APARTMENT INVESTMENT & MANAGEMENT CO 10-Q

ITEM 2. 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. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding: our future plans and goals, including the timing and amount of capital expected to be returned to our stockholders, 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 revenue and expense growth, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, the potential for adverse economic and geopolitical conditions, which negatively impact our operations, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, developments, and redevelopments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios. We caution investors not to place undue reliance on any such forward-looking statements. 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 2025 plans and goals may not be completed, as expected, in a timely manner or at all; geopolitical events which may adversely affect the markets in which our securities trade, and other macro-economic conditions, including, among other things, rising interest rates and inflation, which heightens the impact of the other risks and factors described herein; real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing and effects of acquisitions, dispositions, developments and redevelopments; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete; the impact of tariffs and global trade disruptions on us; financing risks, including the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently owned by us. 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 risk 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, 2024, 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 entities, 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. 32 Table of Contents 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 value-add investments, a pipeline of land for potential future development, a national portfolio of stabilized multifamily real estate and limited indirect and passive investments; and • Capital redeployment plan which includes the prudent recycling of capital, reallocating our equity to higher returning investments, and return of capital to stockholders when appropriate. Our primary goal is outsized risk adjusted returns and accelerating growth for our stockholders. We are focused on providing superior total-return performance to stockholders, primarily through capital appreciation driven by accretive investment and active portfolio management over multi-year periods. We do not presently intend to pay a regular quarterly cash dividend, but may periodically pay dividends for REIT tax purposes or to return a portion of profits to stockholders. Our financial objectives are to create value and produce superior, asset 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 stockholders. We target 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 have no plans to increase our allocation to these investments. We have policies in place that support our current 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 current 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 regional professionals who leverage in-depth local market knowledge, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities. 33 Table of Contents • Owning a portfolio of stabilized core and core plus real estate We own a geographically diversified portfolio of 24 apartment communities (20 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class), including our suburban Boston portfolio of five consolidated properties under contract to be sold. We also own an apartment building and its adjacent office building, Yacht Club Apartments and 1001 Brickell Bay Drive (together referred to as the “Brickell Assemblage”), in a land assemblage that is under contract to be sold. The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across geographically diversified markets, 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 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 7.7 million gross 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 our capital that is allocated to development activities may vary based on market conditions and other factors. • 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, non-recourse construction loans, third-party equity, and the recycling of our 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 our enterprise. When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage our equity, reduce exposure to a single investment and, in certain cases, for strategic benefits. Results for the three and six months ended June 30, 2025 The results from the execution of our business plan during the three and six months ended June 30, 2025 are described below. Financial Results and Highlights • For the three and six months ended June 30, 2025, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.14) and $(0.24), respectively. • For the three and six months ended June 30, 2025, net operating income from our Operating segment was $24.2 million, up 1.1%, and $49.3 million, up 1.9% year-over-year, respectively. • Subsequent to quarter end, in August, we agreed to sell our suburban Boston portfolio of five properties located in Massachusetts, New Hampshire, and Rhode Island for $740.0 million. Four of the five asset sales are expected to close during the third quarter of 2025, with the closing of the final asset expected in the fourth quarter 2025. • Subsequent to quarter end, in July, the buyer with which we are under agreement to sell the Brickell Assemblage for $520.0 million exercised the final contractual closing extension option that required its non-refundable deposit to be increased by $7.0 million, bringing the total non-refundable deposit to $50.0 million. Closing is now scheduled for the fourth quarter of 2025. • Strathmore Square, Upton Place, and Oak Shore, our Development and Redevelopment segment properties in lease-up, remain on plan to reach stabilized occupancy in 2025. • In May, we purchased our development partner's interest in the first phase of development at Strathmore Square. We also borrowed on our revolving credit facility to pay off a higher interest rate mezzanine loan used to fund construction of Strathmore Square. 34 Table of Contents 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 (generally defined as B class). Highlights for the three months ended June 30, 2025 include: • Revenue for our Operating segment was $35.4 million, up 1.9% year-over-year, resulting from a $57 increase in average monthly revenue per apartment home to $2,349 and occupancy of 95.8%, down 50 basis points year-over-year. Revenue was negatively impacted by approximately 35 bps in the quarter due to a commercial tenant vacancy in New York City. • Expenses for our Operating segment were $11.2 million, up 3.9% year-over-year primarily due to higher real estate taxes from a multi-year property assessment at our Nashville property, which assessment is being appealed. • Net operating income for our Operating segment was $24.2 million, up 1.1% year-over-year. Value Add and Opportunistic 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. Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements. As of June 30, 2025, we had one multifamily development project under construction, two multifamily communities that have been substantially completed and are now in lease-up, and one that completed lease-up and is stabilizing operations. In addition to our core multifamily developments, The Benson Hotel was completed in 2023 and remains in the stabilization process. We have a pipeline of future value-add opportunities totaling approximately 7.7 million gross square feet of development in our target markets of Southeast Florida, the Washington, D.C. Metro Area, and Colorado's Front Range. During the three and six months ended June 30, 2025, we invested $22.1 million and $42.4 million, respectively, in development and redevelopment activities, primarily funded through construction loan and preferred equity, compared to $29.8 million and $72.6 million, respectively, during the same period in 2024. Highlights for the three months ended June 30, 2025 include: • In Upper Northwest Washington, D.C., all 689 apartment homes at Upton Place were delivered in 2024 and construction is substantially complete. As of June 30, 2025, 473 (69%) units were leased or pre-leased and 386 (56%) were occupied. Additionally, as of June 30, 2025, 92% of the project’s 105,000 square feet of retail space has been leased. • In Bethesda, Maryland, all 220 of the highly tailored apartment homes at the first phase of Strathmore Square were delivered in 2024 and construction is substantially complete. As of June 30, 2025, 164 (75%) units had been leased and 139 (63%) were occupied. • In Corte Madera, California, construction is complete at Oak Shore. As of June 30, 2025, the ultra-luxury single-family rental community was 96% leased with 23 (96%) of the 24 homes occupied. • In Miami’s Edgewater neighborhood, construction remains on schedule and budget at 34th Street, an ultra-luxury waterfront residential tower that will include rental homes averaging more than 2,500 square feet, with oversized private terraces, top-of-the-line finishes, and unobstructed views of Biscayne Bay. We expect to welcome the first residents in 3Q 2027 and stabilize occupancy in 4Q 2028. • In the second quarter of 2025, we invested $2.5 million into programming, design, documentation, and entitlement efforts primarily at our 901 North development site, located in Fort Lauderdale, Florida. Investment and Disposition Activity We are focused on prudently allocating capital and delivering strong investment returns. Consistent with our capital allocation philosophy, we aim to monetize the value within our assets when accretive uses of the proceeds are identified and invest when the risk adjusted returns are superior to other uses of capital. • Subsequent to quarter end, in August 2025, we entered into a definitive agreement to sell our portfolio of five apartment properties, including 2,719 units, located in suburban Boston for $740.0 million. The buyer has completed 35 Table of Contents due diligence and made a $20.0 million non-refundable deposit. Four of the five asset sales are expected to close during the third quarter of this year, with closing of the final asset expected in the fourth quarter of 2025 to accommodate the assumption of the property loan. • In December 2024, we entered into an agreement to sell, during 2025, the Brickell Assemblage for a gross price of $520.0 million. Subsequent to quarter end, in July 2025, the buyer exercised its final closing extension option and increased its non-refundable deposit by $7.0 million, bringing the total non-refundable deposit to $50.0 million. Closing is now scheduled for the fourth quarter of 2025. • In May, we purchased, for $2.1 million, our development partner's 5% common equity interest in Strathmore Square. In addition, we purchased the same development partner's subordinated interest for $2.9 million, a value representing approximately 60% of its expected future obligation. Balance Sheet and Financing Activities We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of June 30, 2025, we had access to $173.5 million in liquidity, including $41.4 million of cash on hand, $26.4 million of restricted cash, and the capacity to borrow up to $105.7 million on our $150.0 million revolving credit facility. Refer to the Liquidity and Capital Resources section for additional information regarding our leverage. • In May 2025, we borrowed $42.8 million on our revolving credit facility to pay off the mezzanine loan used to fund the construction of the first phase of Strathmore Square. The mezzanine loan carried an interest rate of 13.0%, approximately 650 basis points higher than the average rate on the revolving credit facility borrowings during the second quarter 2025. • Our Boston portfolio, which is under contract to sell, serves as collateral for our revolving credit facility. As such, at the sale closing, the balance borrowed in May 2025 will be repaid and the facility will be retired. We plan to maintain prudent liquidity following the facility's retirement. Financial Results of Operations 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 six months ended June 30, 2025 and 2024 Net loss attributable to Aimco common stockholders decreased by $41.2 million and $37.5 million, respectively, for the three and six months ended June 30, 2025, compared to the same period in 2024, as described more fully below. Property Results 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 June 30, 2025, our Development and Redevelopment segment consists of 9 properties, including one under construction, two substantially completed and in lease-up, and one that has completed lease-up and is stabilizing operations. Our Operating segment includes 20 residential apartment communities with 5,243 apartment homes that have achieved a stabilized level of operations as of January 1, 2024 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. Our Other segment includes The Benson Hotel, our only hotel. Prior period segment information has been recast based upon our current segment population, and is consistent with how our President and Chief Executive Officer, the chief operating decision maker (“CODM”) evaluates the business. We use property net operating income (“PNOI”) to assess the operating performance of our segments. PNOI is defined as 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 36 Table of Contents • 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 amounts to consolidated rental and other property revenues and property operating expenses. Property Net Operating Income The results of our segments for the three months ended June 30, 2025 and 2024, as presented below, are based on segment classifications as of June 30, 2025 ( dollars in thousands ). Three Months Ended June 30, 2025 2024 $ Change % Change Rental and other property revenues, before utility reimbursements: Development and Redevelopment $ 6,124 $ 1,650 $ 4,474 nm Operating 35,394 34,719 675 1.9 % Other 2,084 1,813 271 14.9 % Total 43,602 38,182 5,420 14.2 % Property operating expenses, net of utility reimbursements: Development and Redevelopment 3,090 1,799 1,291 nm Operating 11,166 10,747 419 3.9 % Other 2,424 1,606 818 50.9 % Total 16,680 14,152 2,528 17.9 % Property net operating income: Development and Redevelopment 3,034 (149 ) 3,183 nm Operating 24,228 23,972 256 1.1 % Other (340 ) 207 (547 ) nm Total $ 26,922 $ 24,030 $ 2,892 12.0 % For the three months ended June 30, 2025, compared to the same period in 2024: • Development and Redevelopment property net operating income increased by $3.2 million, due primarily to the lease-up of Upton Place, Strathmore Square, and Oak Shore. • Operating property net operating income increased by $0.3 million, or 1.1%. The increase was attributable primarily to a $0.7 million, or 1.9% increase in rental and other property revenues due to a $57 increase in average monthly revenue per apartment home to $2,349, offset by higher real estate taxes, primarily due to a multi-year property assessment at our Nashville property, which assessment is being appealed. • Other property net operating income decreased by $0.5 million, due primarily to higher real estate taxes from a 2025 property assessment, which assessment is being appealed. The results of our segments for the six months ended June 30, 2025 and 2024, as presented below, are based on segment classifications as of June 30, 2025 ( dollars in thousands ). Six Months Ended June 30, 2025 2024 $ Change % Change Rental and other property revenues, before utility reimbursements: Development and Redevelopment $ 11,333 $ 2,432 $ 8,901 nm Operating 70,967 69,355 1,612 2.3 % Other 3,530 2,999 531 17.7 % Total 85,830 74,786 11,044 14.8 % Property operating expenses, net of utility reimbursements: Development and Redevelopment 6,576 3,204 3,372 nm Operating 21,676 20,984 692 3.3 % Other 4,514 3,364 1,150 34.2 % Total 32,766 27,552 5,214 18.9 % Proportionate property net operating income: Development and Redevelopment 4,757 (772 ) 5,529 nm Operating 49,291 48,371 920 1.9 % Other (984 ) (365 ) (619 ) nm Total $ 53,064 $ 47,234 $ 5,830 12.3 % For the six months ended June 30, 2025, compared to the same period in 2024: 37 Table of Contents • Development and Redevelopment property net operating income increased by $5.5 million, due primarily to the lease-up of Upton Place, Strathmore Square, and Oak Shore. • Operating property net operating income increased by $0.9 million, or 1.9%. The increase was attributable primarily to a $1.6 million, or 2.3% increase in rental and other property revenues due to a $59 increase in average monthly revenue per apartment home to $2,329, offset by higher real estate taxes, primarily due to a multi-year property assessment at our Nashville property, which assessment is being appealed. • Other property net operating income decreased by $0.6 million, due primarily to higher real estate taxes from a 2025 property assessments, which assessment is being appealed. 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. For the three months ended June 30, 2025 and 2024, other property operating expenses not allocated to segments were $1.8 million and $2.0 million, respectively. For the three months ended June 30, 2025 and 2024, properties that were sold or classified as held for sale generated property net operating income of $4.5 million and $6.6 million, respectively. For the six months ended June 30, 2025 and 2024, other property operating expenses not allocated to segments were $3.3 million and $3.9 million, respectively. For the six months ended June 30, 2025 and 2024, properties that were sold or classified as held for sale generated property net operating income of $9.1 million and $14.3 million, respectively. Depreciation and Amortization For the three and six months ended June 30, 2025, compared to the same periods in 2024, Depreciation and amortization expense decreased by $5.7 million, or 26.0%, and $8.8 million, or 21.2%, respectively, due primarily to the disposition of The Hamilton and the classification of the Brickell Assemblage as held for sale in December 2024, partially offset by the substantial completion of Upton Place, Strathmore Square, and Oak Shore in 2024. General and Administrative Expenses For the three months ended June 30, 2025, compared to the same period in 2024, General and administrative expenses increased by $0.2 million, or 2.9%. For the six months ended June 30, 2025, compared to the same period in 2024, General and administrative expenses decreased by $0.1 million, or 0.9%. Interest Income For the three and six months ended June 30, 2025, compared to the same periods in 2024, Interest income decreased by $1.0 million, or 39.0%, and $1.5 million, or 29.8%, respectively, due primarily to a decrease earned on amounts of invested cash. Interest Expense For the three and six months ended June 30, 2025, compared to the same periods in 2024, Interest expense increased by $1.2 million, or 7.0%, and $5.3 million, or 17.4%, respectively, due primarily to increased non-recourse construction loan draws and reduced capitalization due to the substantial completion of Upton Place, Strathmore Square, and Oak Shore in 2024, partially offset by the repayment of certain non-recourse construction loans in December 2024 and use of the revolving credit facility to pay off a higher interest rate non-recourse construction loan in May 2025. Realized and Unrealized Gains (Losses) on Interest Rate Contracts We are required to adjust our interest rate contracts to fair value on a quarterly basis. As a result of the mark-to-market adjustments, we recorded unrealized losses of $0.3 million for the three months ended June 30, 2025, and unrealized losses of $0.8 million for the six months ended June 30, 2025. We recorded unrealized losses of $1.3 million and $1.5 million, respectively, for the same periods in 2024. In addition, we realized gains of $0.2 million for the three months ended June 30, 2025, and realized gains of $0.5 million for the six months ended June 30, 2025, respectively, compared to realized gains of $1.9 million and $3.8 million, respectively, for the same periods in 2024. Realized and Unrealized Gains (Losses) on Equity Investments 38 Table of Contents We measure our investments in stock based on its market price at period end and our investments in property technology funds at NAV as a practical expedient. In addition, we measure our investment in IQHQ 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. As a result of changes in the values of these investments, we recorded unrealized losses of $0.2 million and $0.6 million, respectively, for the three and six months ended June 30, 2025. For the same periods in 2024, we recorded unrealized losses of $47.3 million and $47.5 million, respectively, primarily due to a $47.0 million non-cash impairment recognized on our investment in IQHQ. 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, as well as activity related to our Mezzanine Investment and unconsolidated real estate partnerships. For the three and six months ended June 30, 2025, compared to the same periods in 2024, Other income (expense), net changed by $1.2 million, or 94.4%, and by $2.3 million, or 80.8%, respectively, primarily due to an increase in income related to our Mezzanine Investment, offset by costs associated with our ongoing strategic review. Income Tax Benefit (Expense) Certain aspects of our operations, including our development and redevelopment activities, are conducted through TRS entities. Additionally, our TRS entities hold our investment in 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 gains retained by the REIT. For the three and six months ended June 30, 2025, we had consolidated net losses subject to tax of $0.9 million and $3.2 million, respectively, compared to consolidated net losses subject to tax of $5.3 million and $11.9 million, respectively, for the same period in 2024. For the three and six months ended June 30, 2025, we recognized income tax expense of $5.6 million and $5.5 million, respectively, compared to an income tax benefit of $2.2 and $4.9 million, respectively, during the same periods in 2024. The change in income tax expense is due primarily to the recognition of a non-cash partial valuation allowance against the deferred tax assets of our TRS entities and the tax effect of reduced depreciation in 2025 associated with properties owned by, and activities of, our TRS entities. On July 4, 2025, legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was signed into law. Significant provisions of the OBBBA include the permanent extension of certain provisions of the 2017 Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions. We are currently evaluating the tax consequences of the OBBBA. 39 Table of Contents Critical Accounting Estimates We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. Our critical accounting estimates that involve our more significant judgments and estimates used in the preparation of our consolidated financial statements are detailed 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, 2024. There have been no significant changes in our critical accounting estimates from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented. Non-GAAP Measures 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 facilitates comparison of our credit strength to other companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts. Nareit defines EBITDAre as net income computed in accordance with GAAP, before interest expense, income taxes, 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; and • 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 the following items: • net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests; • realized and unrealized (gains) losses on interest rate contracts, 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; • the (income) loss recognized on our Mezzanine Investment; and • the unrealized (gains) losses recognized on our passive equity investments. 40 Table of Contents The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2025 and 2024, is as follows ( in thousands ): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income (loss) $ (16,976 ) $ (61,103 ) $ (28,688 ) $ (68,299 ) Adjustments: Interest expense 18,002 16,820 35,440 30,190 Income tax (benefit) expense 5,571 (2,188 ) 5,486 (4,917 ) Depreciation and amortization 16,363 22,110 32,784 41,578 Adjustment related to EBITDAre of unconsolidated partnerships 247 217 558 432 EBITDAre $ 23,207 $ (24,144 ) $ 45,580 $ (1,016 ) Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships (3,156 ) (3,598 ) (5,829 ) (7,158 ) Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (232 ) 811 (528 ) 827 EBITDAre adjustments attributable to noncontrolling interests (207 ) (929 ) (535 ) (1,505 ) Mezzanine investment (income) loss, net (1,000 ) 628 (1,000 ) 1,256 Realized and unrealized (gains) losses on interest rate contracts 72 (640 ) 333 (2,312 ) Unrealized (gains) losses on passive equity investments 210 46,972 607 46,972 Adjusted EBITDAre $ 18,894 $ 19,100 $ 38,628 $ 37,064 Liquidity and Capital Resources Liquidity Liquidity is the ability to meet present and future financial obligations. As of June 30, 2025, our available liquidity was $173.5 million, which consisted of: • $41.4 million in cash and cash equivalents; • $26.4 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance; and • $105.7 million of available capacity to borrow under our revolving secured credit facility, after the consideration of outstanding borrowings of $42.8 million and $1.5 million of letters of credit backed by the facility. As of June 30, 2025, we had sufficient capacity on our non-recourse construction loans to cover our remaining commitments on development and redevelopment projects of approximately $125.1 million. We also have unfunded commitments in the amount of $1.2 million related to our 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. 41 Table of Contents We believe, based on the information available at this time, cash and cash equivalents, cash generated from operations, proceeds from planned dispositions, and borrowing capacity are sufficient sources of liquidity to meet our operational needs for the next twelve months. In the event that these sources of liquidity 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, which matures in December 2025, will be retired upon the sale of the Boston portfolio. Please refer to Note 9 to the condensed consolidated financial statements in Item 1 for further information. 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 June 30, 2025, all of our outstanding non-recourse property debt had a fixed interest rate. In addition, the weighted-average contractual rate on our non-recourse debt was 4.4%, and the average remaining term to maturity was 6.3 years. 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. Our primary sources of leverage are non-recourse property-level debt and non-recourse construction loans. We also have a secured $150.0 million credit facility with a syndicate of financial institutions. As of June 30, 2025, we had $42.8 million of outstanding borrowing under our revolving loan commitments, as well as $1.5 million in letters of credit backed by the facility. Our revolving secured credit facility requires that we 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 through the credit facility's maturity date in December 2025 or its retirement upon the sale of the Boston portfolio. Please refer to Note 9 to the condensed consolidated financial statements in Item 1 for further information. 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 six months ended June 30, 2025, net cash provided by operating activities was $13.5 million. Our operating cash flow is primarily affected by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities and general and administrative costs. Cash provided by operating activities for the six months ended June 30, 2025, decreased by $16.2 million compared to the same period in 2024, due primarily to the timing of changes in operating assets and operating liabilities and increased interest expense, partially offset by increased net operating income driven by higher rents. Investing Activities For the six months ended June 30, 2025, net cash used in investing activities of $45.7 million consisted primarily of capital expenditures. Net cash used in investing activities for the six months ended June 30, 2025, decreased by $31.7 million compared to the same period in 2024, due primarily to decreased capital expenditures. 42 Table of Contents Financing Activities For the six months ended June 30, 2025, net cash used in financing activities of $72.4 million consisted primarily of the payment of dividends on common stock and OP Units, offset by proceeds from non-recourse construction loans and contributions from redeemable noncontrolling interests. Proceeds from our revolving credit facility offset the payoff of a non-recourse construction loan. Net cash used in financing activities for the six months ended June 30, 2025, changed by $90.3 million compared to the same period in 2024, due primarily to the payment of dividends and decreased proceeds from non-recourse construction loans, partially offset by increased contributions from redeemable noncontrolling interests. 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. 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. 43 Table of Contents ITEM 3. 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 manage 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. Market Risk As of June 30, 2025, on a consolidated basis, we had no variable-rate property-level debt outstanding and $155.8 million of variable-rate construction loans outstanding. The impact of rising interest rates is mitigated by our use of interest rate caps, which as of June 30, 2025, 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. As of June 30, 2025, we estimate an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no material impact on interest expense. As of June 30, 2025, we held interest rate caps with a maximum notional value of $464.3 million. These instruments were acquired for $3.6 million and at June 30, 2025, were valued at $0.5 million. As of June 30, 2025, we had $67.8 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.