Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
APARTMENT INVESTMENT A ND MANAGEMENT COMPANY
CONDENSED CONSOLIDA TED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30, 2024
December 31, 2023
ASSETS
Buildings and improvements
$
1,691,608
$
1,593,802
Land
620,029
620,821
Total real estate
2,311,637
2,214,623
Accumulated depreciation
( 623,913
)
( 580,802
)
Net real estate
1,687,724
1,633,821
Cash and cash equivalents
82,620
122,601
Restricted cash
27,788
16,666
Notes receivable
58,229
57,554
Right-of-use lease assets - finance leases
108,034
108,992
Other assets, net
103,177
149,841
Total assets
$
2,067,572
$
2,089,475
LIABILITIES AND EQUITY
Non-recourse property debt, net
$
844,779
$
846,298
Non-recourse construction loans, net
405,840
301,443
Total indebtedness
1,250,619
1,147,741
Deferred tax liabilities
103,180
110,284
Lease liabilities - finance leases
121,277
118,697
Accrued liabilities and other
125,140
121,143
Total liabilities
1,600,216
1,497,865
Redeemable noncontrolling interests in consolidated real estate partnerships
175,309
171,632
Commitments and contingencies (Note 3)
Equity ( 510,587,500 shares authorized at both September 30, 2024 and December 31, 2023):
Common Stock, $ 0.01 par value, 136,914,387 and 140,576,102 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
1,369
1,406
Additional paid-in capital
437,337
464,538
Retained earnings (deficit)
( 208,940
)
( 116,292
)
Total Aimco equity
229,766
349,652
Noncontrolling interests in consolidated real estate partnerships
49,544
51,265
Common noncontrolling interests in Aimco Operating Partnership
12,737
19,061
Total equity
292,047
419,978
Total liabilities and equity
$
2,067,572
$
2,089,475
See notes to condensed consolidated financial statements.
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Table of Contents
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
REVENUES
Rental and other property revenues
$
53,158
$
47,701
$
154,508
$
137,643
OPERATING EXPENSES
Property operating expenses
23,337
18,328
67,093
54,648
Depreciation and amortization
23,545
17,804
65,123
51,106
General and administrative expenses
7,750
8,198
23,876
24,487
Total operating expenses
54,632
44,330
156,092
130,241
Interest income
2,299
2,486
7,482
7,022
Interest expense
( 19,031
)
( 8,252
)
( 49,221
)
( 27,633
)
Realized and unrealized gains (losses) on interest rate contracts
( 1,148
)
955
1,164
3,280
Realized and unrealized gains (losses) on equity investments
( 566
)
( 1,066
)
( 48,101
)
165
Gain on dispositions of real estate
—
—
—
1,878
Other income (expense), net
( 3,959
)
( 2,030
)
( 6,835
)
( 6,889
)
Income (loss) before income tax
( 23,879
)
( 4,536
)
( 97,095
)
( 14,775
)
Income tax benefit (expense)
3,814
6,210
8,731
10,823
Net income (loss)
( 20,065
)
1,674
( 88,364
)
( 3,952
)
Net (income) loss attributable to redeemable noncontrolling
interests in consolidated real estate partnerships
( 3,659
)
( 3,610
)
( 10,817
)
( 10,460
)
Net (income) loss attributable to noncontrolling interests
in consolidated real estate partnerships
572
( 447
)
1,399
( 1,060
)
Net (income) loss attributable to common noncontrolling
interests in Aimco Operating Partnership
1,216
123
5,134
775
Net income (loss) attributable to Aimco
$
( 21,936
)
$
( 2,260
)
$
( 92,648
)
$
( 14,697
)
Net income (loss) attributable to Aimco per common
share – basic (Note 4)
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Net income (loss) attributable to Aimco per common
share – diluted (Note 4)
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Weighted-average common shares outstanding – basic
136,749
143,299
139,044
144,431
Weighted-average common shares outstanding – diluted
136,749
143,299
139,044
144,431
See notes to condensed consolidated financial statements.
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APARTMENT INVESTMENT A ND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended September 30, 2024 and 2023
(In thousands)
(Unaudited)
Common Stock
Noncontrolling
Interests in
Common
Noncontrolling
Interests in
Shares
Issued
Amount
Additional
Paid-
in Capital
Retained Earnings (Accumulated Deficit)
Total Aimco
Equity
Consolidated
Real Estate
Partnerships
Aimco
Operating
Partnership
Total
Equity
Balances at June 30, 2023
143,734
$
1,438
$
483,258
$
37,486
$
522,182
$
48,472
$
28,105
$
598,759
Net income (loss)
—
—
—
( 2,260
)
( 2,260
)
447
( 123
)
( 1,936
)
Redemption of OP Units held by third parties and reallocation of noncontrolling interests in Aimco Operating Partnership
—
—
244
—
244
—
( 332
)
( 88
)
Share-based compensation expense
—
—
1,890
—
1,890
—
23
1,913
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
71
—
71
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
( 287
)
—
( 287
)
Common stock repurchased
( 1,744
)
( 17
)
( 13,132
)
—
( 13,149
)
—
—
( 13,149
)
Other common stock issuances
5
—
—
—
—
—
—
—
Other, net
—
( 1
)
1
( 19
)
( 19
)
—
—
( 19
)
Balances at September 30, 2023
141,995
$
1,420
$
472,261
$
35,207
$
508,888
$
48,703
$
27,673
$
585,264
Balances at June 30, 2024
137,167
$
1,372
$
439,168
$
( 187,004
)
$
253,536
$
50,280
$
14,089
$
317,905
Net income (loss)
—
—
—
( 21,936
)
( 21,936
)
( 572
)
( 1,216
)
( 23,724
)
Redemption of OP Units held by third parties and reallocation of noncontrolling interests in Aimco Operating Partnership
—
—
( 143
)
—
( 143
)
—
( 142
)
( 285
)
Share-based compensation expense
—
—
1,839
—
1,839
—
6
1,845
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
194
—
194
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
( 326
)
—
( 326
)
Common stock repurchased
( 373
)
( 4
)
( 3,153
)
—
( 3,157
)
—
—
( 3,157
)
Other common stock issuances, net of withholding taxes
120
1
( 374
)
—
( 373
)
—
—
( 373
)
Other, net
—
—
—
—
—
( 32
)
—
( 32
)
Balances at September 30, 2024
136,914
$
1,369
$
437,337
$
( 208,940
)
$
229,766
$
49,544
$
12,737
$
292,047
See notes to condensed consolidated financial statements.
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Nine Months Ended September 30, 2024 and 2023
(In thousands)
(Unaudited)
Common Stock
Noncontrolling
Interests in
Common
Noncontrolling
Interests in
Shares
Issued
Amount
Additional
Paid-
in Capital
Retained Earnings (Accumulated Deficit)
Total Aimco
Equity
Consolidated
Real Estate
Partnerships
Aimco
Operating
Partnership
Total
Equity
Balances at December 31, 2022
146,525
$
1,466
$
496,482
$
49,904
$
547,852
$
48,294
$
29,212
$
625,358
Net income (loss)
—
—
—
( 14,697
)
( 14,697
)
1,060
( 775
)
( 14,412
)
Redemption of OP Units held by third parties and reallocation of noncontrolling interests in Aimco Operating Partnership
—
—
4,500
—
4,500
—
( 5,209
)
( 709
)
Share-based compensation expense
—
—
5,439
—
5,439
—
3,173
8,612
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
234
—
234
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
( 885
)
—
( 885
)
Common stock repurchased
( 4,747
)
( 47
)
( 35,694
)
—
( 35,741
)
—
—
( 35,741
)
Other common stock issuances
252
2
1,538
—
1,540
—
1,272
2,812
Other, net
( 35
)
( 1
)
( 4
)
—
( 5
)
—
—
( 5
)
Balances at September 30, 2023
141,995
$
1,420
$
472,261
$
35,207
$
508,888
$
48,703
$
27,673
$
585,264
Balances at December 31, 2023
140,576
$
1,406
$
464,538
$
( 116,292
)
$
349,652
$
51,265
$
19,061
$
419,978
Net income (loss)
—
—
—
( 92,648
)
( 92,648
)
( 1,399
)
( 5,134
)
( 99,181
)
Redemption of OP Units held by third parties and reallocation of noncontrolling interests in Aimco Operating Partnership
—
—
523
—
523
—
( 1,208
)
( 685
)
Share-based compensation expense
—
—
5,673
—
5,673
—
18
5,691
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
873
—
873
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
—
—
( 1,163
)
—
( 1,163
)
Common stock repurchased
( 4,290
)
( 43
)
( 34,101
)
—
( 34,144
)
—
—
( 34,144
)
Other common stock issuances, net of withholding taxes
628
6
641
—
647
—
—
647
Other, net
—
—
63
—
63
( 32
)
—
31
Balances at September 30, 2024
136,914
$
1,369
$
437,337
$
( 208,940
)
$
229,766
$
49,544
$
12,737
$
292,047
See notes to condensed consolidated financial statements.
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Table of Contents
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited )
Nine Months Ended September 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
( 88,364
)
$
( 3,952
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
65,123
51,106
Realized and unrealized (gains) losses on interest rate contracts
( 1,164
)
( 3,280
)
Realized and unrealized (gains) losses on equity investments
48,101
( 165
)
Income tax expense (benefit)
( 8,731
)
( 10,823
)
Share-based compensation
4,857
7,632
Loss on extinguishment of debt, net
—
929
Gain on dispositions of real estate
—
( 1,878
)
Loss (income) from unconsolidated real estate partnerships
1,707
( 614
)
Amortization of debt issuance costs and other
16,175
2,811
Changes in operating assets and operating liabilities:
Operating assets, net
( 7,107
)
2,057
Operating liabilities, net
15,559
( 1,272
)
Total adjustments
134,520
46,503
Net cash provided by operating activities
46,156
42,551
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate
—
( 4,108
)
Capital expenditures (1)
( 113,869
)
( 212,195
)
Distributions received from unconsolidated real estate partnerships
—
4,209
Investment in unconsolidated real estate partnerships
( 383
)
( 3,381
)
Purchase of treasury bill
—
( 53,773
)
Other investing activities
( 107
)
5,124
Net cash used in investing activities
( 114,359
)
( 264,124
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse construction loans
84,981
127,423
Principal repayments on non-recourse property debt
( 2,361
)
( 62,309
)
Proceeds from sale of participation in Mezzanine Investment
—
37,500
Payments of deferred loan costs
( 4,324
)
( 229
)
Proceeds from interest rate contracts
5,312
57,182
Common stock repurchased
( 34,144
)
( 36,769
)
Distributions to redeemable noncontrolling interests
( 6,289
)
( 7,210
)
Contributions from noncontrolling interests
873
234
Distributions to noncontrolling interests
( 1,163
)
( 885
)
Contributions from redeemable noncontrolling interests
1,390
125
Redemption of OP Units held by third parties
( 685
)
( 709
)
Other financing activities
( 4,246
)
( 6,661
)
Net cash provided by financing activities
39,344
107,692
NET DECREASE IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
( 28,859
)
( 113,881
)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT
BEGINNING OF PERIOD
139,267
229,766
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT
END OF PERIOD
$
110,408
$
115,885
(1) Accrued capital expenditures wer e $ 31.6 milli on and $ 54.3 million as of September 30, 2024 and 2023 , respectively.
See notes to condensed consolidated financial statements.
8
Table of Contents
AIMCO OP L.P.
CONDENSED CONSOLIDA TED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, 2024
December 31, 2023
ASSETS
Buildings and improvements
$
1,691,608
$
1,593,802
Land
620,029
620,821
Total real estate
2,311,637
2,214,623
Accumulated depreciation
( 623,913
)
( 580,802
)
Net real estate
1,687,724
1,633,821
Cash and cash equivalents
82,620
122,601
Restricted cash
27,788
16,666
Notes receivable
58,229
57,554
Right-of-use lease assets - finance leases
108,034
108,992
Other assets, net
103,177
149,841
Total assets
$
2,067,572
$
2,089,475
LIABILITIES AND EQUITY
Non-recourse property debt, net
844,779
$
846,298
Non-recourse construction loans, net
405,840
301,443
Total indebtedness
1,250,619
1,147,741
Deferred tax liabilities
103,180
110,284
Lease liabilities - finance leases
121,277
118,697
Accrued liabilities and other
125,140
121,143
Total liabilities
1,600,216
1,497,865
Redeemable noncontrolling interests in consolidated real estate partnerships
175,309
171,632
Commitments and contingencies (Note 3)
Partners’ capital:
General Partner and Special Limited Partner
229,766
349,652
Limited Partners
12,737
19,061
Partners’ capital attributable to Aimco Operating Partnership
242,503
368,713
Noncontrolling interests in consolidated real estate partnerships
49,544
51,265
Total partners’ capital
292,047
419,978
Total liabilities and partners’ capital
$
2,067,572
$
2,089,475
See notes to condensed consolidated financial statements.
9
Table of Contents
AIMCO OP L.P.
CONDENSED CONSOLIDATED S TATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
REVENUES
Rental and other property revenues
$
53,158
$
47,701
$
154,508
$
137,643
OPERATING EXPENSES
Property operating expenses
23,337
18,328
67,093
54,648
Depreciation and amortization
23,545
17,804
65,123
51,106
General and administrative expenses
7,750
8,198
23,876
24,487
Total operating expenses
54,632
44,330
156,092
130,241
Interest income
2,299
2,486
7,482
7,022
Interest expense
( 19,031
)
( 8,252
)
( 49,221
)
( 27,633
)
Realized and unrealized gains (losses) on interest rate contracts
( 1,148
)
955
1,164
3,280
Realized and unrealized gains (losses) on equity investments
( 566
)
( 1,066
)
( 48,101
)
165
Gain on dispositions of real estate
—
—
—
1,878
Other income (expense), net
( 3,959
)
( 2,030
)
( 6,835
)
( 6,889
)
Income (loss) before income tax
( 23,879
)
( 4,536
)
( 97,095
)
( 14,775
)
Income tax benefit (expense)
3,814
6,210
8,731
10,823
Net income (loss)
( 20,065
)
1,674
( 88,364
)
( 3,952
)
Net (income) loss attributable to redeemable noncontrolling
interests in consolidated real estate partnerships
( 3,659
)
( 3,610
)
( 10,817
)
( 10,460
)
Net (income) loss attributable to noncontrolling interests
in consolidated real estate partnerships
572
( 447
)
1,399
( 1,060
)
Net income (loss) attributable to Aimco Operating
Partnership
$
( 23,152
)
$
( 2,383
)
$
( 97,782
)
$
( 15,472
)
Net income (loss) attributable to Aimco Operating
Partnership per common unit – basic (Note 4)
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Net income (loss) attributable to Aimco Operating
Partnership per common unit – diluted (Note 4)
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Weighted-average common units outstanding – basic
144,366
151,027
146,683
152,199
Weighted-average common units outstanding – diluted
144,366
151,027
146,683
152,199
See notes to condensed consolidated financial statements.
10
Table of Contents
AIMCO OP L.P.
CONDENSED CONSOLIDATED S TATEMENTS OF PARTNERS’ CAPITAL
For the Three Months Ended September 30, 2024 and 2023
(In thousands)
(Unaudited)
General Partner
and Special
Limited Partner
Limited
Partners
Partners’ Capital
Attributable to
Aimco Operating
Partnership
Noncontrolling
Interests
in Consolidated Real
Estate Partnerships
Total
Partners’
Capital
Balances at June 30, 2023
$
522,182
$
28,105
$
550,287
$
48,472
$
598,759
Net income (loss)
( 2,260
)
( 123
)
( 2,383
)
447
( 1,936
)
Redemption of OP Units held by third parties and reallocation of limited partners' interests in Aimco Operating Partnership
244
( 332
)
( 88
)
—
( 88
)
Share-based compensation expense
1,890
23
1,913
—
1,913
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
71
71
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
( 287
)
( 287
)
Redemption of OP Units held by Aimco
( 13,149
)
—
( 13,149
)
—
( 13,149
)
Other, net
( 19
)
—
( 19
)
—
( 19
)
Balances at September 30, 2023
$
508,888
$
27,673
$
536,561
$
48,703
$
585,264
Balances at June 30, 2024
$
253,536
$
14,089
$
267,625
$
50,280
$
317,905
Net income (loss)
( 21,936
)
( 1,216
)
( 23,152
)
( 572
)
( 23,724
)
Redemption of OP Units held by third parties and reallocation of limited partners' interests in Aimco Operating Partnership
( 143
)
( 142
)
( 285
)
—
( 285
)
Share-based compensation expense
1,839
6
1,845
—
1,845
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
194
194
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
( 326
)
( 326
)
Redemption of OP Units held by Aimco
( 3,157
)
—
( 3,157
)
—
( 3,157
)
Other OP Unit issuances, net of withholding taxes
( 373
)
—
( 373
)
—
( 373
)
Other, net
—
—
—
( 32
)
( 32
)
Balances at September 30, 2024
$
229,766
$
12,737
$
242,503
$
49,544
$
292,047
See notes to condensed consolidated financial statements.
11
Table of Contents
AIMCO OP L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the Nine Months Ended September 30, 2024 and 2023
(In thousands)
(Unaudited)
General Partner
and Special
Limited Partner
Limited
Partners
Partners’ Capital
Attributable to
Aimco Operating
Partnership
Noncontrolling
Interests
in Consolidated Real
Estate Partnerships
Total
Partners’
Capital
Balances at December 31, 2022
$
547,852
$
29,212
$
577,064
$
48,294
$
625,358
Net income (loss)
( 14,697
)
( 775
)
( 15,472
)
1,060
( 14,412
)
Redemption of OP Units held by third parties and reallocation of limited partners' interests in Aimco Operating Partnership
4,500
( 5,209
)
( 709
)
—
( 709
)
Share-based compensation expense
5,439
3,173
8,612
—
8,612
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
234
234
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
( 885
)
( 885
)
Redemption of OP Units held by Aimco
( 35,741
)
—
( 35,741
)
—
( 35,741
)
Other OP Unit issuances
1,540
1,272
2,812
—
2,812
Other, net
( 5
)
—
( 5
)
—
( 5
)
Balances at September 30, 2023
$
508,888
$
27,673
$
536,561
$
48,703
$
585,264
Balances at December 31, 2023
$
349,652
$
19,061
$
368,713
$
51,265
$
419,978
Net income (loss)
( 92,648
)
( 5,134
)
( 97,782
)
( 1,399
)
( 99,181
)
Redemption of OP Units held by third parties and reallocation of limited partners' interests in Aimco Operating Partnership
523
( 1,208
)
( 685
)
—
( 685
)
Share-based compensation expense
5,673
18
5,691
—
5,691
Contributions from noncontrolling interests in consolidated real estate partnerships
—
—
—
873
873
Distributions to noncontrolling interests in consolidated real estate partnerships
—
—
—
( 1,163
)
( 1,163
)
Redemption of OP Units held by Aimco
( 34,144
)
—
( 34,144
)
—
( 34,144
)
Other OP Unit issuances, net of withholding taxes
647
—
647
—
647
Other, net
63
—
63
( 32
)
31
Balances at September 30, 2024
$
229,766
$
12,737
$
242,503
$
49,544
$
292,047
See notes to condensed consolidated financial statements.
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AIMCO OP L.P.
CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
( 88,364
)
$
( 3,952
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
65,123
51,106
Realized and unrealized (gains) losses on interest rate contracts
( 1,164
)
( 3,280
)
Realized and unrealized (gains) losses on equity investments
48,101
( 165
)
Income tax expense (benefit)
( 8,731
)
( 10,823
)
Share-based compensation
4,857
7,632
Loss on extinguishment of debt, net
—
929
Gain on dispositions of real estate
—
( 1,878
)
Loss (income) from unconsolidated real estate partnerships
1,707
( 614
)
Amortization of debt issuance costs and other
16,175
2,811
Changes in operating assets and operating liabilities:
Operating assets, net
( 7,107
)
2,057
Operating liabilities, net
15,559
( 1,272
)
Total adjustments
134,520
46,503
Net cash provided by operating activities
46,156
42,551
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate
—
( 4,108
)
Capital expenditures (1)
( 113,869
)
( 212,195
)
Distributions received from unconsolidated real estate partnerships
—
4,209
Investment in unconsolidated real estate partnerships
( 383
)
( 3,381
)
Purchase of treasury bill
—
( 53,773
)
Other investing activities
( 107
)
5,124
Net cash used in investing activities
( 114,359
)
( 264,124
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse construction loans
84,981
127,423
Principal repayments on non-recourse property debt
( 2,361
)
( 62,309
)
Proceeds from sale of participation in Mezzanine Investment
—
37,500
Payments of deferred loan costs
( 4,324
)
( 229
)
Proceeds from interest rate contracts
5,312
57,182
Common stock repurchased
( 34,144
)
( 36,769
)
Distributions to redeemable noncontrolling interests
( 6,289
)
( 7,210
)
Contributions from noncontrolling interests
873
234
Distributions to noncontrolling interests
( 1,163
)
( 885
)
Contributions from redeemable noncontrolling interests
1,390
125
Redemption of OP Units held by third parties
( 685
)
( 709
)
Other financing activities
( 4,246
)
( 6,661
)
Net cash provided by financing activities
39,344
107,692
NET DECREASE IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
( 28,859
)
( 113,881
)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT
BEGINNING OF PERIOD
139,267
229,766
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT
END OF PERIOD
$
110,408
$
115,885
(1) Accrued capital expenditures were $ 31.6 millio n and $5 4.3 million as of September 30, 2024 and 2023 , respectively.
See notes to condensed consolidated financial statements.
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
NOTES TO CONDENSED CONSOLID ATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
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 partner and is, directly, the special limited partner of Aimco OP L.P. (“Aimco Operating Partnership”). As of September 30, 2024, Aimco owned 92.3 % of the legal interest in the common partnership units of Aimco Operating Partnership and 94.7 % of the economic interest in Aimco Operating Partnership. The remaining 7.7 % legal interest is owned by limited partners. As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.
This filing combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 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. At September 30, 2024, our entire portfolio of operating residential apartment communit ies includes 5,600 apartment homes within 21 consolidated stabilized operating properties, a fully renovated waterfront property with 276 units, a substantially complete 689 -unit community with 105,000 square feet of retail space, a substantially complete 220 -unit community, and four unconsolidated properties. Additionally, we have a single family rental community that is under construction with 16 planned homes and eight accessory dwelling units, a waterfront ground-up development with 114 planned 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; our investment in IQHQ Holdings, LP ("IQHQ"); and our investment in real estate technology funds. See Note 2 for further information over our Mezzanine Investment and our investment in IQHQ.
Note 2 — Basis of Prese ntation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 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 entities. Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of Aimco Operating Partnership and its consolidated entities. 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.
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Table of Contents
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, 2023 . Except where indicated, the footnotes refer to both Aimco and Aimco Operating Partnership.
Principles of Consolidation
We account for joint ventures and other similar entities in which we hold an ownership interest in accordance with the consolidation guidance. We first evaluate whether each entity is a variable interest entity ("VIE"). Under the VIE model, we consolidate an entity 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. In addition, when an entity is not a VIE, we consolidate an entity under the voting model when we control the entity through ownership of a majority voting interest. 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 OP Units held by Aimco) outstanding during the period. For the periods ended September 30, 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.
Redeemable Noncontrolling Interests in Consolidated Real Estate Partnerships
Redeemable noncontrolling interests consist of equity interests held by a limited partner in a consolidated real estate partnership that has the right to require such partnership to redeem all or a portion of the noncontrolling interest in accordance with the partnership agreement. 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, 2024, consists of the following: (i) a preferred equity interest in an entity that owns a portfolio of operating apartment communities, (ii) equity interests in two separate consolidated joint ventures with residential apartment communities in lease-up, and (iii) a preferred equity interest in an entity that owns a waterfront ground-up development. 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, 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 September 30, 2024 ( in thousands ):
2024
Balance at Beginning of Period
$
171,632
Contributions
1,390
Distributions
( 6,289
)
Net income
10,817
Other (1)
( 2,241
)
Balance at September 30, 2024
$
175,309
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(1) In September 2024, we secured a $ 55.5 million preferred equity commitment from a third-party for the development of a luxury water-front rental development in Miami, Florida, as further discussed in Note 6 . Costs incurred were treated as a discount to Redeemable noncontrolling interests in consolidated real estate partnerships in accordance with GAAP .
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. Legal ownership of the subsidiaries that originated and hold the Mezzanine Investment was retained by AIR following the Separation.
The Separation Agreement with AIR provides for AIR to transfer ownership of the subsidiaries that originated and hold the Mezzanine Investment, and a related equity option to acquire a 30 % interest in the partnership owning Parkmerced Apartments. At the time of Separation and as of the date of this filing, legal title of these subsidiaries had not yet transferred to us. 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. The carrying value of the Mezzanine Investment was zero as of September 30, 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, 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 did 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 . 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.
Investment in IQHQ
In 2020, Aimco Predecessor made a $ 50.0 million commitment to IQHQ, a privately held life sciences real estate development company. We account for our investment in IQHQ using the measurement alternative. Under the measurement alternative, the investment is measured at cost less impairment if any needed, with subsequent adjustments for observable price changes of identical or similar investments of the same issuer since it does not have a readily determinable fair value.
In 2022, after fully funding our commitment, 22 % of our original investment in IQHQ was redeemed for $ 16.5 million. Our remaining investment in IQHQ, with a cost basis of $ 39.2 million, was adjusted upward to $ 59.7 million at the same per share value as the cash redemption per share. During the second quarter of 2024, we recorded a non-cash impairment charge of $ 47.0 million to reduce the carrying value of the investment in IQHQ to $ 12.7 million. We did not record additional impairment during the three months ended September 30, 2024. The non-cash impairment is reflected in Realized and unrealized gains (losses) on equity investments in our Condensed Consolidated Statements of Operations for the nine months ended September 30, 2024, and as a reduction in the carrying value of Other investments included in Other assets, net in our Condensed Consolidated Balance Sheets as of September 30, 2024 . No impairment losses were recognized during the period ended September 30, 2023 .
As of September 30, 2024
As of December 31, 2023
Equity ownership in IQHQ under measurement alternative:
Initial cost of remaining balance
$
39,185
$
39,185
Cumulative upward adjustments
20,501
20,501
Cumulative impairment
( 46,972
)
—
Total carrying value
$
12,714
$
59,686
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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 (expense) calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in Income tax benefit (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 income and, if applicable, gains retained by the REIT. For the three and nine months ended September 30, 2024, we had consolidated net losses subject to tax of $ 9.7 million and $ 21.6 million, respectively. For the three and nine months ended September 30, 2023, we had consolidated net losses subject to income tax of $ 5.0 million and $ 12.4 million, respectively.
For the three months ended September 30, 2024, we recognized an income tax benefit of $ 3.8 million, compared to income tax benefit of $ 6.2 million during the same period in 2023. The decrease is due primarily to a change in estimate associated with finalizing the 2022 tax returns in the third quarter of 2023.
For the nine months ended September 30, 2024, we recognized an income tax benefit of $ 8.7 million, compared to income tax benefit of $ 10.8 million during the same period in 2023 . The decrease is due primarily to a change in estimate associated with finalizing the 2022 tax returns in third quarter of 2023, partially offset by the tax effect of fewer gains, increased depreciation, and interest expense associated with properties owned by, and activities of, our TRS entities.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.
Cash Equivalents
We classify highly liquid investments with an original maturity of three months or less as cash equivalents. We maintain cash and cash equivalents in financial institutions in excess of insured limits. We have not experienced any losses in these accounts in the past and believe that we are not exposed to significant credit risk because our accounts are deposited with major financial institutions.
Restricted Cash
Restricted cash consists of tenant security deposits, capital replacement reserves, insurance reserves, and cash restricted as required by our debt agreements.
Other Assets, net
Other assets were comprised of the following amounts as of September 30, 2024 and December 31, 2023 ( in thousands ):
September 30, 2024
December 31, 2023
Other investments
$
17,464
$
65,066
Deferred costs, deposits, and other
15,417
9,374
Prepaid expenses and real estate taxes
10,863
14,855
Interest rate contracts (1)
1,694
5,255
Unconsolidated real estate partnerships (2)
20,934
23,125
Intangible assets, net
13,377
13,494
Corporate fixed assets
10,534
10,669
Accounts receivable, net of allowances of $ 218 and $ 373 as of September 30, 2024 and December 31, 2023, respectively
7,896
5,178
Deferred tax assets
4,714
2,391
Due from affiliates
284
434
Total other assets, net
$
103,177
$
149,841
(1) We account for our Interest rate contracts as non-designated hedges.
17
Table of Contents
(2) See Note 5 for further information regarding the nonrecurring fair value measurement of an unconsolidated real estate partnership during the three months ended September 30, 2024.
Revenue from contracts with customers
We apply ASC 606, Revenue from Contracts with Customers , in recognizing revenue from our operations at The Benson Hotel. The Benson Hotel revenues consist of amounts derived from hotel operations, including room sales, food and beverage sales, and other ancillary hotel service revenues. We recognize revenue from the rental of the hotel rooms and guest services when we satisfy performance obligations as evidenced by the transfer of control when rooms are occupied, and services have been provided. Food and beverage sales are recognized when the customer has been serviced or at the time the transaction occurs. Our contracts generally have a single performance obligation, recognized at a point in time.
The Benson Hotel generated revenues of $ 1.9 million and $ 1.0 million for the three months ended September 30, 2024 and 2023 , respectively, and $ 4.9 million and $ 1.4 million for the nine months ended September 30, 2024 and 2023 , respectively.
Recent Accounting Pronouncements
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 ASU 2023-07 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
Commitments
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. As of September 30, 2024, we had remaining commitments for construction-related contracts of $ 163.7 million, with $ 198.8 million undrawn on our non-recourse construction loans.
As of September 30, 2024, we have remaining commitments of $ 1.5 million related to our investments in property technology funds invested in entities that develop technology related to the real estate industry. The timing of the remaining funding of these commitments is uncertain.
We also enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
Legal Matters
From time to time, we may be a party to certain legal proceedings, incidental to the normal course of business. While the outcome of the legal proceedings cannot be predicted with certainty, we believe there are no legal proceedings pending that would have a material effect upon our financial condition or results of operations.
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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 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 not included in the computation of diluted earnings per share and unit for the three and nine months ended September 30, 2024 and 2023, because the effect of their inclusion would have been antidilutive. As of September 30, 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. 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 and nine months ended September 30, 2024 and 2023, because the effect of their inclusion would have been antidilutive. As of September 30, 2024, participating securities that could potentially dilute basic earnings per share or unit in future periods totaled 2.3 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, 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,
2024
2023
2024
2023
Earnings per share
Numerator:
Net income (loss) attributable to Aimco
$
( 21,936
)
$
( 2,260
)
$
( 92,648
)
$
( 14,697
)
Net income (loss) allocated to Aimco participating securities
—
—
—
—
Net income (loss) attributable to Aimco common stockholders
$
( 21,936
)
$
( 2,260
)
$
( 92,648
)
$
( 14,697
)
Denominator - shares:
Basic weighted-average common stock outstanding
136,749
143,299
139,044
144,431
Diluted share equivalents outstanding
—
—
—
—
Diluted weighted-average common stock outstanding
136,749
143,299
139,044
144,431
Earnings (loss) per share - basic
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Earnings (loss) per share - diluted
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Earnings per unit
Numerator:
Net income (loss) attributable to Aimco Operating Partnership
$
( 23,152
)
$
( 2,383
)
$
( 97,782
)
$
( 15,472
)
Net income (loss) allocated to Aimco Operating Partnership participating securities
—
—
—
—
Net income (loss) attributable to Aimco Operating Partnership's common unit holders
$
( 23,152
)
$
( 2,383
)
$
( 97,782
)
$
( 15,472
)
Denominator - units
Basic weighted-average OP Units outstanding
144,366
151,027
146,683
152,199
Diluted OP Unit equivalents outstanding
—
—
—
—
Diluted weighted-average OP Units outstanding
144,366
151,027
146,683
152,199
Earnings (loss) per unit - basic
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
Earnings (loss) per unit - diluted
$
( 0.16
)
$
( 0.02
)
$
( 0.67
)
$
( 0.10
)
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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. These instruments are presented as Interest rate contracts in Other assets, net in our Condensed Consolidated Balance Sheets . As of September 30, 2024, we held interest rate caps with a maximum notional value of $ 799.4 million. These instruments were acquired for $ 6.3 million, and the fair value of these instruments as of September 30, 2024 and December 31, 2023 is $ 1.7 million and $ 5.2 million, respectively.
On a recurring basis, we measure at fair value our interest rate contracts. Our interest rate contracts are classified within Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market information, including contractual terms, market prices, and interest rate yield curves. The fair value adjustment is included in earnings in Realized and unrealized gains (losses) on interest rate contracts in our Condensed Consolidated Statements of Operations . Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, any upfront premium is reflected in Purchase of interest rate contracts , and any proceeds are reflected in Proceeds from interest rate contracts in our Condensed Consolidated Statements of Cash Flows .
As of September 30, 2024 and December 31, 2023, we had investments in stock of $ 1.6 million and $ 2.9 million, respectively, classified within Level 1 of the GAAP fair value hierarchy. In addition, as of September 30, 2024 and December 31, 2023, we have investments in property technology funds of $ 3.2 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 contracts, investments in stock, and our investments in real estate technology funds as of September 30, 2024 and December 31, 2023 ( in thousands ):
As of September 30, 2024
As of December 31, 2023
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Interest rate contracts
$
1,653
$
—
$
1,653
$
—
$
5,237
$
—
$
5,237
$
—
Investments in stock
1,555
1,555
—
—
2,868
2,868
—
—
Investments in real estate technology funds (1)
3,192
—
—
—
2,508
—
—
—
Total assets
$
6,400
$
1,555
$
1,653
$
—
$
10,613
$
2,868
$
5,237
$
—
(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 and restricted cash approximated their fair value as of September 30, 2024, and December 31, 2023 and are categorized within Level 1 of the GAAP fair value hierarchy. 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 non-recourse construction loans within Level 2 of the GAAP valuation hierarchy based on the significance of certain observable 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 September 30, 2024 and December 31, 2023 ( in thousands ):
As of September 30, 2024
As of December 31, 2023
Carrying Value
Fair Value
Carrying Value
Fair Value
Description:
Non-recourse property debt
$
849,938
$
825,882
$
852,502
$
807,240
Non-recourse construction loans
410,573
410,231
309,521
309,170
Total
$
1,260,511
$
1,236,113
$
1,162,023
$
1,116,410
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Nonrecurring Fair Value Measurements
Investment in IQHQ
During the nine months ended September 30, 2024, we recorded a non-cash impairment charge of $ 47.0 million related to our passive equity investment in IQHQ. This impairment charge was derived using a third-party valuation of IQHQ, which incorporated fair value estimates of properties owned by IQHQ. The fair value estimates of the properties owned by IQHQ were determined by discounted cash flow analyses and references to market comparable data.
The cash flows utilized in such discounted cash flow analyses are comprised of projected operating results, which are based upon market conditions and future expectations. The most significant unobservable inputs utilized in determining the fair value of these assets are capitalization rates and discount rates, which ranged from 6.00 % to 7.00 % and 7.25 % to 10.25 %, respectively. Because of these inputs, we have determined that the fair value of these properties are classified within Level 3 of the fair value hierarchy.
Market comparable data utilizes comparable sales, which are subject to judgment as to comparability to the valued properties. Because these inputs are derived from observable market data, we have determined that the fair values of these properties are classified within Level 2 of the fair value hierarchy.
Unconsolidated real estate partnerships
In March 2022, we acquired an ownership interest in an unconsolidated investment in land held for development in the Edgewater neighborhood of Miami, Florida, in exchange for land that we had purchased for $ 1.8 million in January 2022 and cash of $ 0.3 million. Subsequently, we had additional non-cash contributions of $ 5.7 million for unused transferable density rights and cash contributions of $ 0.9 million. During the quarter ended September 30, 2024, we exercised our rights under the existing joint venture agreement, whereby our joint venture partner agreed to purchase our ownership interest in this unconsolidated investment. As a result of the transaction, we have recognized a non-cash other than temporary impairment ("OTTI") of $ 2.6 million for the three months ended September 30, 2024, within Other income (expense), net in our Condensed Consolidated Statements of Operations.
We reduced our carrying value of the investment to the expected cash proceeds of approximately $ 6.0 million, subject to certain adjustments, to be received in the fourth quarter of 2024. We determined this is a nonrecurring fair value measurement of the unconsolidated investment classified within Level 3 of the fair value hierarchy.
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. The accounting standards for the consolidation of VIEs require qualitative assessments to determine whether we are the primary beneficiary. The primary beneficiary analysis is based on power and economics. We conclude that we are the primary beneficiary and consolidate the VIE if we have both: (i) the power to direct the activities of the VIE that most significantly influence the VIE's economic performance, and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. Significant judgments and assumptions related to these determinations include, but are not limited to, estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.
We consolidate Aimco Operating Partnership, a VIE of which we are the primary beneficiary. Through Aimco Operating Partnership, we consolidate all VIEs for which we are the primary beneficiary. Substantially all of our assets and liabilities are those of Aimco Operating Partnership.
Aimco Operating Partnership is the primary beneficiary of, and therefore consolidates, six VIEs that own interests in real estate. Assets of our consolidated VIEs must first be used to settle the liabilities of those VIEs. The consolidated VIEs' creditors do not have recourse to the general credit of Aimco Operating Partnership.
In addition, we have eight unconsolidated VIEs for which we are not the primary beneficiary because we are not their primary decision maker. The eight unconsolidated VIEs include four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California, the Mezzanine Investment, our passive equity investment in IQHQ, and two unconsolidated investments in land held for development in Miami, Florida and Bethesda, Maryland. Our maximum exposure to loss because of our involvement with the unconsolidated VIEs is limited to the carrying value of their assets.
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The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of September 30, 2024 and December 31, 2023 ( in thousands, except for VIE count ):
As of September 30, 2024
As of December 31, 2023
Consolidated
Unconsolidated
Consolidated
Unconsolidated
Count of VIEs
6
8
5
8
Assets
Net real estate
$
584,872
$
—
$
466,719
$
—
Cash and cash equivalents
2,080
—
3,940
—
Restricted cash
4,499
—
—
—
Notes receivable
18,292
—
17,432
—
Right-of-use lease assets - finance leases
108,034
—
108,992
—
Other assets, net
24,832
33,648
19,393
82,948
Liabilities
Non-recourse construction loans, net
305,329
—
201,103
—
Lease liabilities - finance leases
121,277
—
118,697
—
Accrued liabilities and other
31,769
32,898
35,881
31,018
In September 2024, we secured a $ 55.5 million preferred equity commitment from a third-party for the development of a luxury water-front rental development, located at 640 NE 34th Street in Miami, Florida. In addition, we secured a non-recourse construction loan commitment for up to $ 172 million that has a maturity date of October 1, 2028 , prior to the consideration of a one year extension option. As a result, we performed a reassessment of the entity that owns the property located at 640 NE 34th Street, concluding that it became a VIE and that we are the primary beneficiary. While the consolidation status did not change as it was already consolidated prior to the VIE assessment, its assets and liabilities as of September 30, 2024 have been incorporated in the table above.
Note 7 — Lease Arrangements
Aimco as Lessor
Our apartment homes and commercial spaces are leased to tenants under operating leases. As of September 30, 2024 , our apartment home leases generally have initial terms of 24 months or less. As of September 30, 2024, our commercial space leases have initial terms betwee n 5 and 15 y ears and represent approximately 8 % to 9 % of our total revenue. Our apartment home leases are generally renewable at the end of the lease term, subject to potential changes in rental rates, and our commercial space leases generally have renewal options, subject to associated increases in rental rates due to market based or fixed price renewal options and other certain conditions.
We have a sublease arrangement providing 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, 2024, we recognized sublease income of $ 0.4 million and $ 1.1 m illion, respectively, compared to $ 0.4 million and $ 1.1 million, respectively, for the three and nine months ended September 30, 2023.
The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements and other services. For the three and nine months ended September 30, 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
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Fixed lease income
$
47,391
$
43,937
$
139,096
$
127,150
Variable lease income
3,662
3,640
11,242
10,046
Total lease income
$
51,053
$
47,577
$
150,338
$
137,196
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Future minimum lease payments that are contractually due to us from our office space sublease and commercial space leases, excluding extension options, as of September 30, 2024, are as follows (in thousands) :
Corporate Office Sublease
Commercial Leases
Remainder of 2024
$
354
$
3,274
2025
1,423
10,509
2026
1,433
8,003
2027
1,443
5,967
2028
1,453
3,703
Thereafter
630
18,782
Total
$
6,736
$
50,238
Aimco as Lessee
Lease Arrangements
We are lessee to finance leases for the land underlying our development sites at Upton Place, Strathmore Square, and Oak Shore. We have operating leases primarily for corporate office space. Substantially all of our office lease payments are fixed. See the table below for lease costs, net of capitalized finance lease costs, for the three and nine months ended September 30, 2024 and 2023 ( in thousands ):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Operating lease costs
$
375
$
384
$
1,137
$
1,138
Finance lease costs:
Amortization of right-of-use assets, net of capitalized amounts
312
—
743
—
Interest on lease liabilities, net of capitalized amounts
1,794
—
4,467
—
Total lease costs, net of capitalized amounts
$
2,481
$
384
$
6,347
$
1,138
The weighted-average remaining terms and discount rates for our operating and finance leases are summarized in the table below as of September 30, 2024, and December 31, 2023:
September 30, 2024
December 31, 2023
Weighted average remaining lease term (years):
Operating leases
4.5
5.2
Finance leases
92.7
93.4
Weighted-average discount rate:
Operating leases
3.4
%
3.3
%
Finance leases
6.1
%
6.1
%
As of September 30, 2024 and December 31, 2023, operating lease right-of-use lease assets of $ 5.1 million and $ 6.2 million, respectively, are included in Other assets, net in our Condensed Consolidated Balance Sheets . As of September 30, 2024 and December 31, 2023, operating lease liabilities of $ 9.8 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. We determine if an arrangement is or contains a lease at inception. We have lease agreements with lease and non-lease components, and have elected to not separate these components for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded in our Condensed Consolidated Balance Sheets . Leases with an initial term greater than 12 months are recorded as operating or finance leases in our Condensed Consolidated Balance Sheets .
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Annual Future Minimum Lease Payments
Combined annual future minimum lease payments under our operating and finance leases are as follows as of September 30, 2024 ( in thousands ):
Operating Leases
Finance Leases
Remainder of 2024
$
510
$
980
2025
2,355
4,437
2026
2,341
4,954
2027
2,380
5,483
2028
2,181
5,596
Thereafter
805
1,427,669
Total
10,572
1,449,119
Less: Discount
( 801
)
( 1,327,842
)
Total lease liabilities
$
9,771
$
121,277
Note 8 — Business Segments
We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.
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 September 30, 2024 , our Development and Redevelopment segment consists of 10 properties, including two of which were under construction and two substantially completed and in lease-up.
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 in the prior year. We aggregate all our apartment communities that have reached stabilization into our Operating segment.
During the first quarter of 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 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, net of utility reimbursements, for the consolidated communities; but
• excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ, the Mezzanine Investment, and investments in real estate technology funds; and
• excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.
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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, 2024 and 2023 ( in thousands ):
Development and Redevelopment
Operating
Other
Proportionate
and Other Adjustments (1)
Corporate and Amounts Not Allocated to Segments (2)
Consolidated
Three Months Ended September 30, 2024
Rental and other property revenues
$
6,631
$
39,281
$
4,979
$
2,267
$
—
$
53,158
Property operating expenses
3,940
11,883
3,829
2,276
1,409
23,337
Other operating expenses not allocated
to segments (3)
—
—
—
—
31,295
31,295
Total operating expenses
3,940
11,883
3,829
2,276
32,704
54,632
Proportionate property net operating
income (loss)
2,691
27,398
1,150
( 9
)
( 32,704
)
( 1,474
)
Other items included in income before
income tax (4)
—
—
—
—
( 22,405
)
( 22,405
)
Income (loss) before income tax
$
2,691
$
27,398
$
1,150
$
( 9
)
$
( 55,109
)
$
( 23,879
)
Development and Redevelopment
Operating
Other
Proportionate
and Other Adjustments (1)
Corporate and Amounts Not Allocated to Segments (2)
Consolidated
Three Months Ended September 30, 2023
Rental and other property revenues
$
3,650
$
37,722
$
4,567
$
1,746
$
16
$
47,701
Property operating expenses
1,206
10,745
2,923
1,762
1,692
18,328
Other operating expenses not allocated
to segments (3)
—
—
—
—
26,002
26,002
Total operating expenses
1,206
10,745
2,923
1,762
27,694
44,330
Proportionate property net operating
income (loss)
2,444
26,977
1,644
( 16
)
( 27,678
)
3,371
Other items included in income before
income tax (4)
—
—
—
—
( 7,907
)
( 7,907
)
Income (loss) before income tax
$
2,444
$
26,977
$
1,644
$
( 16
)
$
( 35,585
)
$
( 4,536
)
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, 2024 and 2023 ( in thousands ):
Development and Redevelopment
Operating
Other
Proportionate
and Other Adjustments (1)
Corporate and Amounts Not Allocated to Segments (2)
Consolidated
Nine Months Ended September 30, 2024
Rental and other property revenues
$
16,799
$
116,622
$
14,762
$
6,314
$
11
$
154,508
Property operating expenses
9,689
35,538
10,087
6,416
5,363
67,093
Other operating expenses not allocated
to segments (3)
—
—
—
—
88,999
88,999
Total operating expenses
9,689
35,538
10,087
6,416
94,362
156,092
Proportionate property net operating
income (loss)
7,110
81,084
4,675
( 102
)
( 94,351
)
( 1,584
)
Other items included in income before
income tax (4)
—
—
—
—
( 95,511
)
( 95,511
)
Income (loss) before income tax
$
7,110
$
81,084
$
4,675
$
( 102
)
$
( 189,862
)
$
( 97,095
)
Development and Redevelopment
Operating
Other
Proportionate
and Other Adjustments (1)
Corporate and Amounts Not Allocated to Segments (2)
Consolidated
Nine Months Ended September 30, 2023
Rental and other property revenues
$
9,092
$
111,404
$
12,053
$
4,958
$
136
$
137,643
Property operating expenses
3,971
33,428
7,554
5,068
4,627
54,648
Other operating expenses not allocated
to segments (3)
—
—
—
—
75,593
75,593
Total operating expenses
3,971
33,428
7,554
5,068
80,220
130,241
Proportionate property net operating
income (loss)
5,121
77,976
4,499
( 110
)
( 80,084
)
7,402
Other items included in income before
income tax (4)
—
—
—
—
( 22,177
)
( 22,177
)
Income (loss) before income tax
$
5,121
$
77,976
$
4,499
$
( 110
)
$
( 102,261
)
$
( 14,775
)
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(1) Represents adjustments for noncontrolling interests in consolidated real estate partnerships' share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements, which are included in Rental and other property revenues in our Condensed Consolidated Statements of Operations, in accordance with GAAP, from revenues to property operating expenses for the purpose of evaluating segment results.
(2) Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includes property management expenses and casualty gains and losses, which are included in consolidated 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 expenses.
(4) Other items included in Income before income tax benefit (expense) consist primarily of interest income, interest expense, realized and unrealized gains (losses) on interest rate contracts, realized and unrealized gains (losses) on equity investments, and gain on dispositions of real estate.
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Table of Contents
Net real estate and non-recourse property debt, net, of our segments as of September 30, 2024 and December 31, 2023, were as follows ( in thousands ):
Development and Redevelopment
Operating
Other
Corporate and Amounts Not Allocated to Segments (1)
Total
As of September 30, 2024
Buildings and improvements
$
747,797
$
703,802
$
240,009
$
—
$
1,691,608
Land
206,099
262,409
151,521
—
620,029
Total real estate
953,896
966,211
391,530
—
2,311,637
Accumulated depreciation
( 31,412
)
( 496,893
)
( 95,608
)
—
( 623,913
)
Net real estate
$
922,484
$
469,318
$
295,922
$
—
$
1,687,724
Non-recourse property debt and construction loans, net
$
405,840
$
763,728
$
81,051
$
—
$
1,250,619
Development and Redevelopment
Operating
Other
Corporate and Amounts Not Allocated to Segments (1)
Total
As of December 31, 2023
Buildings and improvements
$
644,154
$
709,051
$
239,089
$
1,508
$
1,593,802
Land
206,820
262,409
151,521
71
620,821
Total real estate
850,974
971,460
390,610
1,579
2,214,623
Accumulated depreciation
( 11,589
)
( 489,206
)
( 78,612
)
( 1,395
)
( 580,802
)
Net real estate
$
839,385
$
482,254
$
311,998
$
184
$
1,633,821
Non-recourse property debt and construction loans, net
$
301,426
$
765,372
$
80,739
$
204
$
1,147,741
(1) During the first quarter of 2024, we disposed of St. George Villas, and therefore it is not included in our segment balance sheets at September 30, 2024. We added a column to the tables above for presentation purposes to display these assets and the associated debt as of September 30, 2024 and December 31, 2023 , respectively.
In addition to the amounts disclosed in the tables above, as of September 30, 2024 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $ 108.0 million and $ 121.3 million, respectively, and as of December 31, 2023 , aggregated to $ 109.0 million and $ 118.7 million, respectively. As of September 30, 2024 , right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.
Note 9 — Subsequent Events
The Hamilton, a 276 -unit apartment building located in Miami, Florida, and on which Aimco completed a major redevelopment and lease-up during the fall of 2023, is under contract for $ 190.0 million. The buyer's deposit became non-refundable in October 2024, and t he sale is expected to close in the fourth quarter of 2024.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.