What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-16 · 217 added, 164 removed, 597 unchanged (39% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

Buildings and improvements

20 unchanged sentences

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

June 30, 2021 and December 31, 2020, respectively

September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Rental and other property revenues

7 unchanged sentences

Unrealized gains (losses) on interest rate options

Other expenses, net

Other income (expense), net

(Loss) income before income tax benefit

4 unchanged sentences

interest in consolidated real estate partnership

Net (income) attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

in consolidated real estate partnerships

1 unchanged sentence

interests in Aimco Operating Partnership

Net (loss) income attributable to Aimco common

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

Net (loss) income attributable to Aimco

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

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

Weighted average common shares outstanding – basic

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended June 30, 2021 and 2020

For the Three Months Ended September 30, 2021 and 2020

(In thousands)

4 unchanged sentences

Aimco Predecessor Equity

Balances at March 31, 2020

Balances at June 30, 2020

Net income attributable to Aimco Predecessor

Net income attributable to noncontrolling interests in consolidated partnerships

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 September 30, 2020

Balances at June 30, 2021

Balances at March 31, 2021

Redemption of Aimco Operating Partnership units

2 unchanged sentences

Distribution to noncontrolling interests in consolidated real estate partnerships

Contributions to noncontrolling interests in consolidated real estate partnerships

Net income attributable to noncontrolling interests in consolidated partnerships

Net loss attributable to common noncontrolling interests in Aimco Operating Partnership

Net loss attributable to Aimco common stockholders

Balances at June 30, 2021

Net loss attributable to Aimco

Balances at September 30, 2021

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Six Months Ended June 30, 2021 and 2020

For the Nine Months Ended September 30, 2021 and 2020

(In thousands)

8 unchanged sentences

Contributions from Aimco Predecessor, net

Balances at June 30, 2020

Balances at September 30, 2020

Balances at December 31, 2020

3 unchanged sentences

Share-based compensation expense

Distribution to noncontrolling interest in consolidated real estate partnerships

Net income attributable to noncontrolling interest in consolidated real estate

Net income attributable to to common noncontrolling interests in Aimco Operating Partnership

Net income attributable to Aimco common stockholders

Balances at June 30, 2021

Distribution to noncontrolling interests in consolidated real estate partnerships

Contributions from noncontrolling interests in consolidated real estate partnerships

Net income attributable to noncontrolling interests in consolidated real estate

Net loss attributable to common noncontrolling interests in Aimco Operating Partnership

Net loss attributable to Aimco

Balances at September 30, 2021

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

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

Depreciation and amortization

16 unchanged sentences

Proceeds from construction loans

Proceeds from non-recourse debt

Payments of deferred loan costs

Principal repayments on non-recourse property debt

Payments on financing leases

Principal payments on finance leases

Purchase of interest rate option

1 unchanged sentence

Other financing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

1 unchanged sentence

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

Capital expenditures net of accrued capital costs of $ 17.1 million and $ 0.8 million for the six months ended June 30, 2021 and 2020, respectively.

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

Includes the acquisition of additional IQHQ shares.

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

September 30,

Buildings and improvements

30 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Rental and other property revenues

7 unchanged sentences

Unrealized gains (losses) on interest rate options

Other expenses, net

Other income (expense), net

(Loss) Income before income tax benefit

6 unchanged sentences

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

Partnership per common unit – basic (Note 6)

Net (loss) income attributable to the Aimco Operating

Partnership per common unit – diluted

Partnership per common unit – diluted (Note 6)

Weighted-average common units outstanding – basic

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended June 30, 2021 and 2020

For the Three Months Ended September 30, 2021 and 2020

(In thousands)

7 unchanged sentences

Total Partners’

Balances at March 31, 2020

Balances at June 30, 2020

Net income attributable to Aimco Predecessor

Net income attributable to noncontrolling interests in

Net loss attributable to noncontrolling interests in

consolidated real estate partnerships

Contributions from Aimco Predecessor, net

Balances at September 30, 2020

Balances at June 30, 2021

Balances at March 31, 2021

Redemption of Aimco Operating Partnership units

3 unchanged sentences

real estate partnerships

Contributions from noncontrolling interests in consolidated partnerships

Net income attributable to noncontrolling interests in

consolidated real estate partnerships

Balances at June 30, 2021

Net loss attributable to the Aimco Operating Partnership

Balances at September 30, 2021

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Six Months Ended June 30, 2021 and 2020

For the Nine Months Ended September 30, 2021 and 2020

(In thousands)

11 unchanged sentences

Contributions from Aimco Predecessor, net

Balances at June 30, 2020

Balances at September 30, 2020

Balances at December 31, 2020

3 unchanged sentences

Share-based compensation expense

Distribution to noncontrolling interest in consolidated

Distribution to noncontrolling interests in consolidated

real estate partnerships

Net income attributable to noncontrolling interests in

Contributions from noncontrolling interests in consolidated partnerships

Net loss attributable to noncontrolling interests in

consolidated real estate partnerships

Balances at June 30, 2021

Net loss attributable to the Aimco Operating Partnership

Balances at September 30, 2021

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

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

Depreciation and amortization

16 unchanged sentences

Proceeds from construction loans

Proceeds from non-recourse debt

Payments of deferred loan costs

Principal repayments on non-recourse property debt

Payments on financing leases

Principal payments on finance leases

Purchase of interest rate option

1 unchanged sentence

Other financing activities

Net cash provided by (used in) financing activities

Net cash provided by financing activities

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

1 unchanged sentence

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

Capital expenditures net of accrued capital costs of $ 17.1 million and $ 0.8 million for the six months ended June 30, 2021 and 2020, respectively.

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

Includes the acquisition of additional IQHQ shares.

See notes to condensed consolidated financial statements.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

Note 1 — Organization

12 unchanged sentences

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

As of June 30, 2021, Aimco owned 93.6 % of the legal interest in the common partnership units of Aimco Operating Partnership and 94.9 % of the economic interest in Aimco Operating Partnership.

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

The remaining 6.9 % legal interest is owned by limited partners.

4 unchanged sentences

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

three residential apartment communities, with 1,331 planned apartment homes, a single family rental community, with 16 planned homes plus 8 accessory dwelling units, and one hotel, with 106 planned rooms, that we are actively developing or redeveloping;

a recently acquired operating community with 58 townhomes;

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

land parcels held for development;

4 unchanged sentences

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 six months ended June 30, 2021 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 .

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading.

In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a

fair presentation have been included.

Operating results for the three and nine months ended September 30, 2021 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 .

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.

17 unchanged sentences

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 and six months ended June 30, 2021 and 2020, the holders of common OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of 5.1 % and 5.0 % respectively.

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

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

2 unchanged sentences

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

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

1 unchanged sentence

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 June 30, 2021 (in thousands):

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

Balance at December 31, 2020

Balance at June 30, 2021

Balance at September 30, 2021

Revenue from Leases

1 unchanged sentence

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

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

Three Months Ended June 30,

Six Months Ended June 30,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Fixed lease income

4 unchanged sentences

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

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

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

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

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

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

We recorded a right-of-use asset in the amount of $ 4.7 million and a corresponding lease liability of $ 4.7 million.

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

See Note 3 for further details.

As of June 30, 2021, operating and financing right-of-use lease assets of $ 5.3 million and $ 438.2 million, respectively, are included in the condensed consolidated balance sheets.

For the three months and six months ended June 30, 2021, amortization related to our finance leases was $ 2.1 million and $ 3.4 million, respectively, net of amounts capitalized.

For the three months and six months ended June 30, 2021, interest expense related to our finance leases was $ 1.7 million and $ 3.9 million, respectively.

As of June 30, 2021, Aimco’s operating leases and financing leases have weighted-average remaining terms of 8.2 years, and 38.5 years, respectively, and weighted-average discount rates of 3.2 % and 5.3 %, respectively.

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

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

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

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

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

4 unchanged sentences

Total lease liabilities

For the three and six months ended June 30, 2021 , we capitalized $ 5.8 million and $ 12.7 million of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets.

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

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

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

Mezzanine Investment

6 unchanged sentences

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 June 30, 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.

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

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

Income Tax Benefit

4 unchanged sentences

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

For the three and six months ended June 30, 2021, we had consolidated net losses subject to tax of $ 9.0 million and $ 18.5 million, respectively.

For the three and six months ended June 30, 2020, we had consolidated net income subject to tax of $ 4.4 million and $ 8.8 million, respectively.

For the three months ended June 30, 2021, we recognized income tax benefit of $ 2.8 million compared to $ 2.0 million, during the same period ended 2020.

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

For the six months ended June 30, 2021, we recorded $ 7.9 million, compared to $ 4.1 million during the same period ended 2020.

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

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

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

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

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

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

10 unchanged sentences

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

June 30, 2021

September 30, 2021

December 31, 2020

8 unchanged sentences

Due from affiliates

Accounts receivable, net of allowances of $ 1,473 and $ 1,467 as of

June 30, 2021 and December 31, 2020, respectively

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

Total other assets, net

6 unchanged sentences

(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”).

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

Master Services Agreement

2 unchanged sentences

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

During the three and six months ended June 30, 2021, we incurred administrative and support fees of $ 0.4 million and $ 0.8 million, respectively, which are included in general and administrative expenses in our condensed consolidated statements of operations.

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

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

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

Property Management Agreements

2 unchanged sentences

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

During the three and six months ended June 30, 2021, we recorded property management and property accounting fees of $ 1.3 million and $ 2.6 million, respectively, which we included in property operating expenses in our condensed consolidated statements of operations.

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

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

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

Notes Payable to AIR

On December 14, 2020, we entered into $ 534.1 million of notes payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets, however, the assets secure existing senior loans of $ 197.5 million as of June 30, 2021.

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

For the three and six months ended June 30, 2021, we recognized interest expense of $ 6.9 million and $ 13.9 million, respectively associated with the notes payable to AIR.

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

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

Master Leasing Agreement

10 unchanged sentences

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

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

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

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

(iii) Prism in Cambridge, Massachusetts;

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

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

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

During the three months ended June 30, 2021, we, as lessee, and AIR, as lessor, entered into a 25 year finance lease for a 15 -acre plot of land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and 8 accessory dwelling units in June 2021.

Initial monthly lease payments approximate $ 2.2 million with aggregate total lease payments of approximately $ 621.1 million.

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

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

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

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

As of June 30, 2021, the estimated obligations pursuant to the construction contracts associated with these leases was $ 65.7 million.

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

Due to and from AIR

As of June 30, 2021, we have amounts due to and from AIR of $ 16.9 million and $ 2.1 million, respectively.

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

As of September 30, 2021, we have amounts due to and from AIR of $ 14.2 million and $ 3.2 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 consist of net cash flows generated by our operating properties.

Terry Considine Service Agreement

Terry Considine Service Agreement/AIR Reimbursement

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

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

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

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

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

For the three and six months ended June 30, 2021, we have recorded $ 1.45 million and $ 2.9 million, respectively, in associated service fees in general and administrative expenses in our condensed consolidated statements of operations.

As of June 30, 2021, accrued service fees of $ 2.9 million are included in accrued liabilities and other in our condensed consolidated balance sheets.

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

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

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

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

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

Guarantee Liability

2 unchanged sentences

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

For the six months ended June 30, 2021, the guarantee liability was reduced by $ 2.5 million.

As of June 30, 2021, the guarantee liability of $ 13.9 million is included in accrued liabilities and other in our condensed consolidated balance sheets.

In February 2021, we acquired The Benson Hotel and Faculty Club (“The 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.

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

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

Acquisitions from AIR

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

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

Refer to Note 5 for further details regarding these acquisitions.

Other Significant Transactions

Non-recourse Property Debt

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

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

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

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

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

Construction Loans

1 unchanged sentence

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

As of June 30, 2021, we had $ 107.9 million of principal outstanding.

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

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

2 unchanged sentences

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

As of June 30, 2021, we had $ 12.2 million of principal outstanding.

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

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

1 unchanged sentence

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

During the three months ended June 30, 2021, we acquired six land parcels adjacent to our Hamilton on the Bay apartment community, located in Miami’s Edgewater neighborhood, for $ 12.0 million and we began major redevelopment of the existing apartment building at Hamilton on the Bay.

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

Subsequent to June 30, 2021, we acquired an additional two parcels for $ 7 million.

In February 2021, we acquired The Benson Hotel and Faculty Club (“The 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 .

Fort Lauderdale Consolidated Joint Venture

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

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

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

The land purchase is expected to close in January 2022 .

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

Note 4 — Commitments and Contingencies

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 June 30, 2021, our commitments related to these capital activities totaled approximately $ 335.2 million, most of which we expect to incur during the next 24 months.

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

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

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

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

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

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

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

During the six months ended June 30, 2021, we contributed $ 0.1 million, leaving an additional funding commitment in the amount of $ 1.0 million, the timing of which is uncertain.

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

Legal Matters

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

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

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

Note 5 — Acquisitions

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

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

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

Number of townhomes

Purchase price

Consideration allocated to land

Consideration allocated to building and improvements

Consideration allocated to intangible assets (1)

Consideration allocated to below-market lease liabilities (2)

Total consideration

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

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

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

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

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

The development property consists of land and initial construction costs.

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

Note 6 — Earnings and Dividends per Share and Unit

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

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

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

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

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

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

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

Three Months Ended June 30,

Six Months Ended June 30,

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Earnings per share

Net (loss) income attributable to Aimco

Net (loss) income attributable to participating securities

Net (loss) income attributable to Aimco common stockholders

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Earnings per unit

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

Net (loss) income attributable to Aimco Operating Partnership

Net (loss) income attributable to participating securities

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

Denominator – units

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Recurring Fair Value Measurements

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.

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

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

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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.

During the six months ended June 30, 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.

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

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

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.

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

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

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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.

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 $ 3.3 million in RET V 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 expedien t .

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

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

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

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

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Fair Value Disclosures

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

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and payables approximated their fair value as of September 30, 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, construction loans, and notes payable to AIR using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, debt service coverage ratios, and loan to value ratios.

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

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

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

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

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

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Note 8 — Variable Interest Entities

Consolidated Entities

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

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

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

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

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

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

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

June 30, 2021

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

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

September 30, 2021

December 31, 2020

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Accrued liabilities and other

Construction loans, net

Lease liabilities

For the three months ended June 30, 2021, two of our consolidated VIEs closed construction loans.

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

In conjunction with these loans, we made customary guarantees.

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

At June 30, 2021, we estimate the maximum exposure equals the $ 120 million outstanding loan balances.

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

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

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

Our investment balance of $ 13.1 million and $ 12.8 million as of June 30, 2021 and December 31, 2020, respectively, represents our maximum exposure to loss in these VIEs.

One of 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 $ 322.4 million as of June 30, 2021, reflected in Mezzanine investment in our condensed consolidated balance sheets, represents our indirect interest in Parkmerced Apartments notes receivable and related accrued interest through our agreement with AIR and represents our maximum exposure to loss in this VIE.

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

Mezzanine Investment

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

Note 9 — Business Segments

We have three segments:

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

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

(i) Development and Redevelopment;

(ii) Operating Portfolio;

and (iii) Other.

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

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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.

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 June 30, 2021, our Development and Redevelopment segment includes four real estate investments:

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

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

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

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

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

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

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

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

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

Development and Redevelopment

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Corporate and

Three months ended June 30, 2021:

Three months ended September 30, 2021:

Rental and other property revenues

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Corporate and

Three months ended June 30, 2020:

Three months ended September 30, 2020:

Rental and other property revenues

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Corporate and

Six months ended June 30, 2021:

Nine months ended September 30, 2021:

Rental and other property revenues

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Corporate and

Six months ended June 30, 2020:

Nine months ended September 30, 2020:

Rental and other property revenues

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

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 operating expenses not allocated to segments consists of depreciation and amortization, general and administrative expense, and miscellaneous other expenses.

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.

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Operating Portfolio

As of June 30, 2021:

As of September 30, 2021:

Buildings and improvements

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Net real estate

Non-recourse property debt, net

Non-recourse property debt and construction loans, net

Development and Redevelopment

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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 June 30, 2021 aggregat ed to $ 438.2 million and $ 437.4 million, respectively, related to our investments in Upton Place, North Tower of Flamingo Point, 707 Leahy, The Fremont, Prism , and Robin Drive Land.

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

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

Note 10 – Subsequent Events

Fort Lauderdale Florida Joint Venture

In July 2021, we entered into a joint venture to purchase three underdeveloped land parcels located in downtown Fort Lauderdale, FL.

The total contract price for the land is $ 49.0 million (of which $ 25.0 million is our 51 % share) and entitlements are in place for the development of approximately three million square feet of multifamily homes and commercial space.

The land purchase is expected to close in January 2022 .

We have paid $ 2.4 million of the $ 25.0 million commitment.

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

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

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