APARTMENT INVESTMENT & MANAGEMENT CO

Previous wording

As used herein and except as the context otherwise requires, “we,” “our,” and “us” refer to Apartment Investment and Management Company (which we refer to as Aimco), Aimco OP L.P. (which we refer to as Aimco Operating Partnership) and their consolidated subsidiaries, collectively.

Current wording

As used herein and except as the context otherwise requires, “we,” “our,” and “us” refer to Apartment Investment and Management Company (which we refer to as Aimco), Aimco OP L.P. (which we refer to as Aimco Operating Partnership) and their consolidated entities, collectively.

Previous wording

Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies. Our development and redevelopment portfolio currently includes projects in construction and lease-up. In addition, our team has secured significant, high-quality, future development opportunities, including total potential of more than 13 million square feet, located in high-growth markets. Generally, we seek direct investment opportunities in locations where barriers to entry are high, target customers can be clearly defined and where we have a comparative advantage over others in the market. From time to time, we may choose to monetize certain pipeline assets prior to vertical construction in an effort to maximize value and risk adjusted returns. In any time period, the amount of our capital that is allocated to development activities may vary based on market conditions and other factors.

Current wording

Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies. Our development and redevelopment portfolio currently includes projects in construction and lease-up. In addition, our team has secured significant, high-quality, future development opportunities, including total potential of more than 13 million gross square feet, located in high-growth markets. Generally, we seek direct investment opportunities in locations where barriers to entry are high, target customers can be clearly defined and where we have a comparative advantage over others in the market. From time to time, we may choose to monetize certain pipeline assets prior to vertical construction in an effort to maximize value and risk adjusted returns. In any time period, the amount of our capital that is allocated to development activities may vary based on market conditions and other factors.

Previous wording

We currently hold select alternative investments, the majority of which originated with Aimco Predecessor and, over time, plan to significantly reduce capital allocated to these investments. Our current allocation to alternative investments includes: our mezzanine loan to the Parkmerced partnership, which owns 3,165 apartment homes and future development rights in San Francisco, California, and our passive equity investments in IQHQ, Inc. ("IQHQ"), a privately-held life sciences real estate development company, and in property technology funds consisting of entities that develop technology related to the real estate industry.

Current wording

We currently hold select alternative investments, the majority of which originated with Aimco Predecessor and, over time, plan to significantly reduce capital allocated to these investments. Our current allocation to alternative investments includes: our mezzanine loan to the Parkmerced partnership, which owns 3,165 apartment homes and future development rights in San Francisco, California, and our passive equity investments in IQHQ, a privately-held life sciences real estate development company, and in property technology funds consisting of entities that develop technology related to the real estate industry.

Previous wording

The results from the execution of our business plan during the three months ended March 31, 2024 are further described below.

Current wording

The results from the execution of our business plan during the three and six months ended June 30, 2024 are further described below.

Previous wording

For the three months ended March 31, 2024, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.07), compared to net loss per share of ($0.06), for the same period in 2023. Higher net operating income and gains related to our interest rate hedging instruments were offset by higher interest expense and depreciation related to advancing and completing development projects.

Current wording

For the three and six months ended June 30, 2024, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.43) and ($0.50), respectively, due primarily to a non-cash impairment charge related to our passive equity investment in IQHQ. For the same periods in 2023, net loss attributable to Aimco common stockholders per share, on a fully dilutive basis, was ($0.02) and ($0.09), respectively.

Previous wording

For the three months ended March 31, 2024, revenue and net operating income from our Operating segment were up 5.4% and 6.5% respectively, year-over-year, due primarily to higher average monthly revenue per apartment home of $2,348, up $121 year-over-year.

Current wording

For the three months ended June 30, 2024, revenue and net operating income from our Operating segment were up 4.6% and 4.1% respectively, year-over-year, due primarily to higher average monthly revenue per apartment home of $2,392, up $101 year-over-year. For the six months ended June 30, 2024, revenue and net operating income from our Operating segment were up 5.0% and 5.3%, respectively, year over year, with average monthly revenue per apartment home of $2,370, up $111 year over year.

Previous wording

During the three months ended March 31, 2024, construction of our three active development projects advanced on plan. At Upton place in Upper Northwest Washington, D.C., we had leased 100 of the 624 units delivered at rates ahead of underwriting.

Current wording

During the three months ended June 30, 2024, construction of Aimco's Strathmore Square and Oak Shore development projects advanced on plan. Aimco has substantially completed construction at Upton Place in Upper Northwest Washington, D.C and, as of June 30, 2024, had leased 193 of the 689 units at rates ahead of underwriting.

Previous wording

Revenue for our Operating segment was $38.6 million, up 5.4% year-over-year, resulting from a $121 increase in average monthly revenue per apartment home to $2,348, partially offset with a 10-basis point decrease in Average Daily Occupancy to 97.9%.

Current wording

Revenue for our Operating segment was $38.7 million, up 4.6% year-over-year, resulting from a $101 increase in average monthly revenue per apartment home to $2,392 and a 10-basis point increase in Average Daily Occupancy to 96.3%.

Previous wording

Expenses for our Operating segment were $11.5 million, up 2.8% year-over-year primarily from higher real estate taxes and insurance.

Current wording

Expenses for our Operating segment were $12.2 million, up 5.7% year-over-year primarily from higher real estate taxes and insurance.

Previous wording

Net operating income for our Operating segment was $27.1 million, up 6.5% year-over-year.

Current wording

Net operating income for our Operating segment was $26.5 million, up 4.1% year-over-year.

Previous wording

We currently have three active development and redevelopment multifamily projects, located in two U.S. markets, in varying phases of construction and lease-up. These projects remain on track, as measured by construction budget and lease-up metrics. Additionally, we have a pipeline of future value-add opportunities totaling approximately 13 million gross square feet of development in our target markets of Southeast Florida, the Washington, D.C. Metro Area, and Colorado's Front Range.

Current wording

As of June 30, 2024, we had two multifamily development projects under construction, a multifamily community that has been substantially completed and is now in lease-up, and a hotel that was completed in 2023 and is being stabilized. These projects remain on track, as measured by construction budget and lease-up metrics. Additionally, we have a pipeline of future value-add opportunities totaling approximately 13 million gross square feet of development in our target markets of Southeast Florida, the Washington, D.C. Metro Area, and Colorado's Front Range.

Previous wording

In Upper Northwest Washington, D.C., construction is nearing completion at Upton Place. As of March 31, 2024, we have delivered 624 apartment homes with 100 units leased or pre-leased at rental rates greater than underwriting. To provide additional revenue and vibrancy during lease up, we are collaborating with Placemakr for the temporary use of 150 units as short-term furnished rentals. Additionally, as of March 31, 2024, more than 82% of the project's 105 thousand square feet of retail space has been leased. Construction is expected to be complete in the second quarter of 2024.

Current wording

In Upper Northwest Washington, D.C., construction is substantially complete at Upton Place. As of June 30, 2024, we have delivered all 689 apartment homes with 193 units leased or pre-leased at rental rates greater than underwriting. Additionally, as of June 30, 2024, more than 82% of the project's 105,000 square feet of retail space has been leased.

Previous wording

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

Current wording

In Bethesda, Maryland, construction is progressing on plan at the first phase of Strathmore Square. As of June 30, 2024, we have delivered 146 of the total 220 highly tailored apartment homes and welcomed residents into their new homes. The remaining apartment homes are on track for delivery in the second half of 2024.

Previous wording

In Corte Madera, CA, construction is ongoing at Oak Shore where 16 luxury single family rental homes and eight accessory dwelling units are being developed. As of March 31, 2024, initial residences had been delivered with eight leased or pre-leased at rental rates greater than underwriting.

Current wording

In Corte Madera, CA, construction is ongoing at Oak Shore where 16 luxury single family rental homes and eight accessory dwelling units are being developed. As of June 30, 2024, ten residences had been delivered with nine leased or pre-leased at rental rates greater than underwriting.

Previous wording

In the first quarter of 2024, we invested $1.0 million into programming, design, documentation, and entitlement efforts related to select pipeline projects located in South Florida and on the Anschutz Medical Campus in Aurora, Colorado.

Current wording

In the second quarter of 2024, we invested $3.3 million into programming, design, documentation, and entitlement efforts related to select pipeline projects located in South Florida and on the Anschutz Medical Campus in Aurora, Colorado.

Previous wording

We are focused on prudently allocating capital and delivering strong investment returns. Consistent with our capital allocation philosophy, we monetize the value within our assets when accretive uses of the proceeds are identified and invest when the risk adjusted returns are superior to other uses of capital. In the three months ended March 31, 2024, no new investment or significant disposition activity occurred.

Current wording

We are focused on prudently allocating capital and delivering strong investment returns. Consistent with our capital allocation philosophy, we monetize the value within our assets when accretive uses of the proceeds are identified and invest when the risk adjusted returns are superior to other uses of capital. In the three months ended June 30, 2024, no new investment or disposition activity occurred.

Previous wording

We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of March 31, 2024, we had access to $290.4 million in liquidity, including $121.8 million of cash on hand, $18.6 million of restricted cash, and the capacity to borrow up to $150.0 million on our revolving credit facility. Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.

Current wording

We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of June 30, 2024, we had access to $259.4 million in liquidity, including $88.5 million of cash on hand, $20.9 million of restricted cash, and the capacity to borrow up to $150.0 million on our revolving credit facility. Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.

Previous wording

Our Development and Redevelopment segment consists of rental communities that are under construction or have not achieved and maintained stabilization throughout the current year and comparable period, as well as land assemblages that are being held for future development. Our Operating segment includes 21 residential apartment communities that have achieved stabilized levels of operations as of January 1, 2023, and maintained it throughout the current year and comparable period. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.

Current wording

Our Development and Redevelopment segment consists of rental communities that are under construction or have not achieved and maintained stabilization throughout the current year and comparable period in the prior year, as well as land assemblages that are being held for future development. Our Operating segment includes 21 residential apartment communities that have achieved stabilized levels of operations as of January 1, 2023, and maintained it throughout the current year and comparable period in the prior year. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.

Previous wording

Results of Operations for the three months ended March 31, 2024, Compared to the same period in 2023

Current wording

Results of Operations for the three and six months ended June 30, 2024 and 2023

Previous wording

Net income attributable to Aimco common stockholders decreased by $1.4 million for the three months ended March 31, 2024, compared to the same period in 2023, as described more fully below.

Current wording

Net income attributable to Aimco common stockholders decreased by $56.9 million and $58.3 million, respectively, for the three and six months ended June 30, 2024, compared to the same period in 2023, as described more fully below.

Previous wording

As of March 31, 2024, our Development and Redevelopment segment included 10 rental communities, three of which were under construction. Our Operating segment included 21 residential apartment communities with approximately 5,600 apartment homes, and our Other segment included 1001 Brickell Bay Drive, our only office building, and The Benson Hotel.

Current wording

As of June 30, 2024, our Development and Redevelopment segment includes 10 rental communities, two of which were under construction. Our Operating segment includes 21 residential apartment communities with approximately 5,600 apartment homes, and our Other segment includes 1001 Brickell Bay Drive, our only office building, and The Benson Hotel, our only hotel.

Previous wording

During the three months ended March 31, 2024, we revised the information regularly reviewed by our chief operating decision maker ("CODM") to assess our operating performance. As a result, we reclassified The Benson Hotel from the Development and Redevelopment segment to the Other segment. Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business. The recast conforms with our reportable segment classification as of March 31, 2024.

Current wording

During the first quarter of 2024, we revised the information regularly reviewed by our chief operating decision maker ("CODM") to assess our operating performance. As a result, we reclassified The Benson Hotel from the Development and Redevelopment segment to the Other segment. In addition, during the first quarter of 2024, we disposed of St. George Villas, which was previously reported within our Other segment. Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business. The recast conforms with our reportable segment classification as of June 30, 2024.

Previous wording

Operating proportionate property net operating income increased by $1.7 million, or 6.5%. The increase was attributable primarily to a $2.0 million, or 5.4% increase in rental and other property revenues due to a$121 increase in average monthly revenue per apartment home to $2,348, offset by a 10-basis point decrease in Average Daily Occupancy to 97.9%.

Current wording

Operating proportionate property net operating income increased by $1.0 million, or 4.1%. The increase was attributable primarily to a $1.7 million, or 4.6% increase in rental and other property revenues due to a$101 increase in average monthly revenue per apartment home to $2,392, and a 10-basis point increase in Average Daily Occupancy to 96.3%.

Previous wording

Other proportionate property net operating income decreased by $0.4 million, or 16.9%. The decrease was due primarily to The Benson Hotel commencing operations subsequent to the first quarter of 2023.

Current wording

Other proportionate property net operating income increased by $1.0 million, or 100.0%. The increase was due primarily to The Benson Hotel commencing operations during the second quarter of 2023.

Previous wording

Development and Redevelopment proportionate property net operating income increased by $1.6 million due primarily to the lease up of apartment homes at The Hamilton.

Current wording

Development and Redevelopment proportionate property net operating income increased by $1.7 million due primarily to the lease up of apartment homes at The Hamilton.

Previous wording

For the three months ended March 31, 2024, compared to the same period in 2023, Depreciation and amortization expense increased by $3.2 million, or 19.6%, due primarily to increases at Upton Place and The Benson Hotel resulting from deliveries of apartment homes and completion of construction subsequent to the first quarter of 2023.

Current wording

For the three and six months ended June 30, 2024, compared to the same periods in 2023, Depreciation and amortization expense increased by $5.1 million, or 29.8%, and $8.3 million, or 24.9%, respectively, due primarily to substantial completion of Upton Place and the completion of The Benson Hotel during the second quarter of 2023.

Previous wording

For the three months ended March 31, 2024, compared to the same period in 2023, Interest income increased by $0.6 million, or 28.7%, due primarily to interest earned on seller financing provided in connection with the sale of a land parcel in December 2023.

Current wording

For the three and six months ended June 30, 2024, compared to the same periods in 2023, Interest income increased by $0.1 million, or 2.3%, and $0.6 million, or 14.3%, respectively, due primarily to interest earned on seller financing provided in connection with the sale of a land parcel in December 2023, offset by a decrease earned on invested cash.

Previous wording

For the three months ended March 31, 2024, compared to the same period in 2023, Interest expense increased by $3.6 million, or 37.5%, due primarily to increased non-recourse construction loan interest for our development and redevelopment properties.

Current wording

For the three and six months ended June 30, 2024, compared to the same periods in 2023, Interest expense increased by $7.2 million, or 74.2%, and $10.8 million, or 55.8%, respectively, due primarily to increased non-recourse construction loan draws and reduced capitalization as development projects are advanced and completed.

Previous wording

Realized and Unrealized Gains (Losses) on Interest Rate Options

Current wording

Realized and Unrealized Gains (Losses) on Interest Rate Contracts

Previous wording

We are required to adjust our interest rate options to fair value on a quarterly basis. As a result of the mark-to-market adjustments, we recorded unrealized losses of $0.2 million for the three months ended March 31, 2024, compared to unrealized losses of $1.9 million for the same period in 2023. In addition, we realized gains of $1.9 million for the three months ended March 31, 2024, compared to realized gains of $0.8 million for the same period in 2023.

Current wording

We are required to adjust our interest rate contracts to fair value on a quarterly basis. As a result of the mark-to-market adjustments, we recorded unrealized losses of $1.3 million and $1.5 million, respectively, for the three and six months ended June 30, 2024, compared to unrealized gains of $2.5 million and $0.6 million, respectively, for the same periods in 2023. In addition, we realized gains of $1.9 million and $3.8 million for the three and six months ended June 30, 2024, respectively, compared to realized gains of $0.9 million and $1.7 million, respectively, for the same periods in 2023.

Previous wording

We measure our investments in stock based on its market price at period end and our investments in property technology funds at NAV as a practical expedient. As a result of changes in the values of these investments, we recorded unrealized losses of $0.3 million for the three months ended March 31, 2024, compared to unrealized gains of $0.1 million for the same period in 2023.

Current wording

We measure our investments in stock based on its market price at period end and our investments in property technology funds at NAV as a practical expedient. In addition, we measure our investment in IQHQ at cost, less impairment if any needed, with subsequent adjustments for observable price changes of identical or similar investments of the same issuer since it does not have a readily determinable fair value. As a result of changes in the values of these investments, we recorded unrealized losses of $47.3 million and $47.5 million, respectively, for the three and six months ended June 30, 2024, primarily due to a $47.0 million non-cash impairment recognized on our investment in IQHQ. For the same periods in 2023, we recorded unrealized gains of $1.1 million $1.2 million, respectively.

Previous wording

Other income (expense), net, includes costs associated with our risk management activities, partnership administration expenses, fee income, and certain non-recurring items, as well as activity related to our Mezzanine Investment. For the three months ended March 31, 2024, compared to the same period in 2023, Other income (expense), netdecreased by $1.7 million, or 47.5%, due primarily to the incremental expense associated with pre-existing long-term incentive partnership units recorded upon the resignation of one of our board members in the prior period, partially offset by the current period amortization of deferred transaction costs resulting from the partial sale of the Mezzanine Investment in June 2023.

Current wording

Other income (expense), net, includes costs associated with our risk management activities, partnership administration expenses, fee income, and certain non-recurring items, as well as activity related to our Mezzanine Investment. For the three months ended June 30, 2024, compared to the same period in 2023, Other income (expense), netdecreased by $0.1 million, or 9.4%. For the six months ended June 30, 2024, compared to the same period in 2023, Other income (expense), net decreased by $2.0 million, or 41.0%, primarily due to the incremental expense associated with pre-existing long-term incentive partnership units recorded upon the resignation of one of our board members in the prior period.

Previous wording

Certain aspects of our operations, including our development and redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.

Current wording

Certain aspects of our operations, including our development and redevelopment activities, are conducted through TRS entities. Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.

Previous wording

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and gains retained by the REIT. For the three months ended March 31, 2024, we had consolidated net losses subject to tax of $6.6 million, compared to consolidated net losses subject to tax of $4.9 million for the same period in 2023.

Current wording

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and gains retained by the REIT. For the three and six months ended June 30, 2024, we had consolidated net losses subject to tax of $5.3 million and $11.9 million, respectively, compared to consolidated net losses subject to tax of $2.5 million and $7.4 million, respectively, for the same periods in 2023.

Previous wording

For the three months ended March 31, 2024, we recognized an income tax benefit of $2.7 million, compared to an income tax benefit of $4.2 million for the same period in 2023. The decrease is due primarily to a reduction to the effective state tax rate expected to apply to the reversal of our existing deferred items recognized during the three months ended March 31, 2023.

Current wording

For the six months ended June 30, 2024, we recognized an income tax benefit of $4.9 million, compared to an income tax benefit of $4.6 million for the same period in 2023. The increase is due primarily to the tax effect of fewer gains, increased depreciation, and interest expense associated with properties owned by, and activities of, our TRS entities. This increase was partially offset by a reduction to the effective state tax rate expected to apply to the reversal of our existing deferred items recognized during the three months ended March 31, 2023.

Previous wording

We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. Our critical accounting estimates that involve our more significant judgments and estimates used in the preparation of our consolidated financial statements are detailed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in our critical accounting estimates from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Current wording

We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. Our critical accounting estimates that involve our more significant judgments and estimates used in the preparation of our consolidated financial statements are detailed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in our critical accounting estimates from those reported in our Form 10-K, other than as noted below, and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Previous wording

realized and unrealized (gains) losses on interest rate options, which we believe allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry; and

Current wording

realized and unrealized (gains) losses on interest rate contracts, which we believe allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry; and

Previous wording

The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2024 and 2023, is as follows (in thousands):

Current wording

The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2024 and 2023, is as follows (in thousands):

Previous wording

As of March 31, 2024, our available liquidity was $290.4 million, which consisted of:

Current wording

As of June 30, 2024, our available liquidity was $259.4 million, which consisted of:

Previous wording

$121.8 million in cash and cash equivalents;

Current wording

$88.5 million in cash and cash equivalents;