Published: 2024-05-08 00:00:00 ET

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13232 (Apartment Investment and Management Company)

Commission File Number: 0-56223 (Aimco OP L.P.)

Apartment Investment and Management Company

Aimco OP L.P.

(Exact name of registrant as specified in its charter)

 

Maryland (Apartment Investment and Management Company)		84-1259577
Delaware (Aimco OP L.P.)		85-2460835
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
4582 South Ulster Street, Suite 1450
Denver, Colorado		80237
(Address of principal executive offices)		(Zip Code)

 

(303) 224-7900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Class A Common Stock (Apartment Investment and Management Company)		AIV		New York Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act:

 

None (Apartment Investment and Management Company)

Partnership Common Units (Aimco OP L.P.)

(title of each class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Apartment Investment and Management Company: Yes  ☒ No ☐		Aimco OP L.P.: Yes  ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Apartment Investment and Management Company: Yes  ☒ No ☐		Aimco OP L.P.: Yes  ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Apartment Investment and Management Company:

 

Large accelerated filer	☒			Accelerated filer	☐
Non-accelerated filer	☐			Smaller reporting company	☐
				Emerging growth company	☐

 

Aimco OP L.P.:

 

Large accelerated filer	☐			Accelerated filer	☒
Non-accelerated filer	☐			Smaller reporting company	☐
				Emerging growth company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Apartment Investment and Management Company:	☐		Aimco OP L.P.:	☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Apartment Investment and Management Company: Yes ☐ No ☒		Aimco OP L.P.: Yes ☐ No ☒

The number of shares of Apartment Investment and Management Company Class A common stock ("Common Stock") outstanding as of May 7, 2024: 144,827,125

 

 

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EXPLANATORY NOTE

Apartment Investment and Management Company (“Aimco” or “the Company”), a Maryland corporation, is a self-administered and self-managed real estate investment trust, or REIT. On December 15, 2020, Aimco completed the separation of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp. (“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”). Events noted in this filing as occurring before December 15, 2020, were those entered into by Aimco Predecessor.

Aimco, through a wholly-owned subsidiary, is the general partner and is, directly, the special limited partner of Aimco OP L.P. ("Aimco Operating Partnership"). As of March 31, 2024, Aimco owned 92.4% of the legal interest in the common partnership units of Aimco Operating Partnership and 94.8% of the economic interest in Aimco Operating Partnership. The remaining 7.6% legal interest is owned by limited partners. The common partnership units of Aimco Operating Partnership are referred to as "OP Units". As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.

Aimco Operating Partnership holds all of Aimco’s assets and manages the daily operations of Aimco’s business. Pursuant to the Aimco Operating Partnership agreement, Aimco is required to contribute to Aimco Operating Partnership all proceeds from the offerings of its securities. In exchange for the contribution of such proceeds, Aimco receives additional interests in Aimco Operating Partnership with similar terms (e.g., if Aimco contributes proceeds of a stock offering, Aimco receives partnership units with terms substantially similar to the stock issued by Aimco).

This filing combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2024, of Aimco and Aimco Operating Partnership. Where it is important to distinguish between the two entities, we refer to them specifically. Otherwise, references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.

We believe combining the periodic reports of Aimco and Aimco Operating Partnership into this single report provides the following benefits:

We operate Aimco and Aimco Operating Partnership as one enterprise; the management of Aimco directs the management and operations of Aimco Operating Partnership; and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, is managed by Aimco.

We believe it is important to understand the few differences between Aimco and Aimco Operating Partnership in the context of how Aimco and Aimco Operating Partnership operate as a consolidated company. Aimco has no assets or liabilities other than its investment in Aimco Operating Partnership. Also, Aimco is a corporation that issues publicly traded equity from time to time, whereas Aimco Operating Partnership is a partnership that has no publicly traded equity. Except for the net proceeds from stock offerings by Aimco, which are contributed to Aimco Operating Partnership in exchange for additional limited partnership interests (of a similar type and in an amount equal to the shares of stock sold in the offering), Aimco Operating Partnership generates all remaining capital required by its business. These sources include Aimco Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility, the issuance of debt and equity securities, including additional partnership units, and proceeds received from the sale of real estate.

Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the condensed consolidated financial statements of Aimco and those of Aimco Operating Partnership. Interests in Aimco Operating Partnership held by entities other than Aimco are classified within partners’ capital in Aimco Operating Partnership’s condensed consolidated financial statements and as noncontrolling interests in Aimco’s condensed consolidated financial statements.

To help investors understand the differences between Aimco and Aimco Operating Partnership, this report provides: separate condensed consolidated financial statements for Aimco and Aimco Operating Partnership; a single set of condensed consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, and earnings per share or earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

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This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for Aimco and Aimco Operating Partnership in order to establish that the requisite certifications have been made and that Aimco and Aimco Operating Partnership are both compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO OP L.P.

 

TABLE OF CONTENTS

 

FORM 10-Q

		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Apartment Investment and Management Company:
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Aimco OP L.P.:
	Condensed Consolidated Balance Sheets (Unaudited)	8
	Condensed Consolidated Statements of Operations (Unaudited)	9
	Condensed Consolidated Statements of Partners’ Capital (Unaudited)	10
	Condensed Consolidated Statements of Cash Flows (Unaudited)	11
	Notes to Condensed Consolidated Financial Statements of Apartment Investment and Management Company and Aimco OP L.P. (Unaudited)	12
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.	CONTROLS AND PROCEDURES	34
	PART II. OTHER INFORMATION
ITEM 1A.	RISK FACTORS	35
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	35
ITEM 6.	EXHIBITS	37
Signatures		38

 

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PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

		March 31, 2024				December 31, 2023
ASSETS
Buildings and improvements		$	1,638,190			$	1,593,802
Land			620,488				620,821
Total real estate			2,258,678				2,214,623
Accumulated depreciation			(597,380	)			(580,802	)
Net real estate			1,661,298				1,633,821
Cash and cash equivalents			121,814				122,601
Restricted cash			18,589				16,666
Interest rate options			5,072				5,255
Unconsolidated real estate partnerships			23,282				23,125
Notes receivable			58,187				57,554
Right-of-use lease assets - finance leases			108,673				108,992
Other assets, net			122,976				121,461
Total assets		$	2,119,891			$	2,089,475
LIABILITIES AND EQUITY
Non-recourse property debt, net		$	845,671			$	846,298
Non-recourse construction loans, net			336,332				301,443
Total indebtedness			1,182,003				1,147,741
Deferred tax liabilities			108,487				110,284
Lease liabilities - finance leases			119,269				118,697
Accrued liabilities and other			131,554				121,143
Total liabilities			1,541,313				1,497,865
Redeemable noncontrolling interests in consolidated real estate partnerships			173,158				171,632
Commitments and contingencies (Note 3)
Equity (510,587,500 shares authorized at both March 31, 2024 and December 31, 2023):
Common Stock, $0.01 par value, 140,210,798 and 140,576,102 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively			1,402				1,406
Additional paid-in capital			460,907				464,538
Retained earnings (deficit)			(126,478	)			(116,292	)
Total Aimco equity			335,831				349,652
Noncontrolling interests in consolidated real estate partnerships			51,333				51,265
Common noncontrolling interests in Aimco Operating Partnership			18,256				19,061
Total equity			405,420				419,978
Total liabilities and equity		$	2,119,891			$	2,089,475

 

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

		Three Months Ended March 31,
		2024				2023
REVENUES
Rental and other property revenues		$	50,203			$	44,268
OPERATING EXPENSES
Property operating expenses			21,199				17,504
Depreciation and amortization			19,468				16,271
General and administrative expenses			8,549				8,403
Total operating expenses			49,216				42,178
Interest income			2,648				2,058
Interest expense			(13,370	)			(9,725	)
Realized and unrealized gains (losses) on interest rate options			1,672				(1,057	)
Realized and unrealized gains (losses) on equity investments			(271	)			137
Income from unconsolidated real estate partnerships			312				174
Other income (expense), net			(1,904	)			(3,626	)
Income (loss) before income tax			(9,926	)			(9,949	)
Income tax benefit (expense)			2,730				4,196
Net income (loss)			(7,196	)			(5,753	)
Net (income) loss attributable to redeemable noncontrolling    interests in consolidated real estate partnerships			(3,560	)			(3,274	)
Net (income) loss attributable to noncontrolling interests    in consolidated real estate partnerships			16				(264	)
Net (income) loss attributable to common noncontrolling    interests in Aimco Operating Partnership			554				474
Net income (loss) attributable to Aimco		$	(10,186	)		$	(8,817	)
Net income (loss) attributable to Aimco per common    share – basic (Note 4)		$	(0.07	)		$	(0.06	)
Net income (loss) attributable to Aimco per common    share – diluted (Note 4)		$	(0.07	)		$	(0.06	)
Weighted-average common shares outstanding – basic			140,594				145,827
Weighted-average common shares outstanding – diluted			140,594				145,827

 

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended March 31, 2024 and 2023

(In thousands, except per share data)

(Unaudited)

 

	Common Stock																				Noncontrolling Interests in				Common Noncontrolling Interests in
	Shares Issued				Amount				Additional Paid- in Capital				Retained Earnings (Accumulated Deficit)				Total Aimco Equity				Consolidated Real Estate Partnerships				Aimco Operating Partnership				Total Equity
Balances at December 31, 2022		146,525			$	1,466			$	496,482			$	49,904			$	547,852			$	48,294			$	29,212			$	625,358
Net income (loss)		—				—				—				(8,817	)			(8,817	)			264				(474	)			(9,027	)
Redemption of OP Units held by third parties		—				—				4,293				—				4,293				—				(4,547	)			(254	)
Share-based compensation expense		—				—				1,696				—				1,696				—				3,126				4,822
Contributions from noncontrolling interests in consolidated real estate partnerships		—				—				—				—				—				50				—				50
Distributions to noncontrolling interests in consolidated real estate partnerships		—				—				—				—				—				(287	)			—				(287	)
Common stock repurchased		(2,019	)			(20	)			(14,701	)			—				(14,721	)			—				—				(14,721	)
Other common stock issuances		247				2				1,538				—				1,540				—				1,272				2,812
Other, net		(35	)			—				(4	)			—				(4	)			—				—				(4	)
Balances at March 31, 2023		144,718				1,448				489,304				41,087				531,839				48,321				28,589				608,749
Balances at December 31, 2023		140,576				1,406				464,538				(116,292	)			349,652				51,265				19,061				419,978
Net income (loss)		—				—				—				(10,186	)			(10,186	)			(16	)			(554	)			(10,756	)
Redemption of OP Units held by third parties		—				—				(28	)			—				(28	)			—				(257	)			(285	)
Share-based compensation expense		—				—				1,928				—				1,928				—				6				1,934
Contributions from noncontrolling interests in consolidated real estate partnerships		—				—				—				—				—				485				—				485
Distributions to noncontrolling interests in consolidated real estate partnerships		—				—				—				—				—				(401	)			—				(401	)
Common stock repurchased		(873	)			(9	)			(6,546	)			—				(6,555	)			—				—				(6,555	)
Other common stock issuances, net of withholding taxes		508				5				1,015				—				1,020				—				—				1,020
Balances at March 31, 2024		140,211			$	1,402			$	460,907			$	(126,478	)		$	335,831			$	51,333			$	18,256			$	405,420

 

 

 

 

 

 

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

	Three Months Ended March 31,
	2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(7,196	)		$	(5,753	)
Adjustments to reconcile net income (loss) to net cash provided by    operating activities:
Depreciation and amortization		19,468				16,271
Realized and unrealized (gains) losses on interest rate options		(1,672	)			1,057
Realized and unrealized (gains) losses on equity investments		271				(137	)
Income tax expense (benefit)		(2,730	)			(4,196	)
Share-based compensation		1,666				4,519
Income from unconsolidated real estate partnerships		(312	)			(174	)
Amortization of debt issuance costs and other		3,339				936
Changes in operating assets and operating liabilities:
Operating assets, net		(3,568	)			2,238
Operating liabilities, net		12,446				(9,162	)
Total adjustments		28,908				11,352
Net cash provided by operating activities		21,712				5,599
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(1)		(40,936	)			(64,814	)
Other investing activities		(153	)			1,580
Net cash used in investing activities		(41,089	)			(63,234	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse construction loans		28,982				35,491
Principal repayments on non-recourse property debt		(784	)			(779	)
Proceeds from interest rate options		1,847				803
Payments on finance leases		(175	)			(796	)
Common stock repurchased		(6,555	)			(14,522	)
Payments related to withholding taxes for share-based compensation		(567	)			—
Distributions to redeemable noncontrolling interests		(2,034	)			(3,095	)
Contributions from noncontrolling interests		485				50
Distributions to noncontrolling interests		(401	)			(287	)
Contributions from redeemable noncontrolling interests		—				124
Redemption of OP Units held by third parties		(285	)			(254	)
Other financing activities		—				(232	)
Net cash provided by financing activities		20,513				16,503
NET DECREASE IN CASH, CASH EQUIVALENTS,    AND RESTRICTED CASH		1,136				(41,132	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT    BEGINNING OF PERIOD		139,267				229,766
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT    END OF PERIOD	$	140,403			$	188,634

(1) Accrued capital expenditures were $39.8 million and $43.8 million as of March 31, 2024 and 2023, respectively.

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AIMCO OP L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

		March 31, 2024				December 31, 2023
ASSETS
Buildings and improvements		$	1,638,190			$	1,593,802
Land			620,488				620,821
Total real estate			2,258,678				2,214,623
Accumulated depreciation			(597,380	)			(580,802	)
Net real estate			1,661,298				1,633,821
Cash and cash equivalents			121,814				122,601
Restricted cash			18,589				16,666
Interest rate options			5,072				5,255
Unconsolidated real estate partnerships			23,282				23,125
Notes receivable			58,187				57,554
Right-of-use lease assets - finance leases			108,673				108,992
Other assets, net			122,976				121,461
Total assets		$	2,119,891			$	2,089,475
LIABILITIES AND EQUITY
Non-recourse property debt, net		$	845,671			$	846,298
Non-recourse construction loans, net			336,332				301,443
Total indebtedness			1,182,003				1,147,741
Deferred tax liabilities			108,487				110,284
Lease liabilities - finance leases			119,269				118,697
Accrued liabilities and other			131,554				121,143
Total liabilities			1,541,313				1,497,865
Redeemable noncontrolling interests in consolidated real estate partnerships			173,158				171,632
Commitments and contingencies (Note 3)
Partners’ capital:
General Partner and Special Limited Partner			335,831				349,652
Limited Partners			18,256				19,061
Partners’ capital attributable to Aimco Operating Partnership			354,087				368,713
Noncontrolling interests in consolidated real estate partnerships			51,333				51,265
Total partners’ capital			405,420				419,978
Total liabilities and partners’ capital		$	2,119,891			$	2,089,475

 

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AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)

 

		Three Months Ended March 31,
		2024				2023
REVENUES
Rental and other property revenues		$	50,203			$	44,268
OPERATING EXPENSES
Property operating expenses			21,199				17,504
Depreciation and amortization			19,468				16,271
General and administrative expenses			8,549				8,403
Total operating expenses			49,216				42,178
Interest income			2,648				2,058
Interest expense			(13,370	)			(9,725	)
Realized and unrealized gains (losses) on interest rate options			1,672				(1,057	)
Realized and unrealized gains (losses) on equity investments			(271	)			137
Income from unconsolidated real estate partnerships			312				174
Other income (expense), net			(1,904	)			(3,626	)
Income (loss) before income tax			(9,926	)			(9,949	)
Income tax benefit (expense)			2,730				4,196
Net income (loss)			(7,196	)			(5,753	)
Net (income) loss attributable to redeemable noncontrolling    interests in consolidated real estate partnerships			(3,560	)			(3,274	)
Net (income) loss attributable to noncontrolling interests    in consolidated real estate partnerships			16				(264	)
Net income (loss) attributable to Aimco Operating      Partnership		$	(10,740	)		$	(9,291	)
Net income (loss) attributable to Aimco Operating      Partnership per common unit – basic (Note 4)		$	(0.07	)		$	(0.06	)
Net income (loss) attributable to Aimco Operating      Partnership per common unit – diluted (Note 4)		$	(0.07	)		$	(0.06	)
Weighted-average common units outstanding – basic			148,257				153,631
Weighted-average common units outstanding – diluted			148,257				153,631

 

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AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2024 and 2023

(In thousands)

(Unaudited)

 

		General Partner and Special Limited Partner				Limited Partners				Partners’ Capital Attributable to Aimco Operating Partnership				Noncontrolling Interests in Consolidated Real Estate Partnerships				Total Partners’ Capital
Balances at December 31, 2022		$	547,852			$	29,212			$	577,064			$	48,294			$	625,358
Net income (loss)			(8,817	)			(474	)			(9,291	)			264				(9,027	)
Redemption of OP Units held by third parties			4,293				(4,547	)			(254	)			—				(254	)
Share-based compensation expense			1,696				3,126				4,822				—				4,822
Contributions from noncontrolling interests in consolidated real estate partnerships			—				—				—				50				50
Distributions to noncontrolling interests in consolidated real estate partnerships			—				—				—				(287	)			(287	)
Redemption of OP Units held by Aimco			(14,721	)			—				(14,721	)			—				(14,721	)
Other OP Unit issuances			1,540				1,272				2,812				—				2,812
Other, net			(4	)			—				(4	)			—				(4	)
Balances at March 31, 2023			531,839				28,589				560,428				48,321				608,749
Balances at December 31, 2023			349,652				19,061				368,713				51,265				419,978
Net income (loss)			(10,186	)			(554	)			(10,740	)			(16	)			(10,756	)
Redemption of OP Units held by third parties			(28	)			(257	)			(285	)			—				(285	)
Share-based compensation expense			1,928				6				1,934				—				1,934
Contributions from noncontrolling interests in consolidated real estate partnerships			—				—				—				485				485
Distributions to noncontrolling interests in consolidated real estate partnerships			—				—				—				(401	)			(401	)
Redemption of OP Units held by Aimco			(6,555	)			—				(6,555	)			—				(6,555	)
Other OP Unit issuances, net of withholding taxes			1,020				—				1,020				—				1,020
Balances at March 31, 2024		$	335,831			$	18,256			$	354,087			$	51,333			$	405,420

 

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AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

	Three Months Ended March 31,
	2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(7,196	)		$	(5,753	)
Adjustments to reconcile net income (loss) to net cash provided by    operating activities:
Depreciation and amortization		19,468				16,271
Realized and unrealized (gains) losses on interest rate options		(1,672	)			1,057
Realized and unrealized (gains) losses on equity investments		271				(137	)
Income tax expense (benefit)		(2,730	)			(4,196	)
Share-based compensation		1,666				4,519
Income from unconsolidated real estate partnerships		(312	)			(174	)
Amortization of debt issuance costs and other		3,339				936
Changes in operating assets and operating liabilities:
Operating assets, net		(3,568	)			2,238
Operating liabilities, net		12,446				(9,162	)
Total adjustments		28,908				11,352
Net cash provided by operating activities		21,712				5,599
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(1)		(40,936	)			(64,814	)
Other investing activities		(153	)			1,580
Net cash used in investing activities		(41,089	)			(63,234	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse construction loans		28,982				35,491
Principal repayments on non-recourse property debt		(784	)			(779	)
Proceeds from interest rate options		1,847				803
Payments on finance leases		(175	)			(796	)
Common stock repurchased		(6,555	)			(14,522	)
Payments related to withholding taxes for share-based compensation		(567	)			—
Distributions to redeemable noncontrolling interests		(2,034	)			(3,095	)
Contributions from noncontrolling interests		485				50
Distributions to noncontrolling interests		(401	)			(287	)
Contributions from redeemable noncontrolling interests		—				124
Redemption of OP Units held by third parties		(285	)			(254	)
Other financing activities		—				(232	)
Net cash provided by financing activities		20,513				16,503
NET DECREASE IN CASH, CASH EQUIVALENTS,    AND RESTRICTED CASH		1,136				(41,132	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT    BEGINNING OF PERIOD		139,267				229,766
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT    END OF PERIOD	$	140,403			$	188,634

(1) Accrued capital expenditures were $39.8 million and $43.8 million as of March 31, 2024 and 2023, respectively.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO OP L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

 

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report on Form 10-Q contains or may contain information that is forward-looking within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding: our future plans and goals, including our pipeline investments and projects, our plans to eliminate certain near term debt maturities, our estimated value creation and potential, our timing, scheduling and budgeting, projections regarding lease growth, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, the potential for adverse economic and geopolitical conditions, which negatively impact our operations, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, developments, and redevelopments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios.

These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to: geopolitical events which may adversely affect the markets in which our securities trade, and other macro-economic conditions, including, among other things, rising interest rates and inflation, which heightens the impact of the other risks and factors described herein; real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing and effects of acquisitions, dispositions, developments and redevelopments; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete; financing risks, including the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently owned by us.

In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.

Readers should carefully review our financial statements and the notes thereto, as well as Item 1A. Risk Factors in Part II of this report. These risk factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

 

Readers should also carefully review the section entitled “Risk Factors” described in Item 1A of Apartment Investment and Management Company’s and Aimco OP L.P.’s combined Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent documents we file from time to time with the SEC.

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

Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States (“GAAP”). These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading.

 

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Executive Overview

Our mission is to make real estate investments, primarily focused on the multifamily sector within targeted U.S. markets, where outcomes are enhanced through our human capital and substantial value is created for investors, teammates, and the communities in which we operate.

Our value proposition includes our:

Our primary goal is outsized risk adjusted returns and accelerating growth for our stockholders. We are focused on providing superior total-return performance to stockholders, primarily through capital appreciation driven by accretive investment and active portfolio management over multi-year periods. We do not presently intend to pay a regular quarterly cash dividend, but may periodically pay dividends for REIT tax purposes or to return a portion of profits to stockholders.

Our financial objectives are to create value and produce superior, asset level, risk-adjusted returns on equity as measured by the investment period Internal Rate of Return (“IRR”) and the project-level Multiple on Invested Capital (“MOIC”). We measure broader performance based on Net Asset Value (“NAV”) growth over time.

Our capital allocation strategy is designed to leverage our investment platform and optimize risk-adjusted returns for our stockholders.

We target a balanced allocation, which includes investments in “Value Add” and “Opportunistic” multifamily real estate, primarily located in Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range, plus investment in a geographically diversified portfolio of "Core" and "Core-Plus" apartment communities.

In addition, we currently hold select alternative assets, consisting primarily of indirect, real estate related debt and equity investments. We have reduced our allocation to these investments and plan to continue to significantly reduce our allocation over time.

We have policies in place that support our stated strategy, guide our investment allocations, and manage risk, including to hold at all times a sizable portion of our net equity in stabilized cash-flowing assets and to require cash or committed credit necessary for completion of development and redevelopment projects prior to their commencement.

 

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Given our stated strategy, it is expected that at any point in time the value-creation process will be ongoing at numerous of our investments. Over time, we expect our enterprise to produce superior returns on equity on a risk-adjusted basis and it is our plan to do so by:

We have corporate headquarters in Denver, Colorado and Washington, D.C. Our investment platform is managed by experienced professionals based in three regions, where we will focus our new investment activity: Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range. By regionalizing this platform, we are able to leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities.

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.

Our entire portfolio of operating properties includes 25 apartment communities (21 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class). We also own one commercial office building that is part of an assemblage with an adjacent apartment building. The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across a geographically diversified portfolio, with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment fundamentals and state and regional governance. Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values.

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.

We will guard our liquidity at all times by maintaining sufficient cash and committed credit.

From time to time, we will allocate capital to financial assets designed to mitigate risks. Existing examples include our use of interest rate caps to provide protection against increases in interest rates on in-place loans.

We expect to capitalize our activities through a combination of non-recourse property debt, non-recourse construction loans, third-party equity, and the recycling of our equity, including retained earnings. We plan to limit the use of recourse leverage, with a strong preference towards non-recourse property-level debt to limit risk to our enterprise. When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage our equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.

 

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

Financial Results and Recent Highlights

 

Operating Property Results

We own a diversified portfolio of stabilized apartment communities located in eight major U.S. markets with average rents in line with local market averages (generally defined as B class). We also own a commercial office building that is part of an assemblage with an adjacent apartment building.

Highlights for the three months ended March 31, 2024 include:

Value Add, Opportunistic & Alternative Investments

Development and Redevelopment

We generally seek development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and where we have a comparative advantage over others in the market. Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.

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.

During the three months ended March 31, 2024, we invested $42.8 million in development and redevelopment activities, inclusive of construction debt and third-party equity, compared to $64.8 million during the three months ended March 31, 2023.

Highlights for the three months ended March 31, 2024 include:

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Investment and Disposition Activity

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.

Balance Sheet and Financing Activities

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.

Financial Results of Operations

We have three segments: (i) Development and Redevelopment, (ii) Operating, and (iii) Other.

Our Development and Redevelopment segment consists of rental communities that are under construction or have not achieved 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.

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.

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

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.

Property Results

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.

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.

We use proportionate property net operating income to assess the operating performance of our segments. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements, for the consolidated communities; but

Please refer to Note 8 to the condensed consolidated financial statements in Item 1 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.

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Proportionate Property Net Operating Income

The results of our segments for the three months ended March 31, 2024 and 2023, as presented below, are based on segment classifications as of March 31, 2024 (dollars in thousands).

	Three Months Ended March 31,
	2024				2023				$ Change				% Change
Rental and other property revenues, before utility reimbursements:
Development and Redevelopment	$	4,672			$	2,201			$	2,471				100.0	%
Operating		38,639				36,672				1,967				5.4	%
Other		4,764				3,671				1,093				29.8	%
Total		48,075				42,544				5,531				13.0	%
Property operating expenses, net of utility reimbursements:
Development and Redevelopment		2,597				1,676				921				55.0	%
Operating		11,503				11,186				317				2.8	%
Other		2,983				1,529				1,454				95.1	%
Total		17,083				14,391				2,692				18.7	%
Proportionate property net operating income:
Development and Redevelopment		2,075				525				1,550				100.0	%
Operating		27,136				25,486				1,650				6.5	%
Other		1,781				2,142				(361	)			(16.9	%)
Total	$	30,992			$	28,153			$	2,839				10.1	%

For the three months ended March 31, 2024, compared to the same period in 2023:

Non-Segment Real Estate Operations

Operating income amounts not attributed to our segments include property management costs, casualty losses, and, if applicable, the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our segments for purposes of evaluating segment performance.

Depreciation and Amortization

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.

General and Administrative Expenses

For the three months ended March 31, 2024, compared to the same period in 2023, General and administrative expenses increased by $0.1 million, or 1.7%.

Interest Income

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.

Interest Expense

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.

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Realized and Unrealized Gains (Losses) on Interest Rate Options

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.

Realized and Unrealized Gains (Losses) on Equity Investments

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.

Other Income (Expense), Net

Other income (expense), net, includes costs associated with our risk management activities, partnership administration expenses, fee income, and certain non-recurring items, as well as activity related to our Mezzanine Investment. For the three months ended March 31, 2024, compared to the same period in 2023, Other income (expense), net decreased 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.

Income Tax Benefit (Expense)

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

Our income tax benefit (expense) calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in Income tax benefit (expense) in our Condensed Consolidated Statements of Operations.

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and 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.

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.

 

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Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. Our critical accounting estimates that involve our more significant judgments and estimates used in the preparation of our consolidated financial statements are detailed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 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.

Non-GAAP Measures

We use EBITDAre and Adjusted EBITDAre in managing our business and in evaluating our financial condition and operating performance. These key financial indicators are non-GAAP measures and are defined and described below. We provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP.

Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and rating agencies as a supplemental measure of our ability to incur and service debt because they are recognized measures of performance by the real estate industry and allow for comparison of our credit strength to different companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts. Nareit defines EBITDAre as net income computed in accordance with GAAP, before interest expense, income taxes, depreciation, and amortization expense, further adjusted for:

EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate investment trusts. We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of the following items:

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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):

		Three Months Ended March 31,
		2024				2023
Net income (loss)		$	(7,196	)		$	(5,753	)
Adjustments:
Interest expense			13,370				9,725
Income tax (benefit) expense			(2,730	)			(4,196	)
Depreciation and amortization			19,468				16,271
Adjustment related to EBITDAre of unconsolidated partnerships			215				223
EBITDAre		$	23,127			$	16,270
Net (income) loss attributable to redeemable noncontrolling    interests in consolidated real estate partnerships			(3,560	)			(3,274	)
Net (income) loss attributable to noncontrolling interests    in consolidated real estate partnerships			16				(264	)
EBITDAre adjustments attributable to noncontrolling interests			(575	)			(16	)
Mezzanine investment (income) loss, net			628				128
Realized and unrealized (gains) losses on interest rate options			(1,672	)			1,057
Adjusted EBITDAre		$	17,964			$	13,901

 

 

Liquidity and Capital Resources

Liquidity

Liquidity is the ability to meet present and future financial obligations. Our primary sources of liquidity are cash flows from operations and borrowing capacity under our loan agreements.

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

As of March 31, 2024, we had sufficient capacity on our non-recourse construction loans to cover our remaining commitments on development and redevelopment projects of approximately $42.4 million. The initial allocations to our joint ventures have remaining unfunded commitments of $3.0 million. We also have unfunded commitments in the amount of $1.9 million related to four investments in entities that develop technology related to the real estate industry. Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, and future investments. Additionally, our third-party property managers may enter into commitments on our behalf to purchase goods and services in connection with the operation of our apartment communities and our office building. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to historical levels.

We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next twelve months.

In the event that our cash and cash equivalents, revolving secured credit facility, and cash provided by operating activities are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional property financing activity and proceeds from apartment community sales. We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property financing activity, cash generated from operations, and the recycling of our equity. Our revolving secured credit facility matures in December 2024, prior to consideration of its one-year extension option.

Leverage and Capital Resources

The availability and cost of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing. Any adverse changes in the lending environment could negatively affect our liquidity. We have taken steps to mitigate a portion of our short-term refunding risk. However, if property or development financing options become unavailable, we may consider alternative sources of liquidity, such as reductions in capital spending or apartment community dispositions.

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As of March 31, 2024, approximately 90% of our outstanding non-recourse property debt had a fixed interest rate and approximately 10% had a variable interest rate, all of which was hedged. In addition, the weighted-average contractual rate on our non-recourse debt was 4.8% and 4.6% inclusive of interest rate caps, and the average remaining term to maturity was 6.4 years. Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates.

While our primary sources of leverage are property-level debt and non-recourse construction loans, we also have a secured $150.0 million credit facility with a syndicate of financial institutions. As of March 31, 2024, we had no outstanding borrowings under our revolving secured credit facility, which requires that we maintain a fixed charge coverage ratio of 1.25X, minimum tangible net worth of $625.0 million, and maximum leverage of 60.0% as defined in the credit agreement. We are currently in compliance and expect to remain in compliance with these covenants during the next twelve months.

Changes in Cash, Cash Equivalents, and Restricted Cash

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing and financing activities, which are presented in our Condensed Consolidated Statements of Cash Flows in Item 1 of this report.

Operating Activities

For the three months ended March 31, 2024, net cash provided by operating activities was $21.7 million. Our operating cash flow is primarily affected by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities and general and administrative costs. Cash provided by operating activities for the three months ended March 31, 2024, increased by $16.1 million compared to the same period in 2023, due primarily to increased net operating income driven by higher rents and the timing of balance sheet position changes.

Investing Activities

For the three months ended March 31, 2024, net cash used in investing activities of $41.1 million consisted primarily of capital expenditures. Net cash used in investing activities for the three months ended March 31, 2024, decreased by $22.1 million compared to the same period in 2023, due primarily to decreased capital expenditures.

Financing Activities

For the three months ended March 31, 2024, net cash provided by financing activities of $20.5 million consisted primarily of proceeds from non-recourse construction loans, offset by common stock repurchases and distributions to redeemable noncontrolling interests. Net cash provided by financing activities for the three months ended March 31, 2024, increased by $4.0 million compared to the same period in 2023, due primarily to decrease in common stock repurchases, partially offset by a decrease in proceeds from non-recourse construction loans.

Future Capital Needs

We expect to fund any future acquisitions, development and redevelopment, and other capital spending principally with operating cash flows, short-term borrowings, and debt and equity financing. Our near-term business plan does not contemplate the issuance of equity. We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next twelve months.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our chief market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing property debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We primarily use long-dated, fixed-rate, non-recourse property debt on stabilized properties in order to avoid the refunding and repricing risks of short-term borrowings.

We use working capital primarily to fund short-term uses. We use derivative financial instruments as a risk management tool and do not use them for trading or other speculative purposes.

As of March 31, 2024, on a consolidated basis, we had approximately $81.3 million of variable-rate property-level debt outstanding and $300.2 million of variable-rate construction loans. The impact of rising interest rates is mitigated by our use of interest rate caps, which as of March 31, 2024, provided protection for our variable interest rate debt. Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates. As of March 31, 2024, we estimate an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no impact on interest expense.

As of March 31, 2024, we held interest rate caps with $627.4 million notional value. These instruments were acquired for $5.8 million and at March 31, 2024, were valued at $5.1 million.

As of March 31, 2024, we had $140.4 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.

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ITEM 4. CONTROLS AND PROCEDURES

Aimco

Disclosure Controls and Procedures

Aimco’s management, with the participation of Aimco’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Aimco’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Aimco’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, Aimco’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in Aimco’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.

Aimco Operating Partnership

Disclosure Controls and Procedures

Aimco Operating Partnership’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of both Aimco and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, has evaluated the effectiveness of Aimco Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer of Aimco OP GP, LLC have concluded that, as of the end of such period, Aimco Operating Partnership’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in Aimco Operating Partnership's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, Aimco Operating Partnership's internal control over financial reporting.

 

 

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes from the risk factors in Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2023. We may disclose changes to such factors or disclose additional factors from time to time in our filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Aimco

Unregistered Sales of Equity Securities

From time to time, Aimco may issue shares of its Common Stock in exchange for OP Units, defined under the Aimco Operating Partnership heading below. Such shares are issued based on an exchange ratio of one share for each OP Unit. Aimco may also issue shares of its Common Stock in exchange for limited partnership interests in consolidated real estate partnerships.

During the three months ended March 31, 2024, no shares of Common Stock were issued in exchange for OP Units in such transactions. Had any such shares been issued, the issuances would have been effected in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.

In addition to any issuances pursuant to transactions of the types discussed above, there were no unregistered sales of equity securities made by Aimco during the quarter ended March 31, 2024.

Repurchases of Equity Securities

The following table summarizes Aimco's share repurchases, for the three months ended March 31, 2024, all of which were part of publicly announced programs:

Fiscal Period		Total Number of Shares Repurchased				Weighted Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs (1)
January 1 - 31, 2024			61,143			$	7.47				61,143				21,056,413
February 1 - 29, 2024			345,202				7.36				345,202				20,711,211
March 1 - 31, 2024			466,414				7.59				466,414				20,244,797
Total			872,759			$	7.49				872,759

(1) Aimco's Board of Directors (the "Board") has, from time to time, authorized Aimco to repurchase shares of its outstanding Common Stock. These repurchases may be made from time to time in the open market or in privately negotiated transactions. These share repurchase authorizations have no expiration date.

Aimco Operating Partnership

There is no public market for OP Units, and Aimco Operating Partnership has no intention of listing OP Units on any securities exchange. In addition, Aimco Operating Partnership’s Partnership Agreement restricts the transferability of OP Units.

On May 7, 2024, there were 156,730,743 OP Units and equivalents outstanding (of which 144,827,125 were held by Aimco), that were held by 1,966 unitholders of record.

Unregistered Sales of Equity Securities

Aimco Operating Partnership did not issue any unregistered OP Units during the three months ended March 31, 2024.

Repurchases of Equity Securities

Aimco Operating Partnership’s Partnership Agreement generally provides that after holding OP Units for one year, limited partners other than Aimco have the right to redeem their OP Units for cash or, at its election, shares of Aimco Common Stock on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended March 31, 2024, no OP Units were redeemed in exchange for shares of Common Stock and 36,907 OP Units were redeemed in exchange for cash at an aggregate weighted average price per unit of $7.74.

The following table summarizes repurchases, or redemptions in exchange for cash, of the Aimco Operating Partnership’s equity securities for the three months ended March 31, 2024:

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Fiscal Period		Total Number of Units Repurchased				Weighted Average Price Paid per Unit				Total Number of Units Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Units That May Yet Be Purchased Under Plans or Programs (1)
January 1 - 31, 2024			—			$	—			N/A		N/A
February 1 - 29, 2024			—				—			N/A		N/A
March 1 - 31, 2024			36,907				7.74			N/A		N/A
Total			36,907			$	7.74

(1) The terms of the Aimco Operating Partnership’s Partnership Agreement do not provide for a maximum number of units that may be repurchased, and other than the express terms of its Partnership Agreement, the Aimco Operating Partnership has no publicly announced plans or programs of repurchase. However, for Aimco to repurchase shares of its Common Stock, the Aimco Operating Partnership must make a concurrent repurchase of its OP Units held by Aimco at a price per unit that is equal to the price per share Aimco pays for its Common Stock.

Dividend and Distribution Payments

As a REIT, Aimco is required to distribute annually to holders of its Common Stock at least 90.0% of its “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. Our Board determines and declares Aimco's dividends. In making a dividend determination, our Board considers a variety of factors, including REIT distribution requirements; current market conditions; liquidity needs; and other uses of cash, such as deleveraging and accretive investment activities.

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ITEM 6. EXHIBITS

The following exhibits are filed with this report:

EXHIBIT NO.		DESCRIPTION
3.1		Charter – Articles of Amendment and Restatement (Exhibit 3.1 to Aimco’s Current Report on Form 8-K, dated October 2, 2023, is incorporated herein by this reference)
3.2		Amended and Restated Bylaws (Exhibit 3.1 to Aimco's Current Report on Form 8-K, dated April 28, 2023, is incorporated herein by this reference).
3.3		Articles Supplementary of Apartment Investment Management Company (Exhibit 3.1 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)
10.1		Amended and Restated Agreement of Limited Partnership of Aimco OP L.P., effective as of December 14, 2020 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco
31.3		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco Operating Partnership
31.4		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco Operating Partnership
32.1		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Aimco
32.2		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Aimco Operating Partnership

 

EXHIBIT NO.		DESCRIPTION
101		The following materials from Aimco’s and Aimco Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of equity and partners’ capital; (iv) condensed consolidated statements of cash flows; and (v) notes to condensed consolidated financial statements.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	APARTMENT INVESTMENT AND MANAGEMENT COMPANY
	By:	/s/ H. Lynn C. Stanfield
		H. Lynn C. Stanfield
		Executive Vice President and Chief Financial Officer
	By:	/s/ Kellie E. Dreyer
		Kellie E. Dreyer
		Senior Vice President and Chief Accounting Officer

 

	AIMCO OP L.P.
	By:	Aimco OP GP, LLC, its General Partner
	By:	/s/ H. Lynn C. Stanfield
		H. Lynn C. Stanfield
		Executive Vice President and Chief Financial Officer
	By:	/s/ Kellie E. Dreyer
		Kellie E. Dreyer
		Senior Vice President and Chief Accounting Officer

 

Date: May 8, 2024

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