022

CONDENSED CONSOLIDATED S TATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2024 and 2023

(In thousands)

1 unchanged sentence

Limited Partner

Partners’

Partners’ Capital

Attributable to

3 unchanged sentences

Estate Partnerships

Partners’

Balances at December 31, 2022

Net income (loss)

Redemption of OP Units

Redemption of OP Units held by third parties

Share-based compensation expense

1 unchanged sentence

Distributions to noncontrolling interests in consolidated real estate partnerships

Purchase of noncontrolling interests in consolidated real estate partnerships

Repurchases of OP Units held by Aimco

Redemption of OP Units held by Aimco

Other OP Unit issuances

Redemption of redeemable noncontrolling interests in consolidated real estate partnerships

Cash dividends

Balances at September 30, 2022

Balances at March 31, 2023

Balances at December 31, 2023

Net income (loss)

Redemption of OP Units

Redemption of OP Units held by third parties

Share-based compensation expense

1 unchanged sentence

Distributions to noncontrolling interests in consolidated real estate partnerships

Repurchases of OP Units held by Aimco

Other OP Unit issuances

Balances at September 30, 2023

Redemption of OP Units held by Aimco

Other OP Unit issuances, net of withholding taxes

Balances at March 31, 2024

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Depreciation and amortization

Mezzanine investment (income) loss, net

Realized and unrealized (gains) losses on interest rate options

2 unchanged sentences

Share-based compensation

Loss on extinguishment of debt, net

Lease modification income

Gain on dispositions of real estate

Income from unconsolidated real estate partnerships

1 unchanged sentence

Changes in operating assets and operating liabilities:

Other assets, net

Net cash received from lease incentive

Accrued liabilities and other

Operating assets, net

Operating liabilities, net

Total adjustments

1 unchanged sentence

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate

Capital expenditures (1)

Proceeds from disposition of real estate

Investment in IQHQ

Redemption of IQHQ investment

Distributions received from unconsolidated real estate partnerships

Investment in unconsolidated real estate partnerships

Purchase of treasury bill

Other investing activities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-recourse property debt

Proceeds from construction loans

Proceeds from sale of participation in Mezzanine Investment

Payments of deferred loan costs

Proceeds from non-recourse construction loans

Principal repayments on non-recourse property debt

Principal repayments on construction loans

Principal repayments on Notes Payable to AIR

Purchase of interest rate options

Proceeds from interest rate options

Payments on finance leases

Payments of prepayment premiums

Common stock repurchased

Dividends paid on common stock

Redemption of redeemable noncontrolling interests

Payments related to withholding taxes for share-based compensation

Distributions to redeemable noncontrolling interests

2 unchanged sentences

Contributions from redeemable noncontrolling interests

Redemption of OP units

Redemption of noncontrolling interest in real estate partnership

Redemption of OP Units held by third parties

Other financing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

NET DECREASE IN CASH, CASH EQUIVALENTS,

4 unchanged sentences

END OF PERIOD

(1) Accrued capital expenditures we re $ 54.3 m illion and $ 31.4 million as of September 30, 2023 and 2022, respectively .

(1) Accrued capital expenditures w ere $ 39.8 mill ion and $ 43.8 million as of March 31, 2024 and 2023, respectively.

See notes to condensed consolidated financial statements.

2 unchanged sentences

NOTES TO CONDENSED CONSOLID ATED FINANCIAL STATEMENTS

September 30, 2023

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”).

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”).

March 31, 2024

Note 1 — Organization

Apartment Investment and Management Company (“Aimco” or "the Company"), a Maryland corporation, is a self-administered and self-managed real estate investment trust (“REIT”).

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

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

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

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

(“Aimco Operating Partnership”).

Except as the context otherwise requires, “we,”

“our,”

and “us”

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

As of September 30, 2023, Aimco owned 92.4 % of the legal interest in the common partnership units of Aimco Operating Partnership and 94.8 % of the economic interest in Aimco Operating Partnership.

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

(“Aimco Operating Partnership”).

As of March 31, 2024, Aimco owned 92.4 % of the legal interest in the common partnership units of Aimco Operating Partnership and 94.8 % of the economic interest in Aimco Operating Partnership.

The remaining 7.6 % legal interest is owned by limited partners.

The common partnership units of Aimco Operating Partnership are referred to as "OP Units".

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

This filing combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2024, of Aimco and Aimco Operating Partnership.

Where it is important to distinguish between the two entities, we refer to them specifically.

Otherwise, references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.

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

multifamily sector.

These real estate investments include:

a portfolio of 26 operating apartment communities ( 22 consolidated properties with 5,640 apartment homes and four unconsolidated operating properties), diversified by both geography and price point;

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

one hotel, with 106 rooms;

three residential apartment communities, with 1,185 apartment homes, of which 276 have been completed and an additional 909 are planned, and a single family rental community with 16 planned homes plus eight accessory dwelling units, which we are actively developing or redeveloping;

land parcels held for development.

Our real estate portfolio also includes two unconsolidated investments in land held for development.

At March 31, 2024, our entire portfolio of operating residential apartment communities includes 5,600 apartment homes within 21 consolidated stabilized operating properties, a fully renovated waterfront property with 276 units, and four unconsolidated properties.

We also own two multifamily properties that are under construction with 624 of the 909 planned apartment homes delivered, a single family rental community that is under construction with 16 planned homes and eight accessory dwelling units, a 106 -key luxury hotel with event space, one commercial office building that is part of an assemblage with an adjacent apartment building, and land parcels held for development.

In addition, we hold other alternative investments, including our Mezzanine Investment (see Note 2 for further information);

1 unchanged sentence

and our investment in real estate technology funds.

Note 2 —

Basis of Presentation and Summary of Significant Accounting Policies

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

Basis of Presentation

3 unchanged sentences

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

Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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.

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 Condensed Consolidated Balance Sheets of Aimco and Aimco Operating Partnership as of December 31, 2023 have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements.

For further information, refer to the financial statements and notes thereto included in Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022 .

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

Principles of Consolidation

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

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

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

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

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

As used herein, and except where the context otherwise requires, “partnership”

refers to a limited partnership or a limited liability company and “partner”

refers to a partner in a limited partnership or a member of a limited liability company.

Refer to Note 6 for further information.

Common Noncontrolling Interests in Aimco Operating Partnership

Common noncontrolling interests in Aimco Operating Partnership consist of OP Units held by third parties, and are reflected in Aimco’s accompanying Condensed Consolidated Balance Sheets as Common Noncontrolling Interests in Aimco Operating Partnership .

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

For the periods ended September 30, 2023 and 2022, the holders of OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of approximately 5.1 % , and 5.0 %, respectively.

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

For the periods ended March 31, 2024 and 2023, the holders of OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of approximately 5.2 % , and 5.1 %, respectively.

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

2 unchanged sentences

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

Redeemable noncontrolling interests in consolidated real estate partnerships as of September 30, 2023, consists of the following:

(i) a $ 102.0 million preferred equity interest in an entity that owns a portfolio of operating apartment communities and (ii) equity interests in two separate consolidated joint ventures that are actively developing residential apartment communities.

Redeemable noncontrolling interests in consolidated real estate partnerships as of March 31, 2024, consists of the following:

(i) a preferred equity interest in an entity that owns a portfolio of operating apartment communities and (ii) equity interests in two separate consolidated joint ventures that expect to complete the development of residential apartment communities in 2024.

Capital contributions, distributions, and net income attributable to redeemable noncontrolling interests in consolidated real estate partnerships are determined in accordance with the relevant partnership agreements.

These interests are presented as Redeemable noncontrolling interests in consolidated real estate partnerships in our Condensed Consolidated Balance Sheets as of September 30, 2023.

The following table shows changes in our redeemable noncontrolling interests in consolidated real estate partnerships from December 31, 2022 to September 30, 2023 (in thousands):

Balance at December 31, 2022

Capital contributions

These interests are presented as Redeemable noncontrolling interests in consolidated real estate partnerships in our Condensed Consolidated Balance Sheets as of March 31, 2024.

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

The following table shows changes in our redeemable noncontrolling interests in consolidated real estate partnerships from December 31, 2023 to March 31, 2024 ( in thousands ):

Balance at Beginning of Period

Distributions

Balance at September 30, 2023

Balance at March 31, 2024

Mezzanine Investment

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

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

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

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

3 unchanged sentences

Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments received on the Mezzanine Investment to us, and we are obligated to indemnify AIR against any costs and expenses related thereto.

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

On a periodic basis, we evaluate our Mezzanine Investment for impairment.

We assess whether there are any indicators that imply the value of our investment may be impaired.

These include assessments of both the underlying property performance and general market conditions in place.

An investment is considered impaired if we determine that its fair value is less than the net carrying value of the investment on an other-than-temporary basis.

Cash flow projections for the investment consider property level factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors.

We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary.

These factors include the loan’s maturity date, our intent and ability to retain our investment in the entity, and the financial condition and long-term prospects of the entity.

Prior to recording a non-cash impairment charge during the three months ended December 31, 2022, we recognized as income the net amounts earned on the Mezzanine Investment by AIR on its equity investment that were due to be paid to us when collected to the extent the income was supported by the change in the counterparty’s claim to the net assets of the underlying borrower.

The income recognized primarily represented the interest accrued under the terms of the underlying Mezzanine Investment.

We have the risks and rewards of ownership of the Mezzanine Investment.

The carrying value of the Mezzanine Investment was zero as of March 31, 2024.

In June 2023, we closed on the sale of a 20 % non-controlling participation in the Mezzanine Investment for $ 33.5 million.

Pursuant to the terms of the agreement, the purchaser has the option to acquire the remaining 80 % for an additional $ 134 million plus interest accruing at no less than 19 % annually through May 2024 when the option expires.

The purchaser pre-paid $ 4 million of interest at the time of closing.

So long as the purchaser's option remains unexercised, Aimco receives a first priority return from any payments made to service or pay down the Mezzanine Investment equal to $ 134 million plus no less than a 19 % annualized return as well as 80 % of any residual payments after the purchaser receives a 10 % annualized return on its subordinate investment.

Additionally, Aimco is responsible for the servicing and administration of the Mezzanine Investment.

Because Aimco receives first priority and a higher annualized return than the purchaser, the sale and transfer of the financial interest does not qualify for sale accounting in accordance with GAAP.

Therefore, the portion of the Mezzanine Investment that was sold, which has a carrying amount of $ 31.5 million, remains in Mezzanine investment in our Condensed Consolidated Balance Sheets .

We have also recorded the cash received from the purchaser as a liability, which is included in Mezzanine investment - participation sold in our Condensed Consolidated Balance Sheets .

Transaction costs have been deferred and presented as a direct reduction from the related liability in Mezzanine investment - participation sold in our Condensed Consolidated Balance Sheets .

The cash flows associated with the Mezzanine investment - participation sold have been included in Cash Flows from Financing Activities in the Condensed Consolidated Statements of Cash Flows.

Pursuant to the terms of the agreement, we receive a first priority return from any payments made to service or pay down the Mezzanine Investment equal to $ 134.0 million plus no less than a 19 % annualized return as well as 80 % of any residual payments after the purchaser receives a 10 % annualized return on its subordinate investment.

Additionally, we are responsible for the servicing and administration of the Mezzanine Investment.

Because we receive first priority and a higher return than the purchaser, the partial sale and transfer of the financial interest does not qualify for sale accounting in accordance with GAAP.

Therefore, we recorded the cash received from the purchaser as a liability, which is included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets in accordance with GAAP.

Although the cash received is accounted for as a liability in accordance with GAAP, no amount is due to the purchaser until after we receive $ 134.0 million plus our annualized return.

Tr ansaction costs have been deferred and are presented as a direct reduction from the related liability, which is included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets .

The cash flows associated with this partial Mezzanine Investment sale have been included in Cash Flows from Financing Activities in our Condensed Consolidated Statements of Cash Flows.

Income Tax Benefit (Expense)

3 unchanged sentences

Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in Income tax benefit (expense) in our Condensed Consolidated Statements of Operations .

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, 2023, we had consolidated net losses subject to tax of $ 5.0 million and $ 12.4 million, respectively.

For the three and nine months ended September 30, 2022, we had consolidated net losses of $ 75.6 million and net income of $ 91.0 million subject to tax, respectively.

For the three months ended September 30, 2023, we recognized an income tax benefit of $ 6.2 million, compared to income tax benefit of $ 17.6 million during the same period in 2022.

The change is due primarily to the income tax benefit associated with the depreciation taken related to the termination of four leases of four properties in the third quarter of 2022, as well as a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.

For the nine months ended September 30, 2023, we recognized an income tax benefit of $ 10.8 million compared to income tax expense of $ 24.3 million during the same period in 2022.

The change is primarily due to the income tax benefit associated with the lease modification income recognized in the second quarter of 2022, as well as a change in the first quarter of 2023 to the effective state tax rate expected to apply to the reversal of deferred taxes and a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.

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

For the three months ended March 31, 2024, we had consolidated net losses subject to tax of $ 6.6 million, compared to consolidated net losses of $ 4.9 million for the same period in 2023.

For the three months ended March 31, 2024, we recognized an income tax benefit of $ 2.7 million, compared to income tax benefit of $ 4.2 million during the same period in 2023 .

The decrease is due primarily to a reduction to the effective state tax rate expected to apply to the reversal of our existing deferred items recognized during the three months ended March 31, 2023.

Use of Estimates

8 unchanged sentences

Other Assets, net

Other assets were comprised of the following amounts as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023

Other assets were comprised of the following amounts as of March 31, 2024 and December 31, 2023 ( in thousands ):

March 31, 2024

December 31, 2023

Other investments

Treasury bill

Deferred costs, deposits, and other

2 unchanged sentences

Corporate fixed assets

Accounts receivable, net of allowances of $ 334 and $ 1,206 as of September 30, 2023 and December 31, 2022, respectively

Accounts receivable, net of allowances of $ 164 and $ 373 as of March 31, 2024 and December 31, 2023, respectively

Deferred tax assets

Due from third-party property manager

Due from affiliates

1 unchanged sentence

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update ("ASU") No.

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

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

, which provides optional expedients to debt, derivatives, and other contracts that refer to LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The original ASU was effective as of its issuance date and provided temporary relief through December 31, 2022, which was extended through December 31, 2024 by ASU 2022-06, "Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848" .

We transitioned to the Secured Overnight Financing Rate ("SOFR") effective July 1, 2023.

There is not a material impact on our consolidated financial statements as a result of this transition.

Note 3 —

Commitments and Contingencies

In November 2023, the FASB issued Accounting Standards Update ("ASU") No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures", which requires disclosure of incremental segment information, including segment expense categories, on an annual and interim basis.

The new guidance is effective for the annual period ended December 31, 2024 and interim periods beginning in 2025.

The amendments in the ASU apply retrospectively to all periods presented in the financial statements.

The segment expense categories and amounts disclosed in prior periods are based on the significant expense categories identified and disclosed in the period of adoption.

We are currently evaluating the potential impact of adopting this new guidance on our condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures.

This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds.

(3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign).

The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance.

ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our condensed consolidated financial statements and related disclosures.

Note 3 — Commitments and Contingencies

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

We expect to fun d most of these commitments over the next 24 months.

As of September 30, 2023, we had remaining commitments for construction-related contracts of $ 120.2 million, with $ 173.8 million undrawn on our construction loans.

As of September 30, 2023, we have remaining commitments of $ 3.1 million related to our unconsolidated joint ventures, which we expect to fund over the next twelve months.

As of March 31, 2024, we had remaining commitments for construction-related contracts of $ 42.4 million, with $ 91.7 million undrawn on our non-recourse construction loans.

As of March 31, 2024, we have remaining commitments of $ 3.0 million related to our unconsolidated joint ventures, which we expect to fund over the next twelve months.

In addition, we have remaining commitments of $ 1.9 million related to our investments in property technology funds invested in entities that develop technology related to the real estate industry.

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Legal Matters

From time to time, we may be a party to certain legal proceedings.

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 4 —

Earnings per Share and per Unit

Note 4 — Earnings per Share and per Unit

Aimco and Aimco Operating Partnership calculate basic earnings per share and basic earnings per unit based on the weighted-average number of shares of Common Stock and OP Units outstanding.

We calculate diluted earnings per share and diluted earnings per unit taking into consideration dilutive shares of Common Stock and OP Unit equivalents and dilutive convertible securities outstanding during the period.

Aimco's Common Stock and OP Unit equivalents include options to purchase shares of Common Stock, which, if exercised, would result in our issuance of additional shares of Common Stock and Aimco Operating Partnership’s issuance to us of additional OP Units equal to the number of shares of Common Stock purchased under the options.

Aimco's Common Stock and OP 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 OP Units equal to the number of shares of Common Stock purchased under the options.

These equivalents also include unvested market-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 OP Units outstanding equal to the number of the shares that vest.

OP Unit equivalents also include unvested long-term incentive partnership units.

The Common Stock and OP Unit equivalents were included in the computation of diluted earnings per share and unit for the three and nine months ended September 30, 2022, because the effect of their inclusion was dilutive.

However, the Common Stock and OP Unit equivalents were not included in the computation of diluted earnings per share and unit for the three and nine months ended September 30, 2023, because the effect of their inclusion would be antidilutive.

As of September 30, 2023, the Common Stock and OP Unit equivalents that could potentially dilute basic earnings per share or unit in future periods totaled 3.7 million and 8.0 million, respectively.

Aimco's time-based restricted stock awards receive non-forfeitable dividends similar to shares of Common Stock and OP Units prior to vesting, and our market-based long-term incentive partnership units receive non-forfeitable distributions based on specified percentages of the distributions paid to OP Units prior to vesting and conversion.

The Common Stock and OP Unit equivalents were not included in the computation of diluted earnings per share and unit for the three months ended March 31, 2024 and 2023, because the effect of their inclusion would have been antidilutive.

As of March 31, 2024, the Common Stock and OP Unit equivalents that could potentially dilute basic earnings per share or unit in future periods totaled 4.2 million and 8.4 million, respectively.

Aimco's time-based restricted stock awards receive non-forfeitable dividends similar to shares of Common Stock and OP Units prior to vesting, and our market-based long-term incentive partnership units ("LTIP Units") receive non-forfeitable distributions based on specified percentages of the distributions paid to OP 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 pe r share and unit computations using the two-class method of allocating distributed and undistributed earnings when the two-class method is more dilutive than the treasury stock method.

Participating securities were included in the computation of diluted earnings per share and unit for the three and nine months ended September 30, 2022, because the effect of their inclusion was dilutive.

However, participating securities are not included in the computation of diluted earnings per share and unit for the three and nine months ended September 30, 2023, because the effect of their inclusion would be antidilutive.

As of September 30, 2023, participating securities that could potentially dilute basic earnings per share or unit in future periods totaled 2.5 million.

Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three and nine months ended September 30, 2023 and 2022, are as follows (in thousands, except per share and per unit data):

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

Participating securities were not included in the computation of diluted earnings per share and unit for the three months ended March 31, 2024 and 2023, because the effect of their inclusion would have been antidilutive.

As of March 31, 2024, participating securities that could potentially dilute basic earnings per share or unit in future periods totaled 2.5 million.

Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three months ended March 31, 2024 and 2023, are as follows ( in thousands, except per share and per unit data ):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Earnings per share

Net income (loss) attributable to Aimco

Net income allocated to Aimco participating securities

Net income (loss) allocated to Aimco participating securities

Net income (loss) attributable to Aimco common stockholders

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Net income (loss) attributable to Aimco Operating Partnership

Net income allocated to Aimco Operating Partnership participating securities

Net income (loss) allocated to Aimco Operating Partnership participating securities

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

Denominator - units

Basic weighted-average common partnership units outstanding

Diluted partnership unit equivalents outstanding

Diluted weighted-average common partnership units outstanding

Basic weighted-average OP Units outstanding

Diluted OP Unit equivalents outstanding

Diluted weighted-average OP Units outstanding

Earnings (loss) per unit - basic

Earnings (loss) per unit - diluted

Note 5 —

Fair Value Measure ments and Disclosures

Note 5 — Fair Value Measure ments and Disclosures

Recurring Fair Value Measurements

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

As of September 30, 2023, we held interest rate caps with $ 627.4 million notional value.

These instruments were acquired for $ 5.8 million, and the fair value of these instruments is noted in the table below.

During th e nine months ended September 30, 2023, we monetized the $ 1.5 billion notional amount interest rate swaption, purchased in conjunction with the Mezzanine Investment to protect against future interest rate increases, for gross proceeds of $ 54.2 million.

Proceeds from the monetization are currently invested in a short-term treasury bill, which is included in Other assets, net in our Condensed Consolidated Balance Sheets.

This instrument has a carrying value and an approximate fair value of $ 54.3 million as of September 30, 2023.

These instruments are presented as Interest rate options in our Condensed Consolidated Balance Sheets .

As of March 31, 2024, we held interest rate caps with a $ 627.4 million notional value.

These instruments were acquired for $ 5.8 million, and the fair value of these instruments is $ 5.1 million as noted in the table below.

On a recurring basis, we measure at fair value our interest rate options.

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Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, any upfront premium is reflected in Purchase of interest rate options , and any proceeds are reflected in Proceeds from interest rate options in our Condensed Consolidated Statements of Cash Flows .

As of September 30, 2023 and December 31, 2022, we have investments in stock of $ 2.3 million and $ 1.2 million, respectively, classified within Level 1 of the GAAP fair value hierarchy.

In addition, as of September 30, 2023 and December 31, 2022, we have investments in property technology funds of $ 2.5 million and $ 3.1 million, respectively, in 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 the fair value for our interest rate options, investments in stock, our investments in real estate technology funds, and our investment in a treasury bill as of September 30, 2023 and December 31, 2022 (in thousands):

As of September 30, 2023

As of March 31, 2024 and December 31, 2023, we had investments in stock of $ 2.4 million and $ 2.9 million, respectively, classified within Level 1 of the GAAP fair value hierarchy.

In addition, as of March 31, 2024 and December 31, 2023, we have investments in property technology funds of $ 2.8 million and $ 2.5 million, respectively, in entities that develop technology related to the real estate industry.

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

See Note 3 for further information regarding unfunded commitments related to these investments.

The following table summarizes the fair value for our interest rate options, investments in stock, and our investments in real estate technology funds as of March 31, 2024 and December 31, 2023 ( in thousands ):

As of March 31, 2024

As of December 31, 2023

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Investments in real estate technology funds (1)

Investment in treasury bill

(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, 2023, and December 31, 2022, 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, 2024, and December 31, 2023, due to their relatively short-term nature and high probability of realization.

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

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

The following table summarizes the carrying value and fair value of our non-recourse property debt, and construction loans as of September 30, 2023 and December 31, 2022 (in thousands):

As of September 30, 2023

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

The following table summarizes the carrying value and fair value of our non-recourse property debt and non-recourse construction loans as of March 31, 2024 and December 31, 2023 ( in thousands ):

As of March 31, 2024

As of December 31, 2023

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Non-recourse property debt

Construction loans

Note 6 —

Variable Interest Entities

Non-recourse construction loans

Note 6 — Variable Interest Entities

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

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Substantially all of our assets and liabilities are those of Aimco Operating Partnership.

Aimco Operating Partnership is the primary beneficiary of, and therefore consolidates, its five VIEs that own interests in real estate.

Aimco Operating Partnership is the primary beneficiary of, and therefore consolidates, five VIEs that own interests in real estate.

Assets of our consolidated VIEs must first be used to settle the liabilities of those VIEs.

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Our maximum exposure to loss because of our involvement with the unconsolidated VIEs is limited to the carrying value of their assets.

The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of September 30, 2023 and December 31, 2022 (in thousands, except for VIE count):

As of September 30, 2023

The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of March 31, 2024 and December 31, 2023 ( in thousands, except for VIE count ):

As of March 31, 2024

As of December 31, 2023

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Count of VIEs

Real estate, net

Net real estate

Cash and cash equivalents

Restricted Cash

Mezzanine investment

Interest rate options

Right-of-use lease assets

Unconsolidated real estate partnerships

Notes receivable

Right-of-use lease assets - finance leases

Other assets, net

Non-recourse construction loans, net

Lease liabilities - finance leases

Accrued liabilities and other

Non-recourse property debt, net

Construction loans, net

Lease liabilities

Mezzanine investment - participation sold

Note 7 —

Lease Arrangements

Note 7 — Lease Arrangements

Aimco as Lessor

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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, 2023 and 2022, our total lease income was comprised of the following amounts for all residential and commercial property leases (in thousands):

Aimco as Lessee

Three Months Ended

September 30,

Nine Months Ended

September 30,

For the three months ended March 31, 2024 and 2023, 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

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Total lease income

Aimco as Lessee

Finance Lease Arrangements

We are lessee to finance leases for the land underlying the development sites at Upton Place, Strathmore Square, and Oak Shore.

As of September 30, 2023 and December 31, 2022, our finance leases had weighted-average remaining terms of 93.6 years and 94.2 years, respectively, and weighted-average discount rates of 6.1 % at each period end, respectively.

For the three and nine months ended September 30, 2023, amortization related to our finance leases was $ 0.0 million for each period, respectively, net of amounts capitalized, compared to $ 0.0 million and $ 6.7 million, respectively, for the three and nine months ended September 30, 2022.

For the three and nine months ended September 30, 2023, we capitalized $ 2.1 million and $ 6.3 million, respectively, of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets, compared to $ 1.7 million and $ 6.5 million, respectively, for the three and nine months ended September 30, 2022.

As of March 31, 2024 and December 31, 2023, our finance leases had weighted-average remaining terms of 93.1 years and 93.4 years, respectively, and weighted-average discount rates of 6.1 % and 6.1 %, respectively.

For the three months ended March 31, 2024, amortization related to finance leases was $ 0.2 million, net of amounts capitalized, compared to zero , net of amounts capitalized, for the three months ended March 31, 2023.

In addition, for the three months ended March 31, 2024, we capitalized $ 0.9 million of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets, compared to $ 2.1 million for the same period in 2023.

Operating Lease Arrangements

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Substantially all of the payments under our office leases are fixed.

As of September 30, 2023 and December 31, 2022, our operating leases had weighted-average remaining terms of 5.4 years and 6.3 years, respectively, and weighted-average discount rates of 3.3 % , and 3.4 %, respectively.

As of March 31, 2024 and December 31, 2023, our operating leases had weighted-average remaining terms of 4.9 years and 5.2 years, respectively, and weighted-average discount rates of 3.4 % , and 3.3 %, respectively.

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

Total operating lease expense for the three and nine months ended September 30, 2023 was $ 0.4 million and $ 1.1 million, respectively, compared to $ 0.2 million and $ 0.5 million, respectively, for the three and nine months ended September 30, 2022.

As of September 30, 2023 and December 31, 2022, operating lease right-of-use lease assets of $ 6.6 million and $ 6.7 million, respectively, are included in Other assets, net in our Condensed Consolidated Balance Sheets .

As of September 30, 2023 and December 31, 2022, operating lease liabilities of $ 12.1 million and $ 12.8 million, respectively, are included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets .

For each of the three month periods ended March 31, 2024 and 2023, we recognized total operating lease expense of $ 0.4 million.

As of March 31, 2024 and December 31, 2023, operating lease right-of-use lease assets of $ 5.8 million and $ 6.2 million, respectively, are included in Other assets, net in our Condensed Consolidated Balance Sheets .

As of March 31, 2024 and December 31, 2023, operating lease liabilities of $ 10.9 million and $ 11.5 million, respectively, are included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets .

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

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

For the three and nine months ended September 30, 2023, we recognized sublease income of $ 0.4 million and $ 1.1 million, respectively, compared to $ 0.4 million and $ 1.1 million, respectively, for the three and nine months ended September 30, 2022.

For each of the three month periods ended March 31, 2024 and 2023, we recognized sublease income of $ 0.4 million.

Annual Future Minimum Lease Payments

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

Sublease Income and Lease Modification Income

Combined minimum annual lease payments under operating and finance leases, a nd sublease income that offsets our operating lease rent, are as follows as of March 31, 2024 ( in thousands ):

Sublease Income

Operating Lease Future Minimum Rent

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Total lease liabilities

Note 8 —

Business Segments

Note 8 — Business Segments

We have three segments:

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and (iii) Other.

Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land held for development.

As of September 30, 2023, our Development and Redevelopment segment consists of 12 properties:

three residential apartment communities with 1,185 apartment homes, of which 276 have been completed and an additional 909 are planned, a single family rental community with 16 planned homes plus eight accessory dwelling units, which we are actively developing or redeveloping;

one hotel with 106 rooms and 18,000 square feet of event space completed in April 2023, and land parcels held for development.

Our Development and Redevelopment segment consists of rental communities that are under construction or have not achieved stabilization, as well as land held for development.

As of March 31, 2024 , our Development and Redevelopment segment consists of 10 rental communities, three of which were under construction.

Our Operating segment includes 21 residential apartment communities with 5,600 apartment homes that have achieved a stabilized level of operations as of January 1, 2023 and maintained it throughout the current year and comparable period.

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

During the first quarter of 2023, we reclassified one residential apartment community from the Other segment to the Operating segment because it reached stabilization.

Prior period segment information has been recast based upon our current segment population, and is consistent with how our chief operating decision maker ("CODM") evaluates the business.

The recast conforms with our reportable segment classification as of September 30, 2023.

During the three months ended March 31, 2024, we revised the information regularly reviewed by our chief operating decision maker ("CODM") to assess our operating performance.

As a result, we reclassified The Benson Hotel from the Development and Redevelopment segment to the Other segment.

In addition, during the first quarter of 2024, we disposed of St.

George Villas, which was previously reported within our Other segment.

Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business.

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

Our Other segment includes 1001 Brickell Bay Drive, our only office building, and St.

George Villas.

Our Other segment includes 1001 Brickell Bay Drive, our only office building, and The Benson Hotel, our only hotel.

Our CODM uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment.

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

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

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

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

• excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ and the Mezzanine Investment, and investments in real estate technology funds;

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

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended September 30, 2023 and 2022 (in thousands):

Development and Redevelopment

Proportionate

and Other Adjustments (1)

Corporate and Amounts Not Allocated to Segments (2)

Three Months Ended September 30, 2023

Rental and other property revenues

Property operating expenses

Other operating expenses not allocated

to segments (3)

Total operating expenses

Proportionate property net operating

income (loss)

Other items included in income before

income tax (4)

Income (loss) before income tax

Development and Redevelopment

Proportionate

and Other Adjustments (1)

Corporate and Amounts Not Allocated to Segments (2)

Three Months Ended September 30, 2022

Rental and other property revenues

Property operating expenses

Other operating expenses not allocated

to segments (3)

Total operating expenses

Proportionate property net operating

income (loss)

Other items included in income before

income tax (4)

Income (loss) before income tax

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the nine months ended September 30, 2023 and 2022 (in thousands):

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, 2024 and 2023 ( in thousands ):

Development and Redevelopment

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Corporate and Amounts Not Allocated to Segments (2)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Rental and other property revenues

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Corporate and Amounts Not Allocated to Segments (2)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Rental and other property revenues

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Also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.

(3) Other operating expenses not allocated to segments consist of depreciation and amortization and general and administrative expense.

(4) Other items included in Income before income tax benefit consist primarily of lease modification income, gain on dispositions of real estate, interest expense, mezzanine investment income (loss), net realized and unrealized gains (losses) on interest rate options, and realized and unrealized gains (losses) on equity investments.

Net real estate and non-recourse property debt, net, of our segments as of September 30, 2023 and December 31, 2022, were as follows (in thousands):

(3) Other operating expenses not allocated to segments consist of depreciation and amortization and general and administrative expenses.

(4) Other items included in Income before income tax benefit (expense) consist primarily of interest expense, mezzanine investment income (loss), net realized and unrealized gains (losses) on interest rate options, and realized and unrealized gains (losses) on equity investments.

Net real estate and non-recourse property debt, net, of our segments as of March 31, 2024 and December 31, 2023, were as follows ( in thousands ):

Development and Redevelopment

As of September 30, 2023

Corporate and Amounts Not Allocated to Segments (1)

As of March 31, 2024

Buildings and improvements

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Development and Redevelopment

Corporate and Amounts Not Allocated to Segments (1)

As of December 31, 2023

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Non-recourse property debt and construction loans, net

In addition to the amounts disclosed in the tables above, as of September 30, 2023 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $ 109.3 million and $ 117.7 million, respectively, and as of December 31, 2022, aggregated to $ 110.3 million and $ 114.6 million, respectively.

As of September 30, 2023 and December 31, 2022, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.

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:

our future plans and goals, including our pipeline investments and projects, our plans to eliminate certain near term debt maturities, our estimated value creation and potential, our timing, scheduling and budgeting, projections regarding lease growth, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, and changes to our corporate governance.

These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to:

the risk that the 2023 plans and goals may not be completed, as expected, in a timely manner or at all, the inability to recognize the anticipated benefits of the pipeline investments and projects, changes in general economic conditions, including, increases in interest rates and other force-majeure events and such other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (“SEC”).

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

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

Risk Factors in Part II of this report.

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

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

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

described in Item 1A of Apartment Investment and Management Company’s and Aimco OP L.P.’s combined Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent documents we file from time to time with the SEC.

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

“our,”

and “us”

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

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

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

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

Executive Overview

Our mission is to make real estate investments, primarily focused on the multifamily sector within targeted U.S.

markets, where outcomes are enhanced through our human capital and substantial value is created for investors, teammates, and the communities in which we operate.

Our value proposition includes our:

Platform, consisting of a cohesive, talented, and tenured team with diverse real estate industry experience combined with a disciplined and proven investment process;

Diversified portfolio, consisting of in-process value-add investments, a pipeline of 14 million square feet of potential future development, a national portfolio of stabilized multifamily real estate and limited indirect and passive investments;

Capital redeployment plan of prudent recycling of capital, reallocating our equity to higher returning investments.

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

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

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

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 is designed to leverage our investment platform and optimize risk-adjusted returns for our shareholders.

Aimco targets a balanced allocation, which includes investments in “Value Add”

and “Opportunistic”

multifamily real estate, primarily located in Southeast Florida, the Washington D.C.

Metro Area and Colorado's Front Range, plus investment in a geographically diversified portfolio of "Core" and "Core-Plus" apartment communities.

In addition, we currently hold select alternative assets, consisting primarily of indirect, real estate related debt and equity investments.

We have reduced our allocation to these investments and plan to continue to significantly reduce our allocation over time.

We have policies in place that support our stated strategy, guide our investment allocations, and manage risk, including to hold at all times a sizable portion of our net equity in stabilized cash-flowing assets and to require cash or committed credit necessary for completion of development and redevelopment projects prior to their commencement.

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 our 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 Washington D.C.

Our investment platform is managed by experienced professionals based in three regions, where we will focus our new investment activity:

Southeast Florida, the Washington D.C.

Metro Area and Colorado's Front Range.

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

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.

Our development and redevelopment portfolio currently includes projects in construction and lease-up.

In addition, our team has secured significant, high-quality, future development opportunities, including total potential of more than 14 million square feet, located in high-growth markets.

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

From time to time, we may choose to monetize certain pipeline assets prior to vertical construction in an effort to maximize value and risk adjusted returns.

In any time period, the amount of Aimco capital that is allocated to development activities may vary based on market conditions and other factors.

Owning a portfolio of stabilized core and core plus real estate

Our entire portfolio of operating properties includes 26 apartment communities (22 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class).

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

The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across a geographically diversified portfolio, 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.

Managing and continuing to reduce our allocation to alternative investments, over time

We currently hold select alternative investments, the majority of which originated with Aimco Predecessor and, over time, plan to significantly reduce capital allocated to these investments.

Our current allocation to alternative investments includes:

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

("IQHQ"), 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 have made significant progress on our plan to reduce capital allocated to alternative investments through the partial sale of the Mezzanine Investment, as discussed further below.

Maintaining sufficient liquidity and utilizing safe financial leverage

We will guard our liquidity at all times by maintaining sufficient cash and committed credit.

From time to time, we will allocate capital to financial assets designed to mitigate risks.

Existing examples include our use of interest rate caps to provide protection against increases in interest rates on in-place loans.

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

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

The results from the execution of our business plan during the three and nine months ended September 30, 2023 are further described below.

Financial Results and Recent Highlights

For the three and nine months ended September 30, 2023, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.02) and ($0.10), respectively, compared to net income per share of $0.19 and $1.81, respectively, for the same periods in 2022 due primarily to lower real estate transaction proceeds and reduced tax benefit.

For the three months ended September 30, 2023, revenue and net operating income from our Stabilized Operating Properties were up 6.4% and 7.6%, respectively, year over year, with average monthly revenue per apartment home of $2,358, up $158 year over year.

For the nine months ended September 30, 2023, revenue and net operating income from our Stabilized Operating Properties were up 9.0% and 10.0%, respectively, year over year, with average monthly revenue per apartment home of $2,292, up $209 year over year.

As of September 30, 2023, we had completed construction and delivered The Hamilton, a 276-apartment home property in Miami, Florida, and The Benson Hotel and Faculty Club, a 106-key boutique hotel on the Anschutz Medical Campus in Aurora, Colorado.

We expect to deliver 234 additional units at Upton Place in Washington, D.C.

and the initial homes at Oak Shore in Corte Madera, California, by the end of 2023.

Aimco is under contract to sell our 80% stake in the Parkmerced mezzanine loan for $134.0 million plus accrued interest.

In June, at the time of closing on the sale of a 20% non-controlling position, the purchaser pre-paid $4.0 million of interest to Aimco and is expected to pay another $7.4 million prior to year end.

Value Add, Opportunistic & Alternative Investments

Development and Redevelopment

We generally seek development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and where we have a comparative advantage over others in the market.

We will focus our new investment activity in Southeast Florida, the Washington D.C.

Metro Area and Colorado's Front Range.

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

We currently have five active development and redevelopment projects, located in four U.S.

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

These projects remain on track, as measured by construction budget and lease-up metrics.

Additionally, we have a pipeline of future value-add opportunities totaling approximately 14 million gross square feet of development in our target markets of Southeast Florida, the Washington D.C.

Metro, and Colorado's Front Range.

During the three and nine months ended September 30, 2023, we invested $74.4 million and $220.4 million, respectively, in development and redevelopment activities.

Updates include:

Construction and repositioning of The Hamilton, a 276-unit bayfront apartment community in Miami, Florida, is now complete.

Demand for rental housing in Southeast Florida remains robust, especially for unique waterfront properties, and the property was 97% leased as of September 30, 2023.

Construction is progressing on plan at the first phase of Strathmore Square in Bethesda, Maryland, which will contain 220 highly tailored apartment homes with initial delivery on track for the second half of 2024.

This suburban infill project is located adjacent to the Grosvenor-Strathmore Metro station and the Strathmore Performing Arts Campus, and is 1.5 miles from The National Institutes of Health main campus.

Funding for the $164.0 million project is fully secured with Aimco having already funded 100% of its equity commitment.

Construction continues on schedule and on budget at Upton Place in Northwest Washington, D.C.

The initial delivery of 81 of Upton Place’s 689 apartment homes occurred in the fourth quarter of 2023.

As of September 30, 2023, 80% of the project's 105,000 square feet of retail space has been leased.

Construction is ongoing at Oak Shore, in Corte Madera, California, where 16 luxury single family rental homes and eight accessory dwelling units are being developed.

Construction has been completed on the initial homes and they are expected to be ready for occupancy in November 2023.

In the three months ended September 30, 2023, we invested $4.8 million into programming, design, documentation, and entitlement efforts related to select pipeline projects located in Southeast Florida, the Washington D.C.

Metro, and Colorado’s Front Range.

Alternative Investments

Our current alternative investments are primarily those investments originated by Aimco Predecessor and include a Mezzanine Investment to the Parkmerced partnership secured by a stabilized multifamily property with an option to participate in future multifamily development, as well as three passive equity investments.

Over time, we plan to significantly reduce capital allocated to these investments.

Updates for our alternative investments include:

Aimco is under contract to sell our 80% stake in the Parkmerced mezzanine loan for $134.0 million plus accrued interest.

In June, at the time of closing on the sale of a 20% non-controlling position, the purchaser pre-paid $4.0 million of interest to Aimco and is expected to pay another $7.4 million prior to year end.

Investment and Disposition Activity

We are focused on growing the business and delivering strong investment returns, through the ownership of apartment properties as well as development and redevelopment activities, funded primarily through third-party capital.

In the three months ended September 30, 2023, no new investment or disposition activity occurred.

Operating Property Results

We own a diversified portfolio of stabilized apartment communities located in eight major U.S.

markets with average rents in line with local market averages.

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

Highlights for the three months ended September 30, 2023 include:

Revenue for our Operating segment for the three months ended September 30, 2023, was $37.7 million, up 6.4% year over year, resulting from a $158 increase in average monthly revenue per apartment home to $2,358, partially offset with a 75-basis point decrease in Average Daily Occupancy to 95.2%.

Expenses for our Operating segment for the three months ended September 30, 2023, were $10.7 million, up 3.5% year-over-year due primarily to higher insurance costs, during the quarter we received favorable real estate tax valuations in Chicago largely offsetting the impact of the prior unfavorable real estate tax valuation in Miami, which has been successfully appealed.

Net operating income for our Operating segment for the three months ended September 30, 2023 was $27.0 million, up 7.6% year-over-year.

Balance Sheet and Financing Activity

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

As of September 30, 2023, we had access to $320.2 million in liquidity, including $95.7 million of cash on hand, a $54.3 million short term investment in a treasury bill, $20.2 million of restricted cash, and the capacity to borrow up to $150.0 million on our revolving credit facility.

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

Financial Results of Operations

We have three segments:

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

Our Development and Redevelopment segment includes properties that are under construction or have not achieved stabilization, as well as land assemblages that are being held for future development.

Our Operating segment includes 21 residential apartment communities that have achieved stabilized levels of operations as of January 1, 2022 and maintained it throughout the current year and comparable period.

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

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

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.

Results of Operations for the three and nine months ended September 30, 2023 and 2022

Net income attributable to Aimco common stockholders decreased by $31.7 million and $291.5 million, respectively, for the three and nine months ended September 30, 2023, compared to the same period in 2022, as described more fully below.

Property Results

As of September 30, 2023, our Development and Redevelopment segment included 12 properties, three of which were properties that were under construction and two of which were recently completed, while the remaining were land held for development.

Our Operating segment included 21 communities with 5,600 apartment homes, and our Other segment included 1001 Brickell Bay Drive, our only office building, and St.

George Villas.

During the first quarter of 2023, we reclassified one residential apartment community from the Other segment to the Operating segment because it reached stabilization.

Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business.

The recast conforms with our reportable segment classification as of September 30, 2023.

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

excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, 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 8 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 September 30, 2023 and 2022, as presented below, are based on segment classifications as of September 30, 2023:

Three Months Ended

September 30,

(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 September 30, 2023, compared to the same period in 2022:

Development and Redevelopment proportionate property net operating income increased by $2.3 million due primarily to the lease up of apartment homes at The Hamilton.

Operating proportionate property net operating income increased by $1.9 million, or 7.6%.

The increase was attributable primarily to a $2.3 million, or 6.4% increase in rental and other property revenues due to higher average revenues of $158 per apartment home, offset with a 75-basis point decrease in Average Daily Occupancy to 95.2%.

Other proportionate property net operating income decreased by $0.4 million, or 14.8%, primarily at our commercial office building in Miami, Florida from lower occupancy following lease expirations earlier in 2023.

The results of our segments for the nine months ended September 30, 2023 and 2022, as presented below, are based on segment classifications as of September 30, 2023:

Nine Months Ended

September 30,

(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 nine months ended September 30, 2023, compared to the same period in 2022:

Development and Redevelopment proportionate property net operating income increased by $3.9 million due primarily to the lease up of apartment homes at The Hamilton.

Operating proportionate property net operating income increased by $7.1 million, or 10.0%.

The increase was attributable primarily to a $9.2 million, or 9.0% increase in rental and other property revenues due to higher average revenues of $209 per apartment home, offset with a 90-basis point decrease in occupancy.

Other proportionate property net operating income decreased by $1.4 million, or 17.7%, primarily at our commercial office building in Miami, Florida from lower occupancy following lease expirations earlier in 2023.

Non-Segment Real Estate Operations

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

Depreciation and Amortization

For the three and nine months ended September 30, 2023, compared to the same periods in 2022, Depreciation and amortization decreased by $67.6 million, or 79.2%, and $92.3 million, or 64.4%, respectively, due primarily to the disposition of three properties and the termination of leases of four properties and related relinquishment of the associated leasehold improvements during the year ended December 31, 2022.

General and Administrative Expenses

For the three and nine months ended September 30, 2023, compared to the same periods in 2022, General and administrative expenses decreased by $2.6 million, or 24.2%, and $4.8 million, or 16.3%, respectively, due primarily to a decrease in expenses for consulting services per the Separation Agreement with AIR, which concluded at December 31, 2022.

Interest Income

For the three and nine months ended September 30, 2023, compared to the same periods in 2022, interest income increased by $1.6 million, or 100.0%, and $5.0 million, or 100.0%, respectively, due primarily to increased interest earned on greater amounts of invested cash at higher rates in the current year versus the prior year.

Interest Expense

For the three and nine months ended September 30, 2023, compared to the same periods in 2022, interest expense decreased by $1.5 million, or 15.1%, and $38.2 million, or 58.0%, respectively, due primarily to the prepayment of the notes payable due to AIR and other property debt, partially offset by an increase related to the placement of certain property debt during the year ended December 31, 2022.

Mezzanine Investment Income (Loss), Net

For the three and nine months ended September 30, 2023, compared to the same periods in 2022, Mezzanine Investment income decreased by $9.2 million, or 100%, and $26.0 million or 100.0%, respectively, due primarily to our cessation of income recognition after the non-cash impairment recorded during the year ended December 31, 2022.

Realized and Unrealized Gains (Losses) on Interest Rate Options

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

As a result of the mark-to-market adjustments, we recorded unrealized losses of $0.5 million and unrealized gains of $0.1 million, respectively, for the three and nine months ended September 30, 2023, compared to unrealized gains of $7.5 million and $38.3 million, respectively, for the three and nine months ended September 30, 2022.

In addition, we recorded realized gains of $1.5 million and $3.2 million, respectively, for the three and nine months ended September 30, 2023, compared to realized gains of $1.7 million and $9.7 million, respectively, for the three and nine months ended September 30, 2022.

Realized and Unrealized Gains (Losses) on Equity Investments

We measure our investments in stock based on market prices at period end and our investments in property technology funds at NAV as a practical expedient.

As a result of changes in the values of these investments, we recorded unrealized losses of $1.1 million and unrealized gains of $0.2 million, respectively, for the three and nine months ended September 30, 2023, compared to unrealized losses of $2.2 million and $6.0 million, respectively, for the three and nine months ended September 30, 2022.

During the three and nine months ended September 30, 2022, we recognized realized and unrealized gains on our investment in IQHQ totaling $0.0 million and $26.2 million, respectively, resulting from a partial redemption of our investment during June 2022.

Gain on Dispositions of Real Estate

During the three months ended September 30, 2023, we had no gain on dispositions compared to a gain of $75.5 million for the three months ended September 30, 2022 related to the sale of two apartment communities.

During the nine months ended September 30, 2023, we recognized a gain on disposition of $1.9 million for the contribution of real estate to an unconsolidated joint venture compared to gains of $170.0 million for the nine months ended September 30, 2022 related to the sale of three apartment communities.

Lease Modification Income

During the three and nine months ended September 30, 2022, we recognized $1.6 million and $207.0 million, respectively, of lease modification income related to the agreement entered into with AIR for the termination of the leases of four properties.

Other Income (Expense), Net

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

For the three months ended September 30, 2023, compared to the same period in 2022, other expenses, net increased by $0.3 million, or 19.9%.

For the nine months ended September 30, 2023, compared to the same period in 2022, other expenses, net increased by $2.3 million, or 53.1%, primarily due to the incremental expense associated with pre-existing long-term incentive partnership units recorded upon the resignation of one of our board members during the first quarter of 2023.

Income Tax Benefit (Expense)

Certain aspects of our operations, including our development and redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities.

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

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

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, 2023, we had consolidated net losses subject to tax of $5.0 million and $12.4 million, respectively, compared to consolidated net losses of $75.6 million and net income of $91.0 million subject to tax, respectively, for the same periods in 2022.

For the three months ended September 30, 2023, we recognized an income tax benefit of $6.2 million, compared to an income tax benefit of $17.6 million for the same period in 2022.

The change is due primarily to GAAP income tax benefit associated with the depreciation taken related to the termination of four leases of four properties in the third quarter of 2022, as well as a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.

For the nine months ended September 30, 2023, we recognized an income tax benefit of $10.8 million, compared to income tax expense of $24.3 million for the same period in 2022.

The change is primarily due to GAAP income tax benefit associated with the lease modification income recognized in the second quarter of 2022, as well as a change in the first quarter of 2023 to the effective state tax rate expected to apply to the reversal of deferred taxes and a change in estimate associated with finalizing the 2022 tax return in the third quarter of 2023.

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 capitalized costs, impairment of long-lived assets, acquisitions, and the Mezzanine Investment.

Our critical accounting policies are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022.

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

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 our 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) loss attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and realized and unrealized (gains) losses on interest rate options, which we believe allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry.

Additionally, we exclude the (income) loss recognized on our Mezzanine Investment.

The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three and nine months ended September 30, 2023 and 2022, is as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss)

Interest expense

Income tax (benefit) expense

Gain on dispositions of real estate

Lease modification income

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) loss, net

Realized and unrealized (gains) losses on interest rate options

Unrealized (gains) losses on IQHQ investment

Adjusted EBITDAre

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 September 30, 2023, our available liquidity was $320.2 million, which consisted of:

$95.7 million in cash and cash equivalents;

$20.2 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance;

$54.3 million short-term investment in a treasury bill;

$150.0 million of available capacity to borrow under our revolving secured credit facility.

As of September 30, 2023, we had sufficient capacity on our construction loans to cover our commitments of approximately $120.2 million.

The initial allocations to our joint ventures have remaining unfunded commitments of $3.1 million.

We also have unfunded commitments in the amount of $2.1 million related to four investments in entities that develop technology related to the real estate industry.

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

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

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

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

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

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

Our revolving secured credit facility matures in December 2024, prior to consideration of its one-year extension option.

Leverage and Capital Resources

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

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

We have taken steps to mitigate a portion of our short-term refunding risk.

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

As of September 30, 2023, approximately 88% of our outstanding non-recourse property debt had a fixed interest rate and approximately 12% had a variable interest rate.

In addition, the weighted-average contractual rate on our non-recourse debt was 5.0% and 4.7% inclusive of interest rate caps, and the average remaining term to maturity was 6.8 years.

At September 30, 2023, all of our outstanding non-recourse property debt was either fixed or hedged.

Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates.

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

As of September 30, 2023, we had no outstanding borrowings under our revolving secured credit facility.

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

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

Changes in Cash, Cash Equivalents, and Restricted Cash

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing and financing activities, which are presented in our Condensed Consolidated Statements of Cash Flows in Item 1 of this report.

Operating Activities

For the nine months ended September 30, 2023, net cash provided by operating activities was $42.6 million.

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

Cash provided by operating activities for the nine months ended September 30, 2023, decreased by $185.7 million compared to the same period ended in 2022, due primarily to lower net cash received from lease incentive, lower net operating income associated with apartment communities sold in the latter part of 2022, and timing of balance sheet position changes, partially offset by decreased interest payments.

Investing Activities

For the nine months ended September 30, 2023, net cash used in investing activities of $264.1 million consisted primarily of capital expenditures of $212.2 million and the purchase of a short-term treasury bill for $53.8 million.

Net cash used in investing activities for the nine months ended September 30, 2023, increased by $181.2 million compared to the same period ended in 2022, due primarily to increased capital expenditures and the purchase of a short-term treasury bill offset by decreased funding for net real estate and investment transactions.

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

Financing Activities

For the nine months ended September 30, 2023, net cash provided by financing activities of $107.7 million consisted primarily of proceeds from construction loans, the sale of a participation in the Mezzanine Investment, and the monetization of interest rate options, partially offset by repayments on non-recourse property debt and common stock repurchases.

Net cash provided by financing activities for the nine months ended September 30, 2023, increased by $272.1 million compared to the same period ended in 2022, due primarily to prior year repayment and borrowing activity, offset by current year activity, including increased proceeds from construction loans, the sale of a participation in the Mezzanine Investment and the monetization of interest rate options.

Future Capital Needs

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

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

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, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads.

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

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

We use derivative financial instruments as a risk management tool and do not use them for trading or other speculative purposes.

As of September 30, 2023, on a consolidated basis, we had approximately $104.2 million of variable-rate property-level debt outstanding and $218.1 million of variable rate construction loans.

The impact of rising interest rates is mitigated by our use of interest rate caps, which as of September 30, 2023, provided protection for our variable interest rate debt.

Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates.

We estimate that an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no impact on interest expense on an annual basis.

As of September 30, 2023, we held interest rate caps with $627.4 million notional value.

These instruments were acquired for $5.8 million and at September 30, 2023, were valued at $9.1 million.

As of September 30, 2023, we had $115.9 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.

(1) During the quarter ended March 31, 2024, we disposed of St.

George Villas, and therefore it is not included in our segment balance sheets at March 31, 2024.

We added a Corporate segment to the tables above for presentation purposes to display these assets and the associated debt as of March 31, 2024 and December 31, 2023 , respectively.

In addition to the amounts disclosed in the tables above, as of March 31, 2024 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $ 108.7 million and $ 119.3 million, respectively, and as of December 31, 2023 , aggregated to $ 109.0 million and $ 118.7 million, respectively.

As of March 31, 2024 , right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.

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