What changed in this filing

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Item 1. Financial Statements

2021-05-17 compared with 2020-11-02 · 392 added, 549 removed, 222 unchanged (81% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30, 2020

March 31, 2021

December 31, 2020

6 unchanged sentences

Mezzanine investment

Assets held for sale

Right-of-use lease assets

Other assets, net

LIABILITIES AND EQUITY

Non-recourse property debt, net

Term loan, net

Revolving credit facility borrowings

Notes payable to AIR

Total indebtedness

Deferred tax liabilities

Lease liabilities

Accrued liabilities and other

Liabilities related to assets held for sale

Total liabilities

Redeemable preferred OP Units

Redeemable noncontrolling interests in consolidated real estate partnership

Redeemable noncontrolling interest in consolidated real estate partnership

Commitments and contingencies (Note 4)

1 unchanged sentence

149,208,479 and 149,036,263 shares issued/outstanding at

September 30, 2020 and December 31, 2019, respectively

March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive income

Distributions in excess of earnings

Retained earnings (Accumulated deficit)

Total Aimco equity

6 unchanged sentences

(In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Rental and other property revenues

3 unchanged sentences

General and administrative expenses

Investment management expenses

Other expenses, net

Total operating expenses

Interest income

Interest expense

Gain on dispositions of real estate

Mezzanine investment income, net

Income from unconsolidated real estate partnerships

(Loss) income before income tax benefit

Unrealized gains on interest rate options

Other expenses, net

Income before income tax benefit

Income tax benefit

Net (loss) income

Noncontrolling interests:

Net loss (income) attributable to noncontrolling interests in

consolidated real estate partnerships

Net income attributable to preferred noncontrolling interests

in Aimco Operating Partnership

Net loss (income) attributable to common noncontrolling

Net loss attributable to redeemable noncontrolling interest in

consolidated real estate partnership

Net (income) loss attributable to noncontrolling interests

in consolidated real estate partnerships

Net income attributable to common noncontrolling

interests in Aimco Operating Partnership

Net income attributable to noncontrolling interests

Net (loss) income attributable to Aimco

Net income attributable to Aimco preferred stockholders

Net (income) loss attributable to participating securities

Net (loss) income attributable to Aimco common

Net (loss) income attributable to Aimco per common

share – basic and diluted

Net income attributable to Aimco common

Net income attributable to Aimco per common share – basic

Net income attributable to Aimco per common share – diluted

Weighted average common shares outstanding – basic

2 unchanged sentences

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Unrealized losses on available for sale debt securities

Comprehensive (loss) income

Comprehensive income attributable to noncontrolling

Comprehensive (loss) income attributable to Aimco

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2020 and 2019

(In thousands)

Noncontrolling

Comprehensive

Income (Loss)

Distributions

Balances at June 30, 2019

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership for consolidated entities

Contribution from noncontrolling interest in consolidated real estate partnerships

Purchase of noncontrolling interest in consolidated real estate partnerships

Change in accumulated other comprehensive income

Common Stock dividends

Distributions to noncontrolling interests

Balances at September 30, 2019

Balances at June 30, 2020

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership of consolidated entities

Contribution from noncontrolling interest in consolidated real estate partnerships

Change in accumulated other comprehensive income

Common Stock dividends

Distributions to noncontrolling interests

Balances at September 30, 2020

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

(In thousands)

Preferred Stock

Noncontrolling

Comprehensive

Income (Loss)

Distributions

Retained Earnings

(Accumulated Deficit)

Aimco Predecessor Equity

Balances at December 31, 2019

Repurchases of Common Stock

Redemption of Preferred Stock

Issuance of Aimco Operating Partnership units

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership for consolidated entities

Contribution from noncontrolling interest in consolidated real estate

Purchase of noncontrolling interest in consolidated real estate partnerships

Change in accumulated other comprehensive income

Common Stock dividends

Common Stock issued to Common Stockholders in special dividend

Preferred Stock dividends

Distributions to noncontrolling interests

Balances at September 30, 2019

Net income attributable to Aimco Predecessor

Net loss attributable to noncontrolling interests in consolidated partnerships

Net income attributable to common noncontrolling interests in Aimco Operating Partnership

Contributions from Aimco Predecessor, net

Balances at March 31, 2020

Balances at December 31, 2020

Repurchases of Common Stock

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership of consolidated entities

Contribution from noncontrolling interest in consolidated real estate

Cumulative effect of a change in accounting principle

Change in accumulated other comprehensive income

Common Stock dividends

Distributions to noncontrolling interests

Balances at September 30, 2020

Issuance of common stock in connection with share-based compensation arrangements

Share-based compensation expense

Distribution to noncontrolling interests in consolidated real estate partnerships

Net income attributable to noncontrolling interests in consolidated partnerships

Net income attributable to common noncontrolling interests in Aimco Operating Partnership

Net income attributable to Aimco common stockholders

Balances at March 31, 2021

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Gain on dispositions of real estate

Income from unconsolidated real estate partnerships

Unrealized (gains) on interest rate options

Income tax benefit

Other adjustments

Net changes in operating assets and operating liabilities

Mezzanine investment income, net

Share based compensation

Amortization of debt issuance costs and other

Changes in operating assets and operating liabilities:

Other assets, net

Accounts payable, accrued liabilities and other

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate and deposits related to purchases of real estate

Purchases of real estate

Capital expenditures (1)

Proceeds from dispositions of real estate

Purchases of corporate assets

Other investing activities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-recourse property debt

Principal repayments on non-recourse property debt

Proceeds from term loan

Net repayments of revolving credit facility

Payment of debt issuance costs

Payment of debt extinguishment costs

Repurchases of Common Stock

Repurchases of Preferred Stock

Payment of dividends to holders of Common Stock

Payment of dividends to holders of Preferred Stock

Payment of distributions to noncontrolling interests

Redemptions of noncontrolling interests in the Aimco Operating Partnership

Contribution from noncontrolling interests in consolidated real estate partnerships

Purchases of noncontrolling interests in consolidated real estate partnerships

Payments on financing leases

Purchase of interest rate option

Change in Aimco Predecessor investment, net

Other financing activities

Net cash provided by (used in) financing activities

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

Net cash used in financing activities

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD

Capital expenditures is net of accrued capital costs of $ 14.5 million and $ 0.9 million for the three months ended March 31, 2021 and 2020, respectively.

See notes to condensed consolidated financial statements.

AIMCO PROPERTIES, L.P.

AIMCO OP L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

September 30, 2020

March 31, 2021

December 31, 2020

6 unchanged sentences

Mezzanine investment

Assets held for sale

Right-of-use lease assets

Other assets, net

LIABILITIES AND EQUITY

Non-recourse property debt, net

Term loan, net

Revolving credit facility borrowings

Notes payable to AIR

Total indebtedness

Deferred tax liabilities

Lease liabilities

Accrued liabilities and other

Liabilities related to assets held for sale

Total liabilities

Redeemable preferred OP Units

Redeemable noncontrolling interests in consolidated real estate partnership

Redeemable noncontrolling interest in consolidated real estate partnership

Commitments and contingencies (Note 4)

2 unchanged sentences

Limited Partners

Partners’ capital attributable to the Aimco Operating Partnership

Partners’ capital attributable to Aimco Operating Partnership

Noncontrolling interests in consolidated real estate partnerships

2 unchanged sentences

See notes to condensed consolidated financial statements.

AIMCO PROPERTIES, L.P.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Rental and other property revenues

3 unchanged sentences

General and administrative expenses

Investment management expenses

Other expenses, net

Total operating expenses

Interest income

Interest expense

Gain on dispositions of real estate

Mezzanine investment income, net

Income from unconsolidated real estate partnerships

(Loss) income before income tax benefit

Unrealized gains on interest rate options

Other expenses, net

Income before income tax benefit

Income tax benefit

Net (loss) income

Net loss (income) attributable to noncontrolling interests in

Net loss attributable to redeemable noncontrolling interest in

consolidated real estate partnerships

Net (loss) income attributable to the Aimco Operating

Net (income) loss attributable to noncontrolling interests in

consolidated real estate partnerships

Net income attributable to the Aimco Operating

Partnership’s preferred unitholders

Net (income) loss attributable to participating securities

Net (loss) income attributable to the Aimco Operating

Partnership’s common unitholders

Net (loss) income attributable to the Aimco Operating

Partnership per common unit – basic and diluted

Net income attributable to the Aimco Operating

Partnership per common unit – basic

Net income attributable to the Aimco Operating

Partnership per common unit – diluted

Weighted-average common units outstanding – basic

1 unchanged sentence

See notes to condensed consolidated financial statements.

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Unrealized losses on available for sale debt securities

Comprehensive (loss) income

Comprehensive loss (income) attributable to noncontrolling

Comprehensive (loss) income attributable to the Aimco

Operating Partnership

See notes to condensed consolidated financial statements.

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended September 30, 2020 and 2019

(In thousands)

General Partner

Limited Partner

Limited Partners

Partners’ Capital

Attributable to

Noncontrolling

Total Partners’

Balances at June 30, 2019

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership of consolidated entities

Contribution from noncontrolling interest in consolidated real

estate partnerships

Purchase of noncontrolling interest in consolidated real estate

Change in accumulated other comprehensive income

Distributions to common unitholders

Distributions paid to noncontrolling interests in

consolidated real estate partnerships

Balances at September 30, 2019

Balances at June 30, 2020

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership of consolidated entities

Contribution from noncontrolling interest in consolidated

real estate partnerships

Change in accumulated other comprehensive income

Distributions to common unitholders

Distributions to noncontrolling interests

Balances at September 30, 2020

See notes to condensed consolidated financial statements.

AIMCO PROPERTIES, L.P.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Nine Months Ended September 30, 2020 and 2019

For the Three Months Ended March 31, 2021 and 2020

(In thousands)

Preferred Units

General Partner

4 unchanged sentences

Noncontrolling

Aimco Predecessor Capital

Total Partners’

Balances at December 31, 2019

Repurchases of common partnership units

Redemption of preferred units

Issuance of Aimco Operating Partnership units

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership of consolidated entities

Contribution from noncontrolling interest in consolidated

real estate partnerships

Purchase of noncontrolling interest in consolidated

real estate partnerships

Change in accumulated other comprehensive income

Distributions to common unitholders

Common partnership units issued to common unitholders

in special distribution

Distributions to preferred unitholders

Distributions paid to noncontrolling interests in

Net income attributable to Aimco Predecessor

Net loss attributable to noncontrolling interests in

consolidated real estate partnerships

Balances at September 30, 2019

Contributions from Aimco Predecessor, net

Balances at March 31, 2020

Balances at December 31, 2020

Repurchases of common partnership units

Redemption of Aimco Operating Partnership units

Amortization of share-based compensation cost

Effect of changes in ownership of consolidated entities

Contribution from noncontrolling interest in consolidated

Share-based compensation expense

Distribution to noncontrolling interests in consolidated

real estate partnerships

Cumulative effect of a change in accounting principle

Change in accumulated other comprehensive income

Distributions to common unitholders

Distributions to noncontrolling interests

Balances at September 30, 2020

Net income attributable to noncontrolling interests in

consolidated real estate partnerships

Balances at March 31, 2021

See notes to condensed consolidated financial statements.

AIMCO PROPERTIES, L.P.

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Gain on dispositions of real estate

Income from unconsolidated real estate partnerships

Unrealized (gains) on interest rate options

Income tax benefit

Other adjustments

Net changes in operating assets and operating liabilities

Mezzanine investment income, net

Share based compensation

Amortization of debt issuance costs and other

Changes in operating assets and operating liabilities:

Other assets, net

Accounts payable, accrued liabilities and other

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate and deposits related to purchases of real estate

Purchases of real estate

Capital expenditures (1)

Proceeds from dispositions of real estate

Purchases of corporate assets

Other investing activities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from non-recourse property debt

Principal repayments on non-recourse property debt

Proceeds from term loan

Net repayments of revolving credit facility

Payment of debt issuance costs

Payment of debt extinguishment costs

Repurchases of common partnership units held by General Partner and Special Limited Partner

Redemption of preferred units from Aimco

Payment of distributions to General Partner and Special Limited Partner

Payment of distributions to Limited Partners

Payment of distributions to preferred OP Units

Payment of distributions to noncontrolling interests

Redemption of common and preferred OP Units

Contributions from noncontrolling interests in consolidated real estate partnerships

Purchases of noncontrolling interests in consolidated real estate partnerships

Payments on financing leases

Purchase of interest rate option

Change in Aimco Predecessor investment, net

Other financing activities

Net cash provided by (used in) financing activities

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

Net cash used in financing activities

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD

Capital expenditures in net of accrued capital costs of $ 14.5 million and $ 0.9 million for the three months ended March 31, 2021 and 2020, respectively.

See notes to condensed consolidated financial statements.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

AIMCO OP L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Note 1 — Organization

Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994.

Aimco is a self-administered and self-managed real estate investment trust, or REIT.

AIMCO Properties, L.P., or the Aimco Operating Partnership, is a Delaware limited partnership formed on May 16, 1994, to conduct our business, which is focused on the ownership, management, redevelopment, and some development of quality apartment communities located in several of the largest markets in the United States.

Aimco, through its wholly-owned subsidiaries, AIMCO-GP, Inc.

and AIMCO-LP Trust, holds a majority of the ownership interests in the Aimco Operating Partnership.

Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership.

Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as OP Units.

OP Units include common partnership units, which we refer to as common OP Units, as well as preferred partnership units, which we refer to as preferred OP Units.

As of September 30, 2020, after elimination of units held by consolidated subsidiaries, the Aimco Operating Partnership had 159,182,513 common OP Units outstanding.

As of September 30, 2020, Aimco owned 148,865,947 of the common OP Units of the Aimco Operating Partnership and Aimco had an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock.

Aimco’s ownership of the total common OP units outstanding represents a 93.5 % legal interest in the Aimco Operating Partnership and a 94.9 % economic interest.

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

We own and operate a portfolio of apartment communities, diversified by both geography and price point, in 17 states and the District of Columbia.

As of September 30, 2020, our portfolio included 126 apartment communities with 33,209 apartment homes in which we held an average ownership of approximately 95 %.

We consolidated 122 of these apartment communities with 33,067 apartment homes.

On September 14, 2020 , we announced a Board-led plan, informed by active and regular engagement with shareholders, to reduce financial risk and execution risk, and to increase shareholder value by division of our business between two public entities.

The first, with approximately 90 % of our estimated fair value, will be known as Apartment Income REIT, or AIR.

The second entity, with 10 % of our estimated fair value, will be known as Aimco, or sometimes for clarity, as “new” Aimco, and is expected to hold the non-traditional assets, specified below.

Separation costs for the three and nine months ended September 30, 2020, totaled $ 11.9 million and $ 12.6 million, respectively, are reflected in other expenses, net on our condensed consolidated statement of operations.

Following the completion of the separation, we expect to retain the redevelopment and development business, 25 consolidated communities including 16 multi-family communities securing a $ 534 million note payable due to AIR, and four non-100% owned communities that we do not consolidate.

In addition, we expect to hold non-traditional assets such as other investments including 1001 Brickell Bay Tower and our loan to, and equity option in, the partnership that owns Parkmerced Apartments.

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

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

(“Aimco Operating Partnership”).

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

The Separation

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

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

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

The condensed consolidated financial statements reflect our historical consolidated financial position, results of operations, and cash flows in conformity with U.S.

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

All significant intercompany balances have been eliminated in consolidation.

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

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

As of March 31, 2021, Aimco owned approximately 93.3 % of the legal interest in the common partnership units of Aimco Operating Partnership and 94.9 % of the economic interest in Aimco Operating Partnership.

The remaining 6.7 % 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.

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

multifamily sector.

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

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

two residential apartment communities, with 1,055 planned apartment homes, and one hotel, with 106 planned rooms, that we are actively developing and redeveloping;

one residential apartment community, currently with 275 apartment homes, in redevelopment planning;

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

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

1 unchanged sentence

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 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, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

The condensed consolidated balance sheets of Aimco and the Aimco Operating Partnership as of December 31, 2019 , 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 the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2019 .

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

Operating results for the three months ended March 31, 2021 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 .

The condensed consolidated balance sheets of Aimco and Aimco Operating Partnership as of December 31, 2020, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements.

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

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

Principles of Consolidation

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

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

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

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

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

2 unchanged sentences

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.

Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are reflected in Aimco’s accompanying condensed consolidated balance sheets as noncontrolling interests in the Aimco Operating Partnership.

Interests in partnerships consolidated by the Aimco Operating Partnership that are held by third parties are reflected in our accompanying condensed consolidated balance sheets as noncontrolling interests in consolidated real estate partnerships.

Redeemable Preferred OP Units

As described in Note 5, the preferred OP Units may be redeemed at the holder’s option and are therefore presented within temporary equity in Aimco’s condensed consolidated balance sheets and within temporary capital in the Aimco Operating Partnership’s condensed consolidated balance sheets.

The following table presents a reconciliation of the Aimco Operating Partnership’s preferred OP Units from December 31, 2019, to September 30, 2020 (in thousands):

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

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

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

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

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

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

Common Noncontrolling Interests in Aimco Operating Partnership

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

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

For the three months ended March 31, 2021 and 2020, the holders of common OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of 5.1 % .

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

Redeemable Noncontrolling Interest in Consolidated Real Estate Partnership

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

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

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

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

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

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

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

Balance at December 31, 2020

Preferred distributions

Redemption of preferred units

Balance at September 30, 2020

The Aimco Operating Partnership has outstanding various classes of redeemable preferred OP Units.

As of September 30, 2020 and December 31, 2019, the Aimco Operating Partnership had 2,938,802 and 3,643,399 redeemable preferred OP Units, respectively, issued and outstanding.

Distributions per annum range from 1.92 % to 8.75 % per class and $ 0.48 to $ 8.00 per unit.

Balance at March 31, 2021

Revenue from Leases

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

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

For the three and nine months ended September 30, 2020 and 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

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

For the three months ended March 31, 2021 and 2020, our total lease income was comprised of the following amounts for all operating leases (in thousands):

Three Months Ended March 31,

Fixed lease income

Variable lease income

Straight-line rent write-off (1)

Total lease income

We monitor the collectability of all unpaid rent amounts.

The onset of COVID-19 and the anticipated economic slowdown resulted in a $ 2.9 million write-off of accrued straight-line rent during the nine months ended September 30, 2020.

Additionally, we wrote-off the related deferred leasing costs of $ 2.4 million during the nine months ended September 30, 2020.

The write-offs of deferred leasing costs are recorded in depreciation and amortization in our condensed consolidated statements of operations.

In response to the economic effects of the COVID-19 pandemic and government al lockdown , many jurisdictions where our communities are located have enacted protections for residents and commercial tenants, including government - mandated rent deferrals, rent freezes, repayment extensions, fee abatement measures or concessions, and prohibitions on lease terminations or evictions for tenants .

Some states and municipalities are also implementing rental assistance programs and encouraging landlord - tenant negotiations .

On April 10, 2020, the Financial Accounting Standards Board, or FASB, issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions, including deferrals or reductions of future lease payments.

Consequently, in accordance with the Staff Q&A issued by the FASB, we may elect to record rent relief when granted rather than over the remaining term of the lease.

Our residential tenants represent approximately 97 % of revenue and our commercial tenants represent approximately 3 % of revenue for the three months ended September 30, 2020.

For the three and nine months ended September 30, 2020, we granted to commercial tenants $ 0.6 million and $ 1.0 million in rent relief, respectively, and elected to record these as a reduction of variable lease income in the table above.

Lessee Arrangements

During the three months ended March 31, 2021, we, as lessee, and AIR, as lessor, entered into finance leases on four properties currently under construction or in lease-up.

The life of three of the leases is 25 years and one lease is for 10 years.

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

We have provided AIR with residual value guarantees aggregating to $ 244.7 which provide that if the residual value of the leased assets are less than the specified residual value guarantees at the earlier of lease expiration or termination, we are required to pay the difference.

See Note 3 for further details.

As of March 31, 2021, operating and financing right-of-use lease assets of $ 5.4 million and $ 437.7 million, respectively, are included in the condensed consolidated balance sheets.

For the three months ended March 31, 2021, amortization expense and interest expense related to our finance leases was $ 1.3 million and $ 1.7 million, respectively, net of capitalized costs.

As of March 31, 2021, Aimco’s operating leases and financing leases have weighted-average remaining terms of 8.2 years, and 38.7 years, respectively, and weighted-average discount rates of 3.2 % and 5.4 %, respectively.

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

Sublease Income

Operating Lease Future Minimum Rent

Financing Leases Future Minimum Payments

Remainder of 2021

Total lease liabilities

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

No lease costs were capitalized on leased assets for the three months ended March 31, 2020.

Mezzanine Investment

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

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

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

At the time of the Separation and as of May 17, 2021 , legal title of these subsidiaries had not yet transferred to Aimco.

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

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

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

As of March 31, 2021 , the Mezzanine Investment in our condensed consolidated balance sheets represents the assets associated with our indirect interest in the subsidiary that owns Parkmerced Apartments, which we do not consolidate.

The loan is subject to certain risks, including, but not limited to, those resulting from the severe downturn in San Francisco rents, the ongoing disruption due to the COVID-19 pandemic and associated governmental response, and the current economic situation, which may result in all or a portion of the loan not being repaid.

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

Income Tax Benefit

For the three months ended March 31, 2021, $ 2.7 million of the income tax benefit is related to internal restructuring completed in the first quarter and changes to our effective state rate expected to apply to the reversal of our existing deferred items.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

Reclassifications and Revisions

For the 2020 presentation of our condensed consolidated statements of operations, we have added a caption for investment management expenses.

We have reclassified certain items from property operating expenses, general and administrative expenses, and other expenses, net, in our 2019 presentation to conform to the current presentation.

Accounting Pronouncements Adopted in the Current Year

On January 1, 2020, we adopted ASC 326, Financial Instruments – Credit Losses , issued by the FASB which changes the method and timing of the recognition of credit losses on financial assets.

The standard requires us to estimate and record credit losses over the life of a financial instrument, including receivables, at its inception.

Our notes receivable and investments in available for sale, or AFS, debt securities are subject to the new standard.

For AFS debt securities, the new standard requires us to estimate a credit loss if the fair value of the instruments is less than the carrying value of the instruments.

We adopted the credit loss standard using the modified-retrospective approach.

We recorded a cumulative-effect adjustment for the estimated credit loss associated with our notes receivable of $ 0.3 million in distributions in excess of earnings and partners’ capital in our condensed consolidated balance sheets as of January 1, 2020.

As of the date of adoption, the fair value of our AFS debt securities exceeded their carrying value and no estimate of credit loss was required for these instruments.

Note 3 — Significant Transactions

Joint Venture Transaction

On September 8, 2020, we formed a joint venture with a passive institutional investor, to own a portfolio of 12 multi-family apartment communities with 4,051 homes located in California.

The communities included in the joint venture were valued at $ 2.4 billion, or approximately $ 592,000 per apartment home.

The joint venture has existing property debt of $ 1.22 billion and an implied equity value of $ 1.18 billion.

In exchange for a 39 % interest subject to $ 475 million of property debt, we received $ 461 million.

We retain ownership of 61 % of the joint venture and will control and operate the communities in exchange for property and asset management fees.

We evaluated the joint venture and concluded that we will continue to consolidate these communities.

The difference between the consideration received and the carrying value of the interest sold was recognized in additional paid-in capital.

Acquisition of Hamilton on the Bay

On August 25, 2020, we acquired Hamilton on the Bay, an apartment community and an adjacent land parcel located in Miami, Florida.

Summarized information regarding this acquisition is set forth in the table below (dollars in thousands):

Number of apartment homes

Purchase price

Capitalized transaction costs

Total consideration

Consideration allocated to land

Consideration allocated to building and improvements

Consideration allocated to intangible assets (1)

Consideration allocated to below-market lease liabilities (2)

Total consideration

Intangible assets include in-place leases and leasing costs with a weighted-average term of 0.5 years .

Below-market leases have a weighted-average term of 0.8 years .

Dispositions of Apartment Communities

During the three months ended September 30, 2020 and 2019, no apartment communities were sold.

During the nine months ended September 30, 2020 and 2019, we sold one apartment community with 219 apartment homes for a gain on disposition of $ 47.2 million and sold eight apartment communities with 2,605 apartment homes for a gain on dispositions of $ 356.9 million, respectively.

The apartment communities sold were in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

From time to time we may be marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy.

At the end of each reporting period we evaluate whether such communities meet the criteria to be classified as held for sale.

As of September 30, 2020, we classified a 266 -apartment home community as held for sale that is expected to be sold for gross proceeds of approximately $ 126 million later in 2020.

On April 20, 2020, we secured a $ 350.0 million term loan.

The loan matures on April 20, 2021 , includes a one-year extension option, and currently bears interest at a 30-day LIBOR plus 1.85 %, with a 50 -basis point LIBOR floor.

Proceeds from the loan were used primarily to repay borrowings on our revolving credit facility.

Life Science Developer Investment

During the three months ended September 30, 2020, we made a $ 50 million commitment to IQHQ, a privately-held life-sciences real estate development company.

In addition, we gained the right to collaborate with IQHQ on any multifamily component at its future development sites.

Cash Equivalents

We classify highly liquid investments with an original maturity of three months or less as cash equivalents.

We maintain 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 (in thousands):

March 31, 2021

December 31, 2020

Notes receivable

Deferred costs, deposits, and other

Interest rate options

Corporate fixed assets

Unconsolidated real estate partnerships

Investment in IQHQ

Prepaid expenses and other

Intangible lease assets, net

Due from affiliates

Accounts receivable, net of allowances of $ 1,693 and $ 1,467 as of

March 31, 2021 and December 31, 2020, respectively

Total other assets, net

Note 3 — Transactions with AIR

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

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

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

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

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

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

Master Services Agreement

We and AIR entered into a Master Services Agreement, in which AIR will provide us with customary administrative and support services.

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

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

During the three months ended March 31, 2021, we incurred administrative and support fees of $ 0.4 million, which is included in general and administrative expenses in our condensed consolidated statements of operations.

We did no t incur any fees for the three months ended March 31, 2020.

Property Management Agreements

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

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

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

During the three months ended March 31, 2021, we recorded property management and property accounting fees of $ 1.3 million, which is included in property operating expenses in our condensed consolidated statements of operations.

We did no t incur any fees for the three months ended March 31, 2020.

Notes Payable to AIR

On December 14, 2020, we entered into $ 534.1 million of notes payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets, however, the assets secure existing senior loans of $ 198.3 million as of March 31, 2021.

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

For the three months ended March 31, 2021, we recognized interest expense of $ 6.9 million associated with the notes payable to AIR.

Master Leasing Agreement

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

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

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

The initial annual rent for any leased property is based on the then-current fair market value of the subject property and market NOI cap rates, subject to certain adjustments, and is further subject to periodic escalation as set forth in the applicable lease, and the other terms thereof, including the initial term and extensions.

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

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

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

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

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

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

The four properties include (i) North Tower at Flamingo Point in Miami Beach, Florida, (ii) The Fremont Residences on the Anschutz Medical Campus in Aurora, Colorado, (iii) Prism in Cambridge, Massachusetts, and (iv) 707 Leahy Apartments in Redwood City, California.

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

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

Each l ease commenc e d on January 1, 2021 .

Initial monthly lease payments approximate $ 2.1 million with aggregate total lease payments of approximately $ 611.9 million.

The initial fair market values of the leased assets at the time of lease inception was determined to be $ 469.0 million in the aggregate.

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

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

The development property consists of land and initial construction costs.

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

Due to and from AIR

As of March 31, 2021, we have amounts due to and due from AIR of $ 23.9 million and $ 24.0 million, respectively.

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

The amounts due from AIR primarily consists of net cash flows generated by our operating properties.

Terry Considine Service Arrangement

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

Considine separate from his services as a board member, including, but not limited to (i) short and long term strategic direction and advice;

(ii) transition and executive support to officers and;

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

The Company is obligated to reimburse AIR for all base salary, short-term incentive amounts and long-term incentive amounts payable by AIR to Mr.

Considine for the calendar year 2021under the terms of his employment agreement with AIR that are in excess of $ 1 million, collectively.

For the three months ended March 31, 2021, we have recorded $ 1.45 million in associated service fees in general and administrative expenses in our condensed consolidated statements of operations.

As of March 31, 2021, accrued service fees of $ 1.45 million are included in accrued liabilities and other and in our condensed consolidated balance sheets.

Guarantee Liability

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

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

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

For the three months ended March 31, 2021, the guarantee liability was reduced by $ 1.3 million.

As of March 31, 2021, the guarantee liability of $ 15.1 million is included in accrued liabilities and other in our condensed consolidated balance sheets.

Note 4 — Commitments and Contingencies

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

As of September 30, 2020, our commitments related to these capital activities totaled approximately $ 184 million, most of which we expect to incur during the next 12 months.

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

As of March 31, 2021, our commitments related to these capital activities totaled approximately $ 266.4 million most of which we expect to incur during the next 12 months.

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

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

We have a commitment to fund an additional $ 37.5 million to IQHQ and currently expect to incur this investment over the next two years.

We also have unfunded commitments related to three investments in privately held entities that develop technology related to the real estate industry (“RETV”) in the amount of $ 1.1 million, the timing of which is uncertain.

Legal Matters

In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

Environmental

Various federal, state, and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present in the land or buildings of an apartment community.

Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials.

The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such apartment communities as well as the ability to sell or finance such apartment communities.

In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions.

Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur or for personal injury, disease, disability, or other infirmities related to the alleged presence of hazardous materials.

In addition to potential environmental liabilities or costs associated with our current apartment communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or apartment communities we no longer own or operate.

We are engaged in discussions with the Environmental Protection Agency, or EPA, regarding contaminated groundwater near an Indiana apartment community that has not been owned by us since 2008.

The contamination allegedly derives from a dry cleaner that operated on our former property, prior to our ownership.

We undertook a voluntary remediation of the dry cleaner contamination under state oversight.

In 2016, EPA listed our former community and a number of residential communities in the vicinity on the National Priorities List, or NPL (i.e., as a Superfund site).

In May 2018, we prevailed on our federal judicial appeal vacating the Superfund listing.

We continue to work with EPA to formulate an agreed order to reimburse EPA costs and finish clean up of the site outside the Superfund program.

Although the outcome of this process is uncertain, we do not expect the resolution to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

We also have a contingent environmental liability related to a property in Lake Tahoe, California.

An entity owned by us was the former general partner of a now-dissolved partnership that previously owned a site where a laundromat, with a self-service dry-cleaning machine, operated.

That entity and the current property owner have been remediating the site since 2009, under the oversight of the Lahontan Regional Water Quality Control Board, or Lahontan.

In May 2017, Lahontan issued a final cleanup and abatement order that names four potentially-responsible parties, acknowledges that there may be additional responsible parties, and requires the named parties to perform additional groundwater investigation and corrective actions with respect to onsite and offsite contamination.

We appealed the final order, and on June 1, 2020, the court vacated the Order against us.

However, there are still civil suits pending related to this contingent liability.

Although the outcome of this process is uncertain, we do not expect the resolution to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

We have determined that our legal obligations to remove or remediate certain potentially hazardous materials may be conditional asset retirement obligations, as defined by GAAP.

Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or apartment community casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations.

Asset retirement obligations that are reasonably estimable as of September 30, 2020, are immaterial to our consolidated financial condition, results of operations, and cash flows.

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

While the outcome of the legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Note 5 — Earnings and Dividends per Share and Unit

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

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

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

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

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

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

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

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

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

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

Our restricted stock awards that are subject to time-based vesting receive non-forfeitable dividends similar to shares of Common Stock and common partnership units prior to vesting, and our TSR long-term incentive partnership units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting

and conversion.

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

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

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

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, 2020 and 2019, are as follows (in thousands, except per share and per unit data):

Three Months Ended September 30,

Nine Months Ended September 30,

Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three months ended March 31, 2021 and 2020, are as follows (in thousands, except per share and per unit data):

Three Months Ended March 31,

Earnings per share

Basic and dilutive net (loss) income attributable to Aimco common

Net income attributable to Aimco common stockholders

Denominator – shares:

Basic weighted-average Common Stock outstanding

Dilutive share equivalents outstanding

Dilutive weighted-average Common Stock outstanding

Earnings per share – basic and diluted

Non-dilutive share equivalents outstanding

Diluted share equivalents outstanding

Diluted weighted-average Common Stock outstanding

Earnings per share – basic

Earnings per share – diluted

Earnings per unit

Basic and dilutive net (loss) income attributable to the Aimco

Operating Partnership's common unitholders

Net income attributable to Aimco Operating Partnership's common unitholders

Denominator – units

Basic weighted-average common partnership units outstanding

Dilutive partnership unit equivalents outstanding

Dilutive weighted-average common partnership units

Earnings per unit – basic and diluted

Non-dilutive partnership unit equivalents outstanding

The Aimco Operating Partnership has various classes of preferred OP Units, which may be redeemed at the holders’ option.

The Aimco Operating Partnership may redeem these units for cash, or at its option, shares of Common Stock.

As of September 30, 2020, these preferred OP Units were potentially redeemable for approximately 2.4 million shares of Common Stock (based on the period end market price), or cash.

The Aimco Operating Partnership has a redemption policy that requires cash settlement of redemption requests for the preferred OP Units, subject to limited exceptions.

Accordingly, we have excluded these securities from earnings per share and unit computations for the periods presented above, and we expect to exclude them in future periods.

Dividends and distributions paid during the three and nine months ended September 30, 2020 and 2019, were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Dividends and distributions paid

In the first quarter of 2019, the Board of Directors authorized a special dividend and special distribution of $ 2.02 , which is included in the $2.80 in the table above.

The special dividend and distribution in the first quarter of 2019 consisted of the below (in millions):

Aimco Special Dividend:

Shares of Common Stock

Cash paid in lieu of issuing fractional shares

Aimco Operating Partnership Special Distribution:

Common partnership units

Cash paid in lieu of issuing fractional units

In connection with the 2019 special dividend and distribution, the Board of Directors authorized a reverse stock split during the three months ended March 31, 2019.

The reverse split combined every 1.03119 common shares and common partnership units into one common share or common partnership unit and was intended to neutralize the dilutive impact of the shares and units issued in the special dividend and distribution.

As a result, the number of shares and units outstanding after the dividend/distribution and reverse split was unchanged from the number outstanding immediately prior to the two actions.

Diluted partnership unit equivalents outstanding

Diluted weighted-average common partnership units outstanding

Earnings per unit – basic

Earnings per unit – diluted

Note 6 — Fair Value Measurements

Recurring Fair Value Measurements

We measure at fair value on a recurring basis our investments in the securitization trust that holds certain of our property debt, which we classify as AFS debt securities.

These investments are presented within other assets in the condensed consolidated balance sheets.

We hold several positions in the securitization trust that pay interest currently and we also hold the first loss position in the securitization trust, which accrues interest over the term of the investment.

These investments were acquired at a discount to face value and we are accreting the discount to the $ 100.9 million face value of the investments through interest income using the effective interest method over the remaining expected term of the investments, which as of September 30, 2020, was approximately 0.8 years.

Our amortized cost basis for these investments, which represents the original cost adjusted for interest accretion less interest payments received, was $ 95.3 million and $ 90.0 million as of September 30, 2020, and December 31, 2019, respectively.

Our investments in AFS debt securities are classified within Level 2 of the GAAP fair value hierarchy.

We estimate the fair value of these investments using an income and market approach with primarily observable inputs, including yields and other information regarding similar types of investments, and adjusted for certain unobservable inputs specific to these investments.

The fair value of the positions that pay interest currently typically moves in an inverse relationship with movements in interest rates.

The fair value of the first loss position is primarily correlated to collateral quality and demand for similar subordinate commercial mortgage-backed securities.

During the nine months ended September 30, 2020, we paid an upfront premium of $ 12.1 million for the option to enter into an interest rate swap at a future date.

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

We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68 % strike price.

The amount of future cash settlement is limited if the prevailing interest rate exceeds 2.78 %.

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

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

We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68 % five year swap strike price.

The amount of future cash settlement is capped if the prevailing interest rate exceeds 2.78 %.

Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement.

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

Our interest rate option is classified within Level 2 of the GAAP fair value hierarchy, and we estimate its 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 other expense, net, in our condensed consolidated statements of operations.

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

The following table summarizes fair value for our AFS debt securities and our interest rate option (in thousands):

As of September 30, 2020

During the three months ended March 31, 2021, we paid an upfront premium of $ 5.6 million (including transaction costs) for the option to enter into an interest rate swap at a future date.

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

We receive a cash settlement in the future if the prevailing interest rate is higher than the 3 % strike price on the five year swap rate.

Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement.

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

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

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

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

We have investments of $ 2.3 million in RETV consisting of three privately held entities that develop technology related to the real estate industry.

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

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

As of March 31, 2021

As of December 31, 2020

AFS debt securities

Interest rate option

Interest rate options

Investment in RETV (1)

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

Fair Value Disclosures

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximated their fair value as of September 30, 2020, and December 31, 2019, due to their relatively short-term nature and high probability of realization.

The carrying amounts of notes receivable, the term loan, and the revolving credit facility also approximated their estimated fair value as of September 30, 2020, and December 31, 2019.

We estimate the fair value of our non-recourse property 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, collateral quality, and loan to value ratios on similarly encumbered apartment communities within our portfolio.

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

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

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

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

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

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

4 unchanged sentences

Consolidated Entities

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

Aimco, through the Aimco Operating Partnership, consolidates all VIEs for which it is the primary beneficiary.

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

All of the VIEs the Aimco Operating Partnership consolidates own interests in one or more apartment communities and are typically structured to generate a return for their partners through the operation and ultimate sale of the communities.

The Aimco Operating Partnership is the primary beneficiary in the limited partnerships in which it is the sole decision maker and has a substantial economic interest.

The table below summarizes apartment community information regarding VIEs consolidated by the Aimco Operating Partnership, excluding 1001 Brickell Bay Drive as it is not an apartment community:

September 30, 2020

December 31, 2019

VIEs with interests in apartment communities

Apartment communities owned by VIEs

Apartment homes in communities owned by VIEs

Assets of the Aimco Operating Partnership’s consolidated VIEs must first be used to settle the liabilities of such consolidated VIEs.

These consolidated VIEs’ creditors do not have recourse to the general credit of the Aimco Operating Partnership.

Assets and liabilities of VIEs, excluding those of the Aimco Operating Partnership, are summarized in the table below (in thousands):

September 30, 2020

Aimco consolidates Aimco Operating Partnership, a variable interest entity (“VIE”) of which Aimco is the primary beneficiary.

Aimco, through Aimco Operating Partnership, consolidates all VIEs for which it is the primary beneficiary.

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

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

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

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

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

March 31, 2021

December 31, 2020

Net real estate

Cash and cash equivalents

Restricted cash

Liabilities (1)

Non-recourse property debt, net, secured by Aimco communities

Deferred tax liability

Unconsolidated

Count of VIEs

Real estate, net

Mezzanine investment

Right-of-use lease assets

Other assets, net

Deferred tax liabilities

Accrued liabilities and other

VIEs as of September 30, 2020 and December 31, 2019, include one VIE that owns an interest in 1001 Brickell Bay Drive.

Assets and liabilities include those of the VIE, but it is not included in the apartment counts above as it is not an apartment community.

Unconsolidated Entities

We have an interest in a partnership that owns Parkmerced Apartments, which meets the definition of a VIE.

However, we are not the primary beneficiary and do not consolidate this partnership.

We loaned $ 275.0 million to the partnership, which accrues interest at 10 % per annum with a five-year term and the right to extend for a second five-year term.

Our investment

balance of $ 300.3 million, reflected in mezzanine investment in our condensed consolidated balance sheets, consists primarily of notes receivable and represents our maximum exposure to loss in this VIE.

Lease liabilities

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

The consolidated VIEs’ creditors do not have recourse to our general credit.

Unconsolidated Real Estate Partnerships

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

Our investment balance of $ 12.9 million and $ 12.8 million as of March 31, 2021 and December 31, 2020, respectively, represents our maximum exposure to loss in these VIEs.

Our other unconsolidated VIE is insignificant to our condensed consolidated balance sheets for both periods presented.

Under the terms of the Separation Agreement, AIR has legally assigned all risks and rewards of ownership in its interest in a partnership that owns Parkmerced Apartments, of which it is not the primary beneficiary.

Our investment balance of $ 314.8 million as of March 31, 2021, reflected in Mezzanine Investment in our condensed consolidated balance sheets, represents our indirect interest in Parkmerced Apartments notes receivable through our agreement with AIR and represents our maximum exposure to loss in this VIE.

Note 8 — Business Segments

We have three segments:

(i) Same Store, (ii) Redevelopment and Development, and (iii) Acquisition and Other Real Estate.

Our Same Store segment includes communities that have reached a stabilized level of operations as of the beginning of a two-year comparable period and maintained it throughout the current and comparable prior year and are not expected to be sold within 12 months.

Our Redevelopment and Development segment includes apartment communities that are currently under construction, and those that have been completed in recent years that have not achieved and maintained stabilized operations for both the current and comparable prior year.

Our Acquisition and Other Real Estate segment includes:

(i) communities that we have acquired since the beginning of a two-year comparable period;

(ii) communities that are subject to limitations on rent increases;

(iii) communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale;

(iv) communities that we expect to redevelop;

and (v) certain commercial spaces.

Our chief operating decision maker uses proportionate property net operating income to assess the operating performance of our communities.

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

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

Our Development and Redevelopment segment includes residential apartment communities, including associated commercial space, that are under construction or have not achieved stabilization.

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

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

Our Other segment consists of 1001 Brickell Bay Drive, our only commercial real estate property.

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

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

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

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

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

As of September 30, 2020, our Same Store segment included 93 consolidated apartment communities with 27,610 apartment homes;

our Redevelopment and Development segment included eight consolidated communities with 2,521 homes;

and our Acquisition and Other Real Estate segment included 20 communities with 2,670 homes and one office building.

The following tables present the rental and other property revenues, property operating expenses, proportionate property net operating income, and income before income tax benefit (expense) of our segments on a proportionate basis, excluding amounts related to communities sold or held for sale and our proportionate share of four apartment communities with 142 apartment homes that we neither manage nor consolidate, for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Redevelopment

Proportionate

Adjustments (1)

Corporate and

Three months ended September 30, 2020:

Rental and other property revenues

Property operating expenses

Other operating expenses not allocated

to segments (3)

Total operating expenses

Proportionate property net operating

income (loss)

Other items included in income before

income tax benefit (4)

Income (loss) before income tax benefit

Redevelopment

Proportionate

Adjustments (1)

Corporate and

Three months ended September 30, 2019:

Rental and other property revenues

Property operating expenses

Other operating expenses not allocated

to segments (3)

Total operating expenses

Proportionate property net operating

income (loss)

Other items included in income before

income tax benefit (4)

Income (loss) before income tax benefit

Redevelopment

As of March 31, 2021, our Development and Redevelopment segment includes three real estate investments:

Upton Place, Hamilton on the Bay and The Benson Hotel.

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

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

Our Other segment includes one office building.

The following tables present the revenues, proportionate property net operating income, and income before income tax benefit of our segments on a proportionate basis, excluding amounts related to our proportionate share of four apartment communities with apartment homes that we neither manage nor consolidate, for the three months ended March 31, 2021 and 2020 (in thousands):

Development and Redevelopment

Operating Portfolio

Proportionate

1 unchanged sentence

Corporate and

Nine months ended September 30, 2020:

Three months ended March 31, 2021:

Rental and other property revenues

4 unchanged sentences

Proportionate property net operating

income (loss)

Other items included in income before

income tax benefit (3)

Income (loss) before income tax benefit

Redevelopment

Income before income tax benefit

Development and Redevelopment

Operating Portfolio

Proportionate

1 unchanged sentence

Corporate and

Nine months ended September 30, 2019:

Three months ended March 31, 2020:

Rental and other property revenues

4 unchanged sentences

Proportionate property net operating

income (loss)

Other items included in income before

income tax benefit (3)

Income (loss) before income tax benefit

Represents adjustments for the 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.

Income before income tax benefit

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

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

Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP.

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.

The write-off of straight-line rent receivables, recognized due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, are included in consolidated rental and property revenues and are not included in our measurement of segment performance for the three and nine months ended September 30, 2020.

Includes depreciation and amortization, general and administrative expenses, and other operating expenses, which may include provision for real estate impairment loss and write-offs of deferred leasing commissions, which are not included in our measure of segment performance.

Includes gain on dispositions of real estate, mezzanine investment income, income from unconsolidated communities, interest income, and interest expense.

The assets of our segments and the consolidated assets not allocated to our segments were as follows (in thousands):

September 30, 2020

December 31, 2019

Redevelopment and Development

Acquisition and Other Real Estate

Corporate and other assets (1)

Total consolidated assets

Includes the assets not allocated to our segments, primarily corporate assets, our mezzanine investment, and assets of communities sold or held for sale as of September 30, 2020.

For the nine months ended September 30, 2020 and 2019, capital additions related to our segments were as follows (in thousands):

Redevelopment and Development

Acquisition and Other Real Estate

Total capital additions

Other operating expenses not allocated to segments consists of depreciation and amortization, general and administrative expense, and other operating expenses which are not included in our measure of segment performance.

Other items included in income before income tax benefit consists primarily of interest expense, unrealized gain on our interest rate options and mezzanine investment income, net.

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

Development and Redevelopment

Operating Portfolio

As of March 31, 2021:

Buildings and improvements

Total real estate

Accumulated depreciation

Net real estate

Non-recourse property debt, net

Development and Redevelopment

Operating Portfolio

As of December 31, 2020:

Buildings and improvements

Total real estate

Accumulated depreciation

Net real estate

Non-recourse property debt, net

In addition to the amounts disclosed in the tables above, the Development and Redevelopment segment right-of-use lease assets and lease liabilities as of March 31, 2021 aggregated to $ 437.7 million and $ 433.5 million, respectively, related to our investments in Upton Place, North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism.

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

Note 9 – Subsequent Events

On October 21, 2020 , our Board of Directors declared a $ 8.20 special dividend in the form of cash and stock.

The special dividend includes the next two quarterly cash dividends, or $ 0.82 per share in the aggregate, accelerating the payment of the regular dividend expected in February of 2021.

Additionally, shareholders in the aggregate will receive $ 7.38 per share in stock.

The dividend will be payable to shareholders of record on the close of business on November 4, 2020 , with shareholders having the opportunity to elect to receive the special dividend in the form of all stock or prorated cash and stock, and will be paid on November 30, 2020 , after trading hours.

The number of shares distributed in the special dividend will be determined by the volume weighted average price (“VWAP”) of our shares during the 10-trading day period ending on November 24, 2020 .

In order to neutralize the dilutive impact of the stock issued in the special dividend, our Board also authorized a reverse stock split, effective on November 30, 2020, immediately following the special dividend.

As a result, total shares outstanding following completion of both the special dividend and the reverse stock split are expected to be unchanged from the total shares outstanding immediately prior to the dividend.

Some stockholders may have more shares and some may have fewer based on their individual elections.

The reverse split will ensure comparability of per share results before and after these transactions.

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

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

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

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

What changed 10-Q

Item 1. Financial Statements