10-K 1 aiv-20231231.htm 10-K 10-K
0000926660--12-310000922864--12-31falseFYFYfalsehttp://fasb.org/us-gaap/2023#RelatedPartyMemberhttp://fasb.org/us-gaap/2023#RelatedPartyMemberhttp://fasb.org/us-gaap/2023#RelatedPartyMemberhttp://fasb.org/us-gaap/2023#RelatedPartyMemberhttp://www.aimco.com/20231231#ParkmercedInvestmentMemberhttp://www.aimco.com/20231231#ParkmercedInvestmentMemberhttp://fasb.org/us-gaap/2023#FinanceLeaseLiabilityhttp://fasb.org/us-gaap/2023#FinanceLeaseLiabilityhttp://fasb.org/us-gaap/2023#FinanceLeaseLiabilityhttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#OtherLiabilitieshttp://fasb.org/us-gaap/2023#OtherLiabilitiesthree yearsthree yearsJune 30 2012May 31 2004March 31 2005July 31 2013August 31 2018April 30 2001October 31 2006December 31 1997December 31 1997November 30 1994October 31 2004October 31 1999August 31 2002August 31 2002August 31 2002August 31 2002August 31 2021August 31 2002May 31 1998December 31 2003December 31 1999January 31 2021February 28 2023July 31 2021July 31 2021July 31 2021August 31 2020June 30 2021December 31 2020February 28 2022January 31 2022December 31 2022June 30 2022July 31 2022June 30 2022January 31 2006July 31 2019five years0000922864us-gaap:ConstructionLoansMemberaiv:FixedRateMember2022-12-310000922864us-gaap:RestrictedStockMember2023-12-310000922864aiv:AimcoRealEstateMember2021-01-012021-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMemberaiv:RoyalCrestEstatesMember2023-01-012023-12-310000922864us-gaap:CommonStockMember2022-01-012022-12-3100009228642020-12-012020-12-310000922864us-gaap:CommonStockMember2023-01-012023-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMemberus-gaap:LoansPayableMemberaiv:PNCBankMemberaiv:SwinglineLoanSubFacilityMember2020-12-012020-12-3100009228642019-11-300000922864aiv:RedevelopmentandDevelopmentMember2023-10-012023-12-310000922864aiv:VariableRateMemberaiv:NonRecoursePropertyDebtMember2022-12-310000922864aiv:PledgedascollateralMemberaiv:NonRecoursePropertyDebtMemberaiv:FixedRateMember2023-12-310000922864aiv:RedevelopmentandDevelopmentMemberus-gaap:OperatingSegmentsMember2022-01-012022-12-310000922864aiv:AimcoRealEstateMember2022-01-012022-12-310000922864us-gaap:ParentMember2022-12-310000922864aiv:WillowBendMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2021-12-310000922864aiv:StGeorgeVillasMemberus-gaap:SegmentContinuingOperationsMemberaiv:OtherRealEstateMember2023-12-310000922864us-gaap:BaseRateMember2023-01-012023-12-310000922864aiv:RedevelopmentandDevelopmentMember2022-12-310000922864us-gaap:UnconsolidatedPropertiesMemberus-gaap:SegmentContinuingOperationsMember2023-12-310000922864us-gaap:RetainedEarningsMember2022-12-310000922864aiv:NonRecoursePropertyDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000922864aiv:AimcoRealEstateMember2022-12-310000922864us-gaap:ParentMember2021-01-012021-12-310000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2020-12-310000922864aiv:OneEdgewaterMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:FlyingHorseMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OtherRealEstateMember2022-01-012022-12-310000922864us-gaap:MeasurementInputCapRateMember2022-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2020-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:PlannedApartmentHomesMember2023-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2020-12-310000922864aiv:ResidentialLeaseMember2023-12-310000922864us-gaap:RestrictedStockMember2022-12-310000922864srt:MaximumMemberaiv:VariableRateMemberus-gaap:ConstructionLoansMember2023-12-310000922864aiv:SearsParcelTwoMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:FairValueInputsLevel3Memberaiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-3100009228642023-06-012023-06-300000922864aiv:YorktownApartmentsMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864aiv:SwinglineLoanSubFacilityMember2023-12-310000922864us-gaap:FairValueMeasurementsRecurringMember2023-01-012023-12-310000922864us-gaap:ConstructionLoanPayableMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2022-01-012022-12-310000922864aiv:NonRecoursePropertyDebtMemberaiv:FixedRateMember2022-12-310000922864aiv:BensonHotelAndFacultyClubTheMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864us-gaap:CommonStockMember2021-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2021-01-012021-12-310000922864aiv:VariableRateMemberus-gaap:ConstructionLoansMembersrt:MinimumMember2023-01-012023-12-310000922864us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864aiv:UptonPlaceMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:AIMCOOPLPMember2022-01-012022-12-310000922864us-gaap:OperatingSegmentsMemberaiv:RedevelopmentandDevelopmentMember2022-01-012022-12-310000922864aiv:RedevelopmentandDevelopmentMemberus-gaap:OperatingSegmentsMember2023-01-012023-12-310000922864aiv:AIRMember2020-12-150000922864aiv:MezzanineInvestmentMember2021-01-012021-12-310000922864us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310000922864aiv:AIRMember2022-01-012022-12-310000922864aiv:TSRRestrictedStockMember2022-01-012022-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:CommercialOfficeBuildingMember2023-12-310000922864us-gaap:CommonStockMember2020-12-310000922864us-gaap:CommonStockMember2022-12-310000922864us-gaap:AdditionalPaidInCapitalMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2021-12-310000922864aiv:WaterfordVillageMemberus-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMember2023-01-012023-12-310000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2021-01-012021-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2023-01-012023-12-310000922864aiv:SearsParcelThreeMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:ConstructionLoanPayableMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000922864us-gaap:FairValueInputsLevel1Memberaiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2022-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMemberaiv:PNCBankMember2020-12-310000922864aiv:TheHamiltonMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2022-12-310000922864aiv:InterestRateOptionsMember2023-12-310000922864us-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864aiv:SanDiegoCommunitiesMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OperatingPortfolioSegmentMember2022-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OperatingPortfolioSegmentMember2023-01-012023-12-310000922864us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2023-12-310000922864aiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864srt:MinimumMember2023-12-310000922864us-gaap:RetainedEarningsMember2023-01-012023-12-310000922864us-gaap:RestrictedStockMember2023-01-012023-12-310000922864us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-12-310000922864srt:MaximumMemberaiv:NonRecoursePropertyDebtMemberaiv:FixedRateMember2023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OtherRealEstateMember2023-01-012023-12-310000922864aiv:RestrictedStockAwardsAndLtipOneUnitsMember2021-01-012021-12-310000922864us-gaap:CorporateNonSegmentMember2022-01-012022-12-310000922864aiv:RoyalCrestEstatesThreeMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMember2023-12-310000922864aiv:VariableRateMemberus-gaap:ConstructionLoansMembersrt:MinimumMember2023-12-310000922864aiv:PropertyTechnologyFundsMember2022-01-012022-12-310000922864us-gaap:ConstructionLoansMembersrt:MinimumMemberaiv:FixedRateMember2023-12-310000922864aiv:StGeorgeVillasMemberus-gaap:SegmentContinuingOperationsMemberaiv:OtherRealEstateMember2023-01-012023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:AimcoRealEstateMember2023-12-310000922864aiv:TSRStockAwardsMember2023-12-310000922864aiv:AIRMember2022-07-012022-07-310000922864aiv:NonRecoursePropertyDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000922864aiv:NonRecoursePropertyDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000922864aiv:BioscienceFourMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:HydeParkTowerMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:ElmCreekMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:OtherMemberus-gaap:OperatingSegmentsMember2023-12-310000922864us-gaap:ConstructionLoansMembersrt:MinimumMemberaiv:FixedRateMember2023-01-012023-12-310000922864aiv:UnvestedTSRLTIPIIUnitsMember2022-12-310000922864aiv:TSRLTIPIIUnitsMemberaiv:AIRMember2023-12-310000922864us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2023-12-310000922864aiv:AIRMember2023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:RedevelopmentandDevelopmentMember2021-01-012021-12-310000922864us-gaap:ConsolidatedPropertiesMemberus-gaap:SegmentContinuingOperationsMember2023-12-310000922864aiv:UnconsolidatedRealEstatePartnershipsMember2022-01-012022-12-310000922864us-gaap:ParentMember2020-12-310000922864aiv:AIMCOOPLPMemberaiv:UnconsolidatedRealEstatePartnershipsMember2021-01-012021-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:FitzsimonsPhaseFourMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:ThreeHundredWBrowardBlvdMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMemberaiv:TwoThousandTwoHundredGraceMember2023-12-310000922864aiv:SearsParcelOneMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2023-12-310000922864aiv:TSRLTIPIIUnitsMember2023-12-310000922864aiv:IQHQMember2023-01-012023-12-3100009228642021-12-310000922864aiv:NonRecoursePropertyDebtMemberaiv:FixedRateMember2023-12-310000922864aiv:PlannedHomesMemberus-gaap:SegmentContinuingOperationsMember2023-12-310000922864us-gaap:ParentMember2022-01-012022-12-310000922864us-gaap:CommonStockMember2023-12-310000922864srt:MinimumMember2023-01-012023-12-310000922864us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2023-12-310000922864us-gaap:CorporateNonSegmentMember2021-01-012021-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:RoyalCrestEstatesMember2023-12-310000922864aiv:CommitmentsrelatedtodevelopmentredevelopmentandcapitalimprovementactivitiesMemberaiv:RETVenturesMember2023-01-012023-12-310000922864aiv:NonRecoursePropertyDebtMember2023-12-3100009228642023-06-300000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2021-01-012021-12-310000922864aiv:FurnitureFixturesAndEquipmentMember2023-12-310000922864us-gaap:RevolvingCreditFacilityMember2023-12-310000922864aiv:VariableRateMemberaiv:NonRecoursePropertyDebtMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:ApartmentHomesRedevelopmentCompletedMember2023-12-3100009228642023-12-310000922864aiv:UptonPlaceMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMemberaiv:TwoThousandTwoHundredGraceMember2023-01-012023-12-310000922864us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-3100009228642024-02-230000922864srt:MaximumMemberus-gaap:ConstructionLoansMemberaiv:FixedRateMember2023-01-012023-12-310000922864aiv:InterestRateOptionsMember2022-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMemberaiv:PNCBankMember2023-01-012023-12-310000922864srt:MaximumMemberaiv:CommitmentsrelatedtooperationsMember2023-01-012023-12-310000922864srt:MaximumMemberaiv:VariableRateMemberus-gaap:ConstructionLoansMember2023-01-012023-12-310000922864aiv:AIRMemberus-gaap:RestrictedStockMember2023-12-310000922864aiv:UnvestedTSRLTIPIIUnitsMember2023-01-012023-12-310000922864aiv:InterestRateOptionsMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-12-310000922864us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OtherRealEstateMember2023-01-012023-12-310000922864us-gaap:ParentMember2023-01-012023-12-310000922864aiv:MezzanineInvestmentMember2023-01-012023-12-310000922864srt:MaximumMemberus-gaap:ConstructionLoansMemberaiv:FixedRateMember2023-12-310000922864aiv:OperatingPartnershipUnitEquivalentsMember2023-01-012023-12-310000922864us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-12-310000922864us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberaiv:InterestRateOptionsMember2023-12-310000922864aiv:VariableRateMemberus-gaap:ConstructionLoansMember2022-12-310000922864aiv:AIRMemberus-gaap:EmployeeStockOptionMember2023-12-310000922864aiv:A173E90thStreetMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864aiv:NonRecoursePropertyDebtMembersrt:MinimumMemberaiv:FixedRateMember2023-12-310000922864aiv:ConvertibleTsrLtipIiUnitsMember2022-12-310000922864us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864us-gaap:AdditionalPaidInCapitalMember2023-01-012023-12-310000922864aiv:PropertyTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864aiv:HamiltonHouseMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:IQHQMember2021-01-012021-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:RoomsMember2023-12-310000922864aiv:AIRMemberus-gaap:RelatedPartyMember2022-01-012022-12-310000922864aiv:TSRLTIPIUnitsMember2022-12-310000922864us-gaap:CorporateNonSegmentMember2021-01-012021-12-310000922864aiv:FortLauderdaleJointVentureMember2023-12-012023-12-310000922864us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864aiv:A2020PlanMember2023-12-310000922864aiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:InterestRateOptionsMember2022-12-310000922864us-gaap:OperatingSegmentsMemberaiv:RedevelopmentandDevelopmentMember2022-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:WexfordVillageMemberaiv:StabilizedMember2023-12-310000922864aiv:ConvertibleTsrLtipIiUnitsMember2023-12-310000922864us-gaap:RelatedPartyMember2023-12-310000922864aiv:FederalAndStateMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:MezzanineInvestmentMember2021-01-012021-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2023-01-012023-12-310000922864aiv:TSRRestrictedStockMember2023-12-310000922864aiv:YorktownApartmentsMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:InterestRateOptionsMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:MezzanineInvestmentMember2023-01-012023-12-310000922864us-gaap:LetterOfCreditMemberaiv:PNCBankMember2020-12-310000922864us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2022-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2023-01-012023-12-310000922864us-gaap:CommonStockMember2021-01-012021-12-310000922864aiv:SearsParcelTwoMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:StrathmorePhaseOneMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:BluffsAtPacificaMemberaiv:StabilizedMember2023-12-310000922864aiv:VariableRateMemberaiv:NonRecoursePropertyDebtMember2023-12-310000922864aiv:AIRMember2022-09-010000922864aiv:YachtClubAtBrickellMemberus-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMember2023-01-012023-12-310000922864aiv:WhollyAndPartiallyOwnedConsolidatedPropertiesMemberaiv:OperatingPortfolioSegmentMember2023-01-012023-03-310000922864us-gaap:OperatingSegmentsMemberaiv:OperatingPortfolioSegmentMember2021-01-012021-12-310000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2020-12-310000922864aiv:ThreeHundredWBrowardBlvdMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembersrt:MinimumMember2020-12-012020-12-310000922864aiv:TSRRestrictedStockMember2023-01-012023-12-310000922864aiv:EvanstonPlaceMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2023-01-012023-12-310000922864us-gaap:AdditionalPaidInCapitalMember2020-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMemberus-gaap:LoansPayableMemberaiv:PNCBankMemberaiv:SwinglineLoanSubFacilityMember2023-01-012023-12-310000922864aiv:AIMCOOperatingPartnershipMember2023-01-012023-12-310000922864aiv:AIMCOOPLPMemberaiv:UnconsolidatedRealEstatePartnershipMember2021-01-012021-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2020-12-310000922864aiv:TSRStockOptionsTSRLTIPIAndLTIPIIUnitsMember2022-01-012022-12-310000922864aiv:UnconsolidatedRealEstatePartnershipMember2022-01-012022-12-310000922864aiv:AIRMemberus-gaap:RelatedPartyMember2021-01-012021-12-310000922864aiv:TSRLTIPIUnitsMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:FitzsimonsPhaseFourMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:UnconsolidatedRealEstatePartnershipMember2021-01-012021-12-310000922864us-gaap:RelatedPartyMember2022-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:AccessoryDwellingUnitsMember2023-12-310000922864us-gaap:RestrictedStockMembersrt:MinimumMember2023-01-012023-12-310000922864srt:MaximumMember2023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OtherRealEstateMember2022-01-012022-12-310000922864aiv:AIMCOOPLPMember2023-01-012023-12-310000922864aiv:IQHQMember2023-12-310000922864aiv:OperatingPortfolioSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-12-310000922864aiv:NonRecoursePropertyDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000922864srt:MaximumMemberus-gaap:RestrictedStockMember2023-01-012023-12-310000922864aiv:PledgedascollateralMemberus-gaap:ConstructionLoansMemberaiv:FixedRateMember2023-12-310000922864aiv:TheHamiltonMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864srt:SubsidiariesMember2023-01-012023-12-310000922864us-gaap:ConstructionLoansMemberaiv:FixedRateMember2023-12-3100009228642021-01-012021-12-310000922864us-gaap:FairValueInputsLevel1Memberaiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864aiv:UnconsolidatedRealEstatePartnershipMember2023-01-012023-12-310000922864aiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864us-gaap:FairValueInputsLevel3Memberaiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864aiv:TSRLTIPIUnitsMember2023-12-310000922864aiv:AIRMemberaiv:TSRRestrictedStockMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:PlantationGardensMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2023-01-012023-12-310000922864us-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-310000922864aiv:A118122West23RdStreetMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:RealEstatePartnershipMember2021-12-310000922864us-gaap:CorporateNonSegmentMember2022-12-310000922864aiv:RestrictedStockAwardsAndLtipOneUnitsMember2023-01-012023-12-310000922864us-gaap:ConstructionLoanPayableMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000922864us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000922864aiv:BluffsAtPacificaMemberus-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMember2023-01-012023-12-310000922864us-gaap:AdditionalPaidInCapitalMember2022-12-310000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2021-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2022-12-310000922864us-gaap:OperatingSegmentsMember2023-12-310000922864us-gaap:CorporateNonSegmentMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMemberaiv:RoyalCrestEstatesMember2023-12-310000922864aiv:IQHQMember2022-01-012022-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OperatingPortfolioSegmentMember2022-01-012022-12-310000922864aiv:UnvestedTimeLTIPIiUnitsMember2022-12-310000922864aiv:RoyalCrestEstatesThreeMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMemberaiv:RoyalCrestEstatesMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:NonRecoursePropertyDebtMember2022-12-310000922864us-gaap:ParentMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2023-12-310000922864us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2023-12-310000922864us-gaap:RetainedEarningsMember2022-01-012022-12-310000922864us-gaap:FairValueInputsLevel2Memberaiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864us-gaap:EmployeeStockOptionMember2022-01-012022-12-310000922864aiv:AIMCOOPLPMember2020-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2021-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:ElmCreekMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2023-12-310000922864us-gaap:FairValueInputsLevel2Memberaiv:RealEstateTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000922864us-gaap:MaterialReconcilingItemsMember2021-01-012021-12-310000922864aiv:BensonHotelAndFacultyClubTheMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2021-12-310000922864aiv:IQHQMember2022-12-310000922864aiv:WillowBendMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000922864aiv:BankLoftsMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:StrathmorePhaseOneMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:WhollyAndPartiallyOwnedConsolidatedPropertiesMemberaiv:PlannedApartmentHomesMemberaiv:OperatingPortfolioSegmentMember2022-01-010000922864aiv:NonRecoursePropertyDebtMembersrt:MinimumMemberaiv:FixedRateMember2023-01-012023-12-310000922864aiv:SearsParcelThreeMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:EldridgeMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864aiv:OneEdgewaterMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:A173E90thStreetMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2023-12-310000922864aiv:UnvestedTSRStockAwardsMember2023-12-310000922864srt:MaximumMemberaiv:TSRStockAwardsMember2023-01-012023-12-310000922864aiv:PropertyTechnologyFundsMember2021-01-012021-12-3100009228642022-01-012022-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2022-12-310000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:A1001BrickellBayDriveMemberaiv:OtherRealEstateMember2023-12-310000922864aiv:UnvestedTSRLTIPIIUnitsMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OakShoreMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-3100009228642022-12-310000922864us-gaap:RetainedEarningsMember2020-12-310000922864aiv:UnvestedTSRStockAwardsMember2022-12-310000922864us-gaap:RetainedEarningsMember2021-01-012021-12-3100009228642022-09-302022-09-300000922864us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMemberus-gaap:SecuredDebtMemberaiv:PNCBankMember2020-12-012020-12-310000922864us-gaap:CorporateNonSegmentMember2023-01-012023-12-310000922864aiv:RestrictedStockAwardsAndLtipOneUnitsMember2022-01-012022-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2021-01-012021-12-310000922864aiv:AIMCOOPLPMember2023-06-012023-06-300000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2022-12-310000922864us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000922864aiv:ResidentialLeaseMember2023-01-012023-12-310000922864aiv:EvanstonPlaceMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:UnconsolidatedRealEstatePartnershipsMember2021-01-012021-12-310000922864us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberaiv:InterestRateOptionsMember2022-12-310000922864aiv:AIMCOOPLPMemberaiv:UnconsolidatedRealEstatePartnershipsMember2022-01-012022-12-3100009228642019-11-012019-11-300000922864aiv:RealEstatePartnershipMember2022-12-310000922864us-gaap:MeasurementInputCapRateMember2023-12-310000922864aiv:FlyingHorseMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:RealEstatePartnershipMember2023-01-012023-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2021-12-310000922864aiv:AIMCOOPLPMemberaiv:PartnersCapitalAttributableToPartnershipMember2022-01-012022-12-310000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2022-12-3100009228642020-12-310000922864srt:MinimumMemberaiv:TSRStockAwardsMember2023-01-012023-12-310000922864us-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864aiv:AIMCOOPLPMemberaiv:MezzanineInvestmentMember2022-01-012022-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2021-01-012021-12-310000922864srt:MaximumMemberaiv:NonRecoursePropertyDebtMemberaiv:FixedRateMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:A237239NinthAvenueMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:UnconsolidatedInvestmentInIqhqAndMezzanineInvestmentMember2023-12-310000922864aiv:WhollyAndPartiallyOwnedConsolidatedPropertiesMemberaiv:OperatingPortfolioSegmentMember2022-01-010000922864aiv:AIRMember2023-01-012023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OtherRealEstateMember2021-01-012021-12-310000922864aiv:HamiltonHouseMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864aiv:TSRRestrictedStockMember2022-12-310000922864aiv:BankLoftsMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwaptionMember2023-01-012023-12-310000922864aiv:AIMCOOPLPMemberaiv:GeneralPartnerAndSpecialLimitedPartnerMember2022-01-012022-12-310000922864aiv:YachtClubAtBrickellMemberus-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMember2023-12-310000922864aiv:TSRStockAwardsMember2022-01-012022-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMemberaiv:RoyalCrestEstatesMember2023-01-012023-12-310000922864aiv:InterestRateOptionsMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2021-01-012021-12-310000922864aiv:AimcoRealEstateMember2023-01-012023-12-310000922864us-gaap:ParentMember2021-12-3100009228642023-01-012023-12-310000922864aiv:ResidentialApartmentCommunitiesInRedevelopmentMemberus-gaap:SegmentContinuingOperationsMember2023-12-310000922864aiv:AIMCOOPLPMember2023-12-310000922864aiv:RealEstatePartnershipMember2023-12-310000922864us-gaap:EquipmentMember2023-12-310000922864aiv:AIMCOOPLPMember2021-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMemberaiv:HillmeadeMember2023-12-310000922864aiv:SearsParcelOneMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864us-gaap:LetterOfCreditMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:UnconsolidatedRealEstatePartnershipMember2022-01-012022-12-310000922864aiv:RealEstatePartnershipMember2022-01-012022-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OperatingPortfolioSegmentMember2023-01-012023-12-310000922864aiv:BioscienceFourMemberus-gaap:SegmentContinuingOperationsMemberaiv:RedevelopmentandDevelopmentMember2023-01-012023-12-310000922864us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2023-01-012023-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OperatingPortfolioSegmentMember2023-12-310000922864us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2022-12-310000922864aiv:MezzanineInvestmentMember2022-01-012022-12-310000922864aiv:CommercialLeaseMember2023-12-310000922864us-gaap:ConstructionLoansMember2023-12-310000922864aiv:AIMCOOPLPMemberaiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2023-01-012023-12-310000922864us-gaap:ConstructionLoanPayableMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000922864us-gaap:AdditionalPaidInCapitalMember2021-12-310000922864aiv:AIMCOOPLPMember2021-01-012021-12-310000922864us-gaap:LimitedPartnerMemberaiv:AIMCOOPLPMember2022-01-012022-12-310000922864aiv:AIMCOOPLPMemberaiv:UnconsolidatedRealEstatePartnershipMember2023-01-012023-12-310000922864aiv:AIRMemberaiv:TSRStockAwardsMember2023-12-310000922864aiv:EldridgeMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-12-310000922864aiv:NoncontrollingInterestsInConsolidatedRealEstatePartnershipsMember2022-01-012022-12-310000922864us-gaap:BaseRateMember2020-12-012020-12-310000922864aiv:UnvestedTimeLTIPIiUnitsMember2023-01-012023-12-310000922864aiv:RealEstateInvestmentsMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:RoyalCrestEstatesMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:WexfordVillageMemberaiv:StabilizedMember2023-01-012023-12-310000922864aiv:WaterfordVillageMemberus-gaap:SegmentContinuingOperationsMemberaiv:StabilizedMember2023-12-310000922864us-gaap:MaterialReconcilingItemsMember2022-01-012022-12-310000922864aiv:PropertyTechnologyFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000922864us-gaap:CorporateNonSegmentMember2022-01-012022-12-310000922864aiv:UnconsolidatedRealEstatePartnershipsMember2023-01-012023-12-310000922864us-gaap:ConstructionLoansMember2022-12-310000922864aiv:AIMCOOPLPMemberaiv:UnconsolidatedRealEstatePartnershipsMember2023-01-012023-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:LoansPayableMemberaiv:PNCBankMemberaiv:SwinglineLoanSubFacilityMember2020-12-310000922864us-gaap:RetainedEarningsMember2021-12-310000922864us-gaap:FairValueMeasurementsRecurringMemberaiv:InterestRateSwapsAndCapsMember2023-12-310000922864srt:MaximumMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:PlantationGardensMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864aiv:VariableRateMemberus-gaap:ConstructionLoansMember2023-12-310000922864us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwaptionMember2023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMemberaiv:HillmeadeMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:HydeParkTowerMemberaiv:OperatingPortfolioMember2023-12-310000922864us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMemberaiv:PNCBankMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2020-12-012020-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2020-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:OakShoreMemberaiv:RedevelopmentandDevelopmentMember2023-12-310000922864aiv:ConvertibleTsrLtipIiUnitsMember2023-01-012023-12-310000922864aiv:A118122West23RdStreetMemberus-gaap:SegmentContinuingOperationsMemberaiv:OperatingPortfolioMember2023-01-012023-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:A1001BrickellBayDriveMemberaiv:OtherRealEstateMember2023-01-012023-12-310000922864aiv:RedevelopmentandDevelopmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-12-310000922864us-gaap:MaterialReconcilingItemsMember2023-01-012023-12-310000922864aiv:AIMCOOPLPMember2022-12-310000922864aiv:AimcoRealEstateMember2021-12-310000922864us-gaap:OperatingSegmentsMemberaiv:OtherRealEstateMember2021-01-012021-12-310000922864us-gaap:RetainedEarningsMember2023-12-310000922864aiv:OtherMemberus-gaap:OperatingSegmentsMember2022-12-310000922864us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2022-12-310000922864aiv:OperatingPortfolioSegmentMemberus-gaap:OperatingSegmentsMember2022-01-012022-12-310000922864aiv:PropertyTechnologyFundsMember2023-01-012023-12-310000922864us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommonStockMember2022-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2022-01-012022-12-310000922864aiv:CommonNoncontrollingInterestsInAimcoOperatingPartnershipMember2022-12-310000922864aiv:AimcoRealEstateMember2020-12-310000922864us-gaap:SegmentContinuingOperationsMemberaiv:A237239NinthAvenueMemberaiv:OperatingPortfolioMember2023-01-012023-12-31xbrli:pureaiv:Leaseaiv:ApartmentHomeaiv:Entityiso4217:USDxbrli:sharesaiv:Communityaiv:Dwellingxbrli:sharesaiv:Landaiv:Propertyaiv:OfficeBuildingiso4217:USDaiv:Segment

 

 

-FN6 - VIE's

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

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

 

For the fiscal year ended December 31, 2023

 

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)

 

Registrant’s telephone number, including area code (303-224-7900)

 

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 if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.

 

Apartment Investment and Management Company: Yes No

Aimco OP L.P.: Yes No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 

Apartment Investment and Management Company: Yes No

Aimco OP L.P.: Yes No

 

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

Apartment Investment and Management Company: Yes No

Aimco OP L.P.: Yes No

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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 aggregate market value of the voting and non-voting common stock of Apartment Investment and Management Company held by non-affiliates of Apartment Investment and Management Company was approximately $1.2 billion based upon the closing price of $8.52 on June 30, 2023.

As of February 23, 2024, there were 144,811,666 shares of Class A common stock ("Common Stock") outstanding.

 

 

Documents Incorporated by Reference

 


 

 

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 directly is the special limited partner of Aimco OP L.P. ("Aimco Operating Partnership"). As of December 31, 2023, 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 Annual Reports on Form 10-K for the fiscal year ended December 31, 2023, 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 present our business as a whole, in the same manner our management views and operates the business;
We eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosures apply to both Aimco and Aimco Operating Partnership; and
We save time and cost through the preparation of a single combined report rather than two separate reports.

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 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 consolidated financial statements and as noncontrolling interests in Aimco’s consolidated financial statements.

To help investors understand the differences between Aimco and Aimco Operating Partnership, this report provides: separate consolidated financial statements for Aimco and Aimco Operating Partnership; a single set of 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.

 


 

 

This report also includes separate Part II, Item 9A. 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.

 


 

 

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO OP, L.P.

TABLE OF CONTENTS

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended December 31, 2023

 

Item

 

Page

 

PART I

 

 

 

 

1.

Business

2

 

 

 

1A.

Risk Factors

6

 

 

 

1B.

Unresolved Staff Comments

23

 

 

 

1C.

Cybersecurity

23

 

 

 

2.

Properties

24

 

 

 

3.

Legal Proceedings

24

 

 

 

4.

Mine Safety Disclosures

24

 

 

 

 

PART II

 

 

 

 

5.

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

25

 

 

 

6.

[Reserved]

 

 

 

 

7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

 

 

 

7A.

Quantitative and Qualitative Disclosures About Market Risk

37

 

 

 

8.

Financial Statements and Supplementary Data

37

 

 

 

9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

37

 

 

 

9A.

Controls and Procedures

37

 

 

 

9B.

Other Information

42

 

 

 

9C.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

42

 

 

 

 

PART III

 

 

 

 

10.

Directors, Executive Officers and Corporate Governance

43

 

 

 

11.

Executive Compensation

61

 

 

 

12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

86

 

 

 

13.

Certain Relationships and Related Transactions, and Director Independence

88

 

 

 

14.

Principal Accounting Fees and Services

89

 

 

 

 

PART IV

 

 

 

 

15.

Exhibits and Financial Statement Schedules

90

 

 

 

 

 

 

16.

Form 10-K Summary

93

 

 

 

 

 

 

 

 


 

 

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 Annual Report 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 Annual Report 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 of this Annual Report and subsequent documents we file from time to time with the SEC. 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 Annual Report. 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.

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.

1

 


 

 

PART I

ITEM 1. BUSINESS

The Company

Aimco, a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”). Aimco, through a wholly-owned subsidiary, is the general partner and directly is the special limited partner of Aimco Operating Partnership, a Delaware Limited Partnership. Aimco conducts all of its business and owns all of its assets through Aimco Operating Partnership.

On December 15, 2020, we completed the Separation, creating two separate and distinct, publicly traded companies, Aimco and AIR.

Please refer to Note 14 to the consolidated financial statements in Item 8 for discussion regarding our business segments.

Executive Overview

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

Our value proposition includes our:

Platform, consisting of a cohesive, talented, and tenured team with diverse real estate industry experience combined with a disciplined and proven investment process;
Diversified portfolio, consisting of $0.6 billion of in-process value-add investments, a pipeline of 13 million square feet of potential future development, a national portfolio of stabilized multifamily real estate and limited indirect and passive investments; and
Capital redeployment plan which includes the prudent recycling of capital, reallocating our equity to higher returning investments, and return of capital to stockholders when appropriate.

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

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

Our capital allocation strategy was 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 sizeable 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.

 

2

 


 

 

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

Benefiting from a national platform while leveraging local and regional expertise

We have corporate headquarters in Denver, Colorado and Washington, D.C. Our investment platform is managed by experienced 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.

Managing and investing in value-add and opportunistic real estate

Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies. Our development and redevelopment portfolio currently includes projects in construction and lease-up. In addition, our team has secured significant, high-quality, future development opportunities, including total potential of 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.

Owning a portfolio of stabilized core and core plus real estate

Our entire portfolio of operating properties includes 26 apartment communities (22 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 geographically diversified markets, with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment fundamentals and state and regional governance. Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values.

Managing and continuing to reduce our allocation to alternative investments, over time

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.

Maintaining sufficient liquidity and utilizing safe financial leverage

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

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

We expect to capitalize our activities through a combination of non-recourse property debt, 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.

 

3

 


 

 

Competition

There are many developers, managers, and owners of apartment real estate and underdeveloped land, as well as REITs, private real estate companies, and investors, that compete with us in acquiring, developing, obtaining financing for, and disposing of apartment communities. This competition affects our ability to realize our real estate development and transactional objectives.

In addition, our apartment communities compete for residents with other housing alternatives, including other rental apartments and condominiums, and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing, as well as household formation and job creation in a particular area, could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.

Taxation

Aimco

Aimco has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its initial taxable year, and intends to continue to operate in such a manner. The Code imposes various requirements related to organizational structure, distribution levels, diversity of stock ownership, and certain restrictions with regard to owned assets and categories of income that must be met in order to continue to qualify as a REIT. If Aimco continues to qualify for taxation as a REIT, it will generally not be subject to United States federal corporate income tax on its taxable income that is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and stockholder levels) that generally results from an investment in a corporation.

Certain of our operations, or a portion thereof, are conducted through taxable REIT subsidiaries, each of which we refer to as a “TRS”. A TRS is a corporate subsidiary that has elected to be a TRS instead of a REIT and, as such, is subject to United States federal corporate income tax.

Aimco Operating Partnership

Aimco Operating Partnership is treated as a “pass-through” entity for United States federal income tax purposes and is not subject to United States federal income taxation. Partners in Aimco Operating Partnership, however, are subject to tax on their allocable share of partnership income, gains, losses, deductions, and credits, regardless of whether the partners receive any actual distributions of cash or other property from Aimco Operating Partnership during the taxable year. Generally, the characterization of any particular item is determined by Aimco Operating Partnership rather than at the partner level, and the amount of a partner’s allocable share of such item is governed by the terms of Aimco Operating Partnership’s Partnership Agreement. Aimco Operating Partnership is subject to tax in certain states.

Regulation

General

Apartment development is subject to various laws, ordinances, and regulations, including those concerning entitlement, building, health and safety, site and building design, environment, zoning, and sales, and similar matters apply to or affect the real estate development industry.

Apartment communities and their owners are subject to various laws, ordinances, and regulations, including those related to real estate broker licensing and regulations relating to recreational facilities such as swimming pools, activity centers, and other common areas.

Changes in laws increasing the potential liability for environmental conditions existing on communities or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction, and safety requirements, may result in significant unanticipated expenditures, which could adversely affect our net income and cash flows from operating activities.

In addition, existing rent control laws, as well as future enactment of rent control or rent stabilization laws, or other laws and ordinances regulating multifamily housing, may reduce rental revenue or increase operating costs in particular markets.

 

4

 


 

 

Environmental

Various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present. These materials may include lead-based paint, asbestos, polychlorinated biphenyls, and petroleum-based fuels. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the release or presence of such materials. In connection with the ownership of real estate, we could potentially be liable for environmental liabilities or costs associated with our real estate, whether currently owned, acquired in the future, or owned in the past. These and other risks related to environmental matters are described in more detail in Item 1A. Risk Factors.

Corporate Responsibility

Corporate responsibility is an important part of our business. As with all other aspects of our business, our corporate responsibility program focuses on continuous improvement, to the benefit of our stockholders, our residents, our teammates, our communities, and the environment. We actively discuss these matters with our stockholders and solicit their feedback on our program.

Environmental, Social, Governance Policies

We update our Environmental, Social, Governance ("ESG") policies and publish a Corporate Responsibility Report reflecting our ESG priorities and performance on an annual basis.

We remain committed to providing best-in-class living environments that mitigate risk while reducing environmental impacts and creating value. Our ESG policies are in place to guide this commitment and are applicable to all new construction, existing assets, and corporate operations. These policies are also taken into consideration when hiring suppliers and procuring materials.

Human Capital and Culture

We believe our most valuable asset is our human capital, and are committed to fostering, cultivating, and preserving a welcoming and inclusive culture for all teammates. Our success is reliant on the collective sum of individual talents.

We continuously invest in our teammates and company culture to ensure employee satisfaction, health, and well-being.

We hire and promote employees based upon their unique experiences, abilities, talents, and drive. This naturally leads to a workforce rich with diverse backgrounds and perspectives, leading to improved outcomes.

We focus on succession planning and talent development to produce a strong, stable team that is the foundation of our success. We are responsible for and implement succession planning in all leadership positions, both in the short term and the long term.

We offer benefits and support reinforcing our emphasis on the health and well-being of our teammates, including 16 weeks of paid time for parental leave to new mothers and fathers, a longstanding policy of workplace flexibility for our teammates to attend to personal and family matters during the workweek, office environments focused on natural light and ergonomic office furniture including adjustable height desks, access to Company-provided healthy snacks and drinks, paid time annually to volunteer in local communities, and a bonus structure at all levels of the organization.

We evaluate team engagement and retention and include those in our goals on which all teammates are compensated. Every teammate is surveyed annually via a third-party confidential survey. The teammate engagement score consists of the average of the responses to the questions that comprise the engagement index, on a scale of 1 to 5, for all teammates who complete the survey during the year. Our overall team engagement score for the 2023 Annual Lifecycle Surveys was 4.74, with a 100% overall response rate, compared to the target score of 4.25.

 

As of December 31, 2023, we had 61 full-time teammates performing asset management, development or transactional services and managing corporate and area functions. None of our employees are represented by labor unions.

 

In 2023, we were recognized with Healthiest Employers Awards in South Florida, Washington, D.C., and Denver, ranking #1 in our category for South Florida and #2 in our category for Colorado and Washington, D.C. The Healthiest Employers Awards honor companies with policies and initiatives promoting the health and well-being of their employees. Healthiest Employers takes a holistic view of worksite health, evaluating the extent of leadership team buy-in, including how well they understand the needs of the employee population and how they proactively support well-being.

 

5

 


 

 

 

Available Information

Our combined Annual Report on Form 10-K, our combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K filed by us or Aimco Operating Partnership, and any amendments to any of those reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable after filing through our website at www.aimco.com. The information contained on our website is not incorporated into this Annual Report.

ITEM 1A. RISK FACTORS

The risk factors noted in this section, and other factors noted throughout this Annual Report, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement.

RISKS RELATED TO BUSINESS

Adverse economic and geopolitical conditions, health crises and dislocations in the financial and credit markets could affect our ability to collect rents and late fees from tenants, and our ability to evict tenants, in addition to having other negative effects on our business, which in turn could adversely affect our financial condition and results of operations.

Adverse economic and geopolitical conditions, local, regional, national, or international health crises and dislocations in the credit markets could negatively impact our tenants and our operations. The occurrence of regional epidemics or a global pandemic, may adversely affect our operations, financial condition, and results of operations. These conditions also may add uncertainty to operations and may cause supply chain disruptions.

The effects of a health crisis, adverse economic or geopolitical events or dislocation in the financial and credit markets have negatively impacted or would negatively impact our operations or those of entities in which we hold a partial interest, including:

our ability to collect rents and late fees on a timely basis or at all, without reductions or other concessions;
our ability to evict residents for non-payment or for other reasons;
our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption;
fluctuations in regional and local economies, local real estate conditions, and rental rates;
interruptions in real estate development and redevelopment activities due to supply chain disruptions;
our ability to dispose of communities at all or on terms favorable to us; and
our ability to complete developments and redevelopments and other construction projects as planned.

Given the nature of the effects of a potential epidemic, pandemic, or other health crisis, it remains challenging to predict the ultimate impact of such events on the global economy, our residents and commercial tenants, our communities, and the operations of entities in which we hold an interest (including our economic interest in the partnership owning the “Parkmerced Apartments”). Such events, depending on their nature, duration, and intensity, could have a material adverse effect on our operating results and financial condition. An epidemic, pandemic, or other health crisis also may have the effect of heightening many of the other risks described below.

Development, redevelopment, and construction risks could affect our profitability.

Development and redevelopment are subject to numerous risks, including the following:

we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third-party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;
we may incur costs that exceed our original estimates due to increased material, labor, or other factors and costs, such as those resulting from litigation, program changes, inflation, interest rate increases or supply chain disruptions;
we may be unable to complete construction and lease-up of an apartment community on schedule, including as a result of global supply chain disruptions, resulting in increased construction and financing costs and a decrease in expected rental revenues;

6

 


 

 

occupancy rates and rents at an apartment community may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development of competing communities;
we may be unable to obtain financing, including construction loans, with favorable terms, or at all, which may cause us to delay or abandon an opportunity;
we may abandon opportunities that we have already begun to explore, or stop projects we have already commenced, for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover costs already incurred in exploring those opportunities;
we may incur liabilities to third parties during the development or redevelopment process and we may be faced with claims for construction defects after a property has been developed;
we may face opposition from local community or political groups with respect to the development, construction, or operations at a particular site;
health and safety incidents or other accidents on site may occur during development;
unexpected events or circumstances may arise during the development or redevelopment process that affect the timing of completion and the cost and profitability of the development or redevelopment;
loss of a key member of a redevelopment or development team could adversely affect our ability to deliver developments and redevelopments on time and within our budget;
government restrictions, standards or regulations intended to reduce greenhouse gas emissions and potential climate change impacts may increase in the future in the form of restrictions or additional requirements on development in certain areas; and
environmental, social, governance and other sustainability matters and our responses to these matters could impact development.

Some of these development risks may be heightened given current uncertain and potentially volatile market conditions. If market volatility causes economic conditions to remain unpredictable or to trend downwards, we may not achieve our expected returns on properties under development and we could lose some or all of our investments in those properties. In addition, the lead time required to develop, construct, and lease-up a development property may increase, which could adversely impact our projected returns or result in a termination of the development project.

In addition, we may serve as either the construction manager or the general contractor for our development projects. The construction of real estate projects entails unique risks, including risks that the project will fail to conform to building plans, specifications, and timetables. These failures could be caused by labor strikes, weather, government regulations, and other conditions beyond our control. In addition, we may become liable for injuries and accidents occurring during the construction process that are underinsured.

Failure to generate sufficient net operating income may adversely affect our liquidity, limit our ability to fund necessary capital expenditures, or adversely affect our ability to pay dividends or distributions.

Our ability to fund necessary capital expenditures on our communities and make payments to our investors depends on, among other things, our ability to generate net operating income in excess of required debt payments and our ability to collect on interest and principal payments due to us. If we are unable to fund capital expenditures on our communities, we may not be able to preserve the competitiveness of our communities, which could adversely affect their net operating income and long-term value.

Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including:

the general economic climate;
an inflationary environment in which the costs to operate and maintain our communities increase at a rate greater than our ability to increase rents, which we can only do upon renewal of existing leases or at the inception of new leases;
competition from other apartment communities and other housing options;

 

7

 


 

 

local conditions, such as loss of jobs, unemployment rates, or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;
changes in governmental regulations and the related cost of compliance;
changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing; and
changes in interest rates and the availability of financing.

Our business and financial results could be adversely affected by significant inflation, higher interest rates or deflation.

Inflation can adversely affect us by increasing costs of land, materials and labor. In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on housing affordability. Rising interest rates increase the borrowing costs on new debt and could affect fair value of our investments. In an inflationary environment, our cost of capital, labor and materials can increase and the purchasing power of our cash resources can decline, which can have an adverse impact on our business or financial results.

Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels. This could lead to deterioration in economic conditions, including an increase in the rate of unemployment. Deflation could also cause the value of our real estate to decline. These, or other factors related to deflation, could have a negative impact on our business or financial results.

Our ability to continue to grow or maintain our pipeline of development and redevelopment opportunities may be constrained.

We source development and redevelopment opportunities through various means, including from our operating portfolio and property acquisitions. We may be unable to identify and complete acquisitions of properties compatible with our investment strategy. We may be unable to locate properties that will produce returns with a sufficient spread to our cost of capital. The inability to source opportunities could impede our growth and could have a material adverse effect on us.

Our properties are geographically concentrated in Florida, Chicago, and in the Northeast region of the United States, which makes us more susceptible to regional and local adverse economic and other conditions than if we owned a more geographically diversified portfolio.

The majority of our properties are located in Florida, Chicago, and in the Northeast region of the United States. As a result, we are particularly susceptible to adverse economic or other conditions in these markets (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, and the cost of complying with governmental regulations or increased regulation), as well as to natural disasters (including earthquakes, storms, and hurricanes), potentially adverse effects of “global warming,” and other disruptions that occur in these markets (such as terrorist activity or threats of terrorist activity and other events), any of which may have a greater impact on the value of our assets or on our operating results than if we owned a more geographically diversified portfolio.

We cannot assure you that these markets will grow or that underlying real estate fundamentals will be favorable to owners, operators, and developers of multifamily, retail, or office assets, or future development assets. Our operations may also be affected if competing assets are built in these markets. Moreover, submarkets within our core markets may be dependent upon a limited number of industries. Any adverse economic or other conditions, or any decrease in demand for office, multifamily, or retail assets could adversely impact our financial condition and results of operations.

Our development projects may subject us to certain liabilities, and we are subject to risks associated with developing properties in partnership with others.

We may hire and supervise third-party contractors to provide construction, engineering, and various other services for development projects. Certain of these contracts may be structured such that we are the principal rather than the agent. As a result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction defects, negligent performance of work or other similar actions by third parties we have engaged.

 

8

 


 

 

Adverse outcomes of disputes or litigation could negatively impact our business, results of operations, and financial condition, particularly if we have not limited the extent of the damages for which we may be liable, or if our liabilities exceed the amounts of the insurance that we carry. Moreover, our tenants may seek to hold us accountable for the actions of contractors because of our role even if we have technically disclaimed liability as a legal matter, in which case we may determine it necessary to participate in a financial settlement for purposes of preserving the tenant or customer relationship or to protect our corporate brand. To the extent our tenants are obligated to reimburse us, acting as a principal may also mean that we pay a contractor before we have been reimbursed by our tenants. This exposes us to additional risks of collection in the event of a bankruptcy, insolvency, or a condominium purchaser default. The reverse can occur as well, where a contractor we have paid files for bankruptcy protection or commits fraud with the funds before completing a project that we have funded in part or in full.

Additionally, we use partnerships and limited liability companies to develop some of our real estate investments. Acting through our wholly-owned subsidiaries, we typically will be the general partner or managing member in these partnerships or limited liability companies. There are, however, instances in which we may not control or even participate in management or day-to-day operations of these properties. The use of partnerships and limited liability companies involve special risks associated with the possibility that:

a partner or member may have interests or goals inconsistent with ours;
a general partner or managing member may take actions contrary to our instructions, requests, policies, or objectives with respect to our real estate investments;
a partner or member could experience financial difficulties that prevent it from fulfilling its financial or other responsibilities to the project; or
a partner may not fulfill its contractual obligations.

In the event any of our partners or members file for bankruptcy, we could be precluded from taking certain actions affecting our project without bankruptcy court approval, which could diminish our control over the project even if we were the general partner or managing member. In addition, if the bankruptcy court were to discharge the obligations of our partner or member, it could result in our ultimate liability for the project being greater than originally anticipated.

Further, disputes between us and a partner may result in litigation or arbitration that may increase our expenses and prevent our management from focusing their time and attention on our business.

To the extent we are a general partner, we may be exposed to unlimited liability, which may exceed our investment or equity in the partnership. If one of our subsidiaries is a general partner of a particular partnership, it may be exposed to the same kind of unlimited liability.

Development of properties may entail a lengthy, uncertain, and costly entitlement process.

Approval to develop real property sometimes requires political support and generally entails an extensive entitlement process involving multiple and overlapping regulatory jurisdictions and often requires discretionary action by local governments. Real estate projects must generally comply with local land development regulations and may need to comply with state and federal regulations. We may incur substantial costs to comply with legal and regulatory requirements. An increase in legal and regulatory requirements may cause us to incur substantial additional costs, or in some cases cause us to determine that the property is not feasible for development. In addition, our competitors and local residents may challenge our efforts to obtain entitlements and permits for the development of properties. The process to comply with these regulations is usually lengthy and costly, may not result in the approvals we seek, and can be expected to materially affect our development activities.

Government regulations and legal challenges may delay the start or completion of the development of our communities, increase our expenses or limit our building of apartments or other activities.

Various local, state, and federal statutes, ordinances, rules, and regulations concerning building, health and safety, site and building design, environment, zoning, sales, and similar matters apply to or affect the real estate development industry. In addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted or approvals already obtained depends on factors beyond our control, such as changes in federal, state, and local policies, rules and regulations, and their interpretations and application.

 

9

 


 

 

Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps. If municipalities in which we operate take such actions, it could have an adverse effect on our business by causing delays, increasing our costs, or limiting our ability to operate in those municipalities. These measures may reduce our ability to develop apartment communities and to build and sell other real estate development projects in the affected markets, including with respect to land we may already own, and create additional costs and administration requirements, which in turn may harm our future sales, margins, and earnings.

In addition, there is a variety of legislation being enacted, or considered for enactment, at the federal, state, and local level relating to energy and climate change. This legislation relates to items such as carbon dioxide emissions control and building codes that impose energy efficiency standards. New building code requirements that impose stricter energy efficiency standards could significantly increase our cost to construct buildings. Such environmental laws may affect, for example, how we manage storm water runoff, wastewater discharges, and dust; how we develop or operate properties on or affecting resources such as wetlands, endangered species, cultural resources, or areas subject to preservation laws; and how we address contamination. As climate change concerns continue to grow, legislation and regulations of this nature are expected to continue and increase costs of compliance. In addition, it is possible that some form of expanded energy efficiency legislation may be passed by the U.S. Congress or federal agencies and certain state legislatures, which may, despite being phased in over time, significantly increase our costs of building apartment communities and the sale price to our buyers and adversely affect our sales volumes. We may be required to apply for additional approvals or modify our existing approvals because of changes in local circumstances or applicable law.

Energy-related initiatives affect a wide variety of companies throughout the United States and the world and, because our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, they could have an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are burdened with expensive cap and trade and similar energy-related taxes and regulations. Our noncompliance with environmental laws could result in fines and penalties, obligations to remediate, permit revocations, other sanctions and reputational harm.

Governmental regulation affects not only construction activities but also sales activities, mortgage lending activities, and other dealings with consumers. Further, government agencies routinely initiate audits, reviews, or investigations of our business practices to ensure compliance with applicable laws and regulations, which can cause us to incur costs or create other disruptions in our business that can be significant. Further, we may experience delays and increased expenses as a result of legal challenges to our proposed communities, whether brought by governmental authorities or private parties.

Competition could limit our ability to lease apartment homes, increase or maintain rents or execute our development strategy.

Our apartment communities compete for residents with other housing alternatives, including other rental apartments and condominiums, and, to a lesser degree, single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing, as well as the lack of household formation and job creation in a particular area, could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.

In addition, there are many developers, managers, and owners of apartment real estate and underdeveloped land, as well as REITs, private real estate companies, and investors, that compete with us, some of whom have greater financial resources and market share than us. If our competitors prevent us from realizing our real estate development objectives, our performance may fall short of our expectations and adversely affect our business.

Because real estate investments are relatively illiquid, we may not be able to sell apartment communities or other assets when appropriate.

Real estate investments are relatively illiquid and generally cannot be sold quickly. REIT tax rules also restrict our ability to sell apartment communities. Thus, we may not be able to change our portfolio promptly in response to changes in economic or other market conditions. Our ability to dispose of apartment communities in the future will depend on prevailing economic and market conditions, including the cost and availability of financing. This could have a material adverse effect on our financial condition or results of operations.

 

10

 


 

 

Climate change may adversely affect our business.

To the extent that significant changes in the climate occur in areas where our properties are located, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Climate change may also have indirect effects on our business by increasing the costs of (or making unavailable) insurance on favorable terms, or at all, or requiring us to spend funds to repair and protect our properties against such risks. Should the impact of climate change be material in nature, including significant property damage to or destruction of our properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and regulations based on concerns about climate change could result in increased capital expenditures on our properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our net income.

Potential liability or other expenditures associated with potential environmental contamination may be costly.

Various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of removal or remediation of certain potentially hazardous materials that may be present in the land or buildings. Potentially hazardous materials may include polychlorinated biphenyls, petroleum-based fuels, lead-based paint, or asbestos, among other materials. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such real estate as well as the ability to sell or finance such real estate. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions, damages to natural resources, and for potential fines or penalties in connection with such damage or with respect to the improper management of hazardous materials. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur, or personal injury, disease, disability, or other infirmities related to the alleged presence of hazardous materials at an apartment community. In addition to potential environmental liabilities or costs associated with our current real estate, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or real estate we no longer own or operate.

Rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability.

State and local governmental agencies may introduce rent control laws or other regulations that limit our ability to increase rental rates, which may affect our rental income. Especially in times of recession and economic slowdown, rent control initiatives can acquire significant political support. If rent controls unexpectedly became applicable to certain of our properties, our revenue from and the value of such properties could be adversely affected.

Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.

Under the Americans with Disabilities Act of 1990 (“ADA”), all places intended to be used by the public are required to meet certain federal requirements related to access and use by disabled persons. The Fair Housing Amendments Act of 1988 (“FHAA”) requires apartment communities first occupied after March 13, 1991, to comply with design and construction requirements for disabled access. For those apartment communities receiving federal funds, the Rehabilitation Act of 1973 also has requirements regarding disabled access. These and federal, state, and local laws may require structural modifications to our apartment communities or changes in policy/practice or affect renovations of the communities. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that our apartment communities are substantially in compliance with present requirements, we may incur unanticipated expenses to comply with the ADA, the FHAA, and the Rehabilitation Act of 1973 in connection with the ongoing operation or redevelopment of our apartment communities.

Moisture infiltration and resulting mold remediation may be costly.

Although we are proactively engaged in managing moisture intrusion and preventing the presence of mold at our apartment communities, it is not unusual for periodic moisture intrusion to cause mold in isolated locations within an apartment community. We have implemented policies, procedures, and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will manage mold exposure at our apartment communities and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. We have only limited insurance coverage for property damage claims arising from the presence of mold and for personal injury claims related to mold exposure.

 

11

 


 

 

Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our financial condition and results of operations.

We are insured for a portion of our real estate assets’ exposure to casualty losses resulting from fire, earthquake, hurricane, tornado, flood, and other perils, which insurance is subject to deductibles and self-insurance retention. We recognize casualty losses or gains based on the net book value of the affected asset and the amount of any related insurance proceeds. In many instances, the actual cost to repair or replace the apartment community may exceed its net book value and any insurance proceeds. We recognize the uninsured portion of losses as casualty losses in the periods in which they are incurred. In addition, we are self-insured for a portion of our exposure to third-party claims related to our workers’ compensation coverage and general liability exposure. With respect to our exposure to claims of third parties, we establish reserves at levels that reflect our known and estimated losses. The ultimate cost of losses and the impact of unforeseen events may vary materially from recorded reserves, and variances may adversely affect our operating results and financial condition. We purchase insurance to reduce our exposure to losses and limit our financial losses on large individual risks. The availability and cost of insurance are determined by market conditions outside our control. No assurance can be made that we will be able to obtain and maintain insurance at the same levels and on the same terms as we do today. If we are not able to obtain or maintain insurance in amounts we consider appropriate for our business, or if the cost of obtaining such insurance increases materially, we may have to retain a larger portion of the potential loss associated with our exposures to risks.

Natural disasters and severe weather may affect our financial condition and results of operations.

Natural disasters such as earthquakes and severe weather such as hurricanes may result in significant damage to our real estate assets. The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather event (such as a hurricane) affecting a region may have a significant adverse effect on our financial condition and results of operations. We cannot accurately predict natural disasters or severe weather, or the number and type of such events that will affect us. As a result, our operating and financial results may vary significantly from one period to the next. Although we anticipate and plan for losses, there can be no assurance that our financial results will not be adversely affected by our exposure to losses arising from natural disasters or severe weather in the future that exceed our previous experience and assumptions.

We depend on our senior management.

Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational, financing, acquisition, and disposition activity. Members of our senior management team have national or regional industry reputations that attract business and investment opportunities and assist us in negotiations with lenders, existing and potential tenants, and other industry participants. The loss of services of one or more members of our senior management team, or our inability to attract and retain similarly qualified personnel, could adversely affect our business, diminish our investment opportunities, and weaken our relationships with lenders, business partners, existing and prospective tenants, and industry participants, which could adversely affect our financial condition, results of operations, and cash flow.

We rely on our property managers to manage our properties. If our property managers fail to efficiently manage our properties, tenants may not renew their leases, or we may become subject to unforeseen liabilities.

Our properties are managed by third parties. We do not supervise our third-party property managers or their employees on a day-to-day basis and we cannot assure you that they will manage such properties in a manner that is consistent with their obligations under our agreements, that they will not be negligent in their performance or engage in any criminal or fraudulent activity, or that they will not otherwise default on their management obligations to us. If any of the foregoing occurs, the relationships with our tenants at such properties could be damaged, which may cause the tenants not to renew their leases, and we could incur liabilities resulting from loss or injury to the properties or to persons at the properties. If we are unable to lease the properties or we become subject to significant liabilities as a result of our third-party property managers’ management performance, our financial condition and results of operations could be substantially harmed.

 

12

 


 

 

Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.

Information technology, communication networks, and related systems (“IT Systems”), including systems maintained by third-party vendors with which we do business are essential to the operation of our business. We use these systems to manage our vendor relationships, internal communications, accounting and record-keeping systems, and many other key aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential, personal and other information (“Confidential Information") in our computer systems and networks, which also depend on the strength of our procedures and the effectiveness of our internal controls. We own and manage some of these IT Systems, but also rely on third parties for a range of IT Systems and related products and services, including but not limited to cloud computing services. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyberattacks.

We face numerous and evolving risks associated with energy blackouts, natural disasters, terrorism, war, telecommunication failures, and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems. The risk of a cyber incident has generally increased as the number, intensity and sophistication of attempted attacks have increased globally, including by computer hackers, foreign governments, information service interruptions and cyber terrorists, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware. Techniques used in cyber incidents evolve frequently, may originate from less regulated and remote areas of the world and be difficult to detect and may not be recognized until launched against a target. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, making it impossible for us to entirely eliminate this risk. Because we make use of third-party suppliers and service providers that support our internal- and external-facing operations, successful cyberattacks that disrupt or result in unauthorized access to third party IT Systems can materially impact our operations and financial results. Aimco predecessor and our third-party vendors have been impacted by security incidents in the past and we and our third-party vendors will likely continue to experience security incidents of varying degrees. For example, unauthorized parties, whether within or outside the Company, may disrupt or gain access to our IT Systems, or those of third parties with whom we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering. While we do not believe that past incidents have had a material impact to date, as our reliance on technology increases, so do the risks of a security incident. The occurrence of any of the foregoing risks could have a material adverse effect on us.

We may also incur additional costs to remedy damages caused by such disruptions. There can be no assurance that our security efforts and measures will be fully implemented, complied with or effective or that attempted security breaches or disruptions would not be successful or damaging. Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss, or misuse of the Confidential Information, and a loss of confidence in our security measures, which could harm our business, operating results, and financial condition. We also cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.

Compliance with ever evolving federal and state laws relating to the handling of information about individuals involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations, and financial condition.

We receive, store, handle, transmit, use and otherwise process business information and information related to individuals, including from and about actual and prospective tenants, as well as our employees and service providers. We also depend on a number of third-party vendors in relation to the operation of our business, a number of which we rely on to process personal data on our behalf. While we may not be responsible for the compliance with certain laws, failure by such third parties to comply with those laws could result in harm to our reputation and brand and require us to expend significant resources.

We and our vendors are subject to a variety of federal and state data privacy laws, rules, regulations, industry standards and other requirements, including those that apply generally to the handling of information about individuals, and those that are specific to certain industries, sectors, contexts, or locations. These requirements, and their application, interpretation and amendment are constantly evolving and developing.

 

13

 


 

 

We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act (the “CCPA” (which became effective on January 1, 2020 and is amended by the California Privacy Rights Act)), relating to the collection, use, disclosure and security of employee and business contact data. For other personal data, including tenant, we rely on our third-party partners to store and process such data. Among other things, the CCPA: requires disclosures to such residents about the data collection, use and disclosure practices of covered businesses; provides such individuals expanded rights to access, delete, and correct their personal information, and opt-out of certain sales or transfers of personal information; and provides such individuals with a private right of action and statutory damages for certain data breaches. The enactment of the CCPA is prompting a wave of similar legislative developments in other states in the United States, which creates the potential for a patchwork of overlapping but different state laws. Evolving compliance and operational requirements under the CCPA and the privacy and data security laws of other jurisdictions in which we operate impose significant costs that are likely to increase over time. Our failure, or the failure of third-party partners we rely on to process data, to comply with laws, rules, and regulations related to privacy and data protection could harm our business or reputation.

Additionally, we rely on third-party property managers to run background checks on prospective tenants. Those third-party managers are considered “users” of consumer reports provided by consumer reporting agencies (“CRAs”) under the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act (collectively, “FCRA”). FCRA regulates and protects consumer information and, among other things, imposes specific obligations “users” of consumer reports. Such obligations include notifying consumers when such reports are used to make an adverse decision, and, in the context of completing employee background checks, providing a notice containing certain disclosures to the consumer and obtaining their consent. Noncompliance with the FCRA can lead to civil and even criminal penalties, and it permits consumers to bring a private right of action if they are unsatisfied with the dispute resolution process.

Further, laws, regulations, and standards covering marketing, advertising, and other activities conducted by telephone, email, mobile devices, and the internet may be or become applicable to our business, such as the Telephone Consumer Protection Act (the “TCPA”), the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”), and similar state consumer protection and communication privacy laws, such as California’s Invasion of Privacy Act.

Third-party property managers send short message service, or SMS, text messages to tenants. The actual or perceived improper sending of such text messages may subject us to potential risks, including liabilities or claims relating to consumer protection laws such as the TCPA. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct telemarketing and/or SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs. Any future such litigation against us could be costly and time-consuming to defend. In particular, the TCPA imposes significant restrictions on the ability to make telephone calls or send text messages to mobile telephone numbers without the prior consent of the person being contacted. Federal or state regulatory authorities or private litigants may claim that the notices and disclosures we provide, form of consents we obtain or our SMS texting practices are not adequate or violate applicable law. This may in the future result in civil claims against us. Claims that we have violated the TCPA could be costly to litigate, whether or not they have merit, and could expose us to substantial statutory damages or costly settlements.

Third-party property managers send marketing messages via email and are subject to the CAN-SPAM Act. The CAN-SPAM Act imposes certain obligations regarding the content of emails and providing opt-outs (with the corresponding requirement to honor such opt-outs promptly). While we strive to ensure that all of our marketing communications comply with the requirements set forth in the CAN-SPAM Act, any violations could result in the FTC seeking civil penalties against us.

Moreover, as our third-party property managers accept debit and credit cards for payment, they are subject to the Payment Card Industry Data Security Standard (“PCI-DSS”), issued by the Payment Card Industry Security Standards Council. PCI-DSS contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and transmission of cardholder data. If our third-party property managers or other service providers are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could materially and adversely affect our business.

Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other requirements could result in proceedings or actions against us by individuals, consumer rights groups, government agencies, or others. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, results of

operations, and financial condition could be materially adversely affected.

 

 

14

 


 

 

Our implementation of a new enterprise resource planning ("ERP") system may adversely affect our business, results of operations, and financial condition or the effectiveness of our internal control over financial reporting.

We are engaged in a phased implementation of a new ERP system, which will to continue throughout 2024. During the third quarter of 2023, we implemented the first phase, which replaced a legacy system where a significant portion of our transactions were originated, processed, or recorded. The ERP system is designed to accurately maintain our financial records, enhance operational functionality and provide timely information to our management team related to the operation of our business. The implementation of a new ERP system has required, and will continue to require, the investment of significant financial and human capital resources. While we have invested, and continue to invest, significant resources in planning, project management, consulting, and training, it is possible that significant implementation, operational, and functionality issues may arise during the course of implementing and utilizing the ERP system, and it is further possible that we may experience significant delays, increased costs, and other difficulties that are not presently contemplated. Any significant disruptions, delays, deficiencies, or errors in the design, implementation, and utilization of the ERP system could adversely affect our operations, prevent us from accurately and timely reporting our financial results, and negatively impact our business, results of operations and financial condition. Additionally, if we do not effectively implement and utilize the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to adequately assess its effectiveness could be delayed.

We do not have control over the partnership owning the Parkmerced Apartments, the operation of which could adversely affect our financial condition and results of operations.

Our indirect interest in the partnership owning the Parkmerced Apartments is subject to certain risks, including, but not limited to, exposure to the skill and capital of the controlling party and those resulting from fluctuations in San Francisco occupancy rates, operating disruptions due to effects of the pandemic, and the current economic situation which may result in all, or a portion of the loan not being repaid. In November 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to the partnership owning the Parkmerced Apartments (the “Mezzanine Investment”). The loan bears interest at a 10% annual rate, accruing if not paid from property operations. In June 2023, we closed on the sale of a 20% non-controlling participation in the loan for $33.5 million. In connection with the participation sold, the purchaser also made a $4.0 million non-refundable payment for the option to acquire the remaining 80% for an additional $134 million plus our annualized return. The option expired unexercised in the quarter ended December 31, 2023. We have recognized a $158.0 million non-cash impairment to reduce the carrying value of loan to zero as of December 31, 2023. While we have impaired and written down the carrying value of the Mezzanine Investment to zero, risks remains that all or a portion of the loan will not be repaid. There can be no assurances that we will not take additional charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our financial condition and results of operations.

There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR.

There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR. The Separation was designed to minimize conflicts of interest between us and AIR, and the volume of transactions with AIR has significantly decreased since the Separation. While AIR is not a related party, there can be no assurance that such conflicts, or appearance of conflicts, do not exist.

Actual, potential, or perceived conflicts could give rise to investor dissatisfaction, settlements with stockholders, litigation or regulatory inquiries or enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual, or perceived conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse impact on our reputation, which could materially adversely affect our business in a number of ways, including causing a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities, and a resulting increased risk of litigation and regulatory enforcement actions.

 

15

 


 

 

Our business could be negatively affected as a result of the actions of activist stockholders.

Publicly traded companies have increasingly become subject to campaigns by investors advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases, or even sales of assets or the entire company. We have been subject to stockholder activism in the past and given our stockholder composition and other factors, it is possible our stockholders or future activist stockholders may attempt to effect such changes in the future. Responding to proxy contests and other actions by such activist stockholders or others would be costly and time-consuming, disrupt our operations and divert the attention of our board of directors (the "Board") and senior management team from the pursuit of business strategies, which could adversely affect our results of operations and financial condition. Additionally, perceived uncertainties as to our future direction as a result of stockholder activism or changes to the composition of our Board may lead to the perception of a change in the direction of the business, instability, or lack of continuity, which may be exploited by our competitors, cause concern to our current or potential lenders, partners, or others with whom we do business, and make it more difficult to attract and retain qualified personnel.

RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING

Our debt financing could result in foreclosure of our apartment communities, prevent us from making distributions on our equity, or otherwise adversely affect our liquidity.

A significant number of our assets, including apartment communities, land, and construction projects serve as collateral for our credit facility, property debt and construction loans. Our secured credit facility matures in December 2024, prior to consideration of its one-year extension option. Certain of our subsidiaries have existing secured property-level debt equal to approximately $852.5 million and construction loans of approximately $309.5 million as of December 31, 2023. Over time, we are likely to become party to additional financing arrangements, including credit facilities or other bank debt, bonds, and mortgage financing. Our organizational documents do not limit the amount of debt that we may incur, and we have significant amounts of debt outstanding. Payments of principal and interest may leave us with insufficient cash resources to operate our communities or pay distributions required to maintain our qualification as a REIT.

In connection with such financing activities, we are subject to the risk that our cash flow from operations will be insufficient to make required payments of principal and interest, and the risk that our indebtedness may not be refinanced or that the terms of any refinancing will not be as favorable as the terms of then-existing indebtedness. If we fail to make required payments of principal and interest on our non-recourse property debt, our lenders could foreclose on the apartment communities and other collateral securing such debt, which would result in the loss to us of income and asset value.

Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity.

Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit markets. During periods of economic uncertainty, the United States credit markets may experience significant liquidity disruptions, which may cause the spreads on debt financings to widen considerably and make obtaining financing, including, but not limited to non-recourse property debt secured by stabilized properties, construction loans, and corporate borrowings such as those under our credit facilities, more difficult. In particular, apartment borrowers have benefited from the historic willingness of the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), to make substantial amounts of loans secured by multifamily properties, even in times of economic distress. These two lenders are federally chartered and subject to federal regulation, which is subject to change, making uncertain their prospects and ability to provide liquidity in a future downturn.

If our ability to obtain financing is adversely affected, we may be unable to satisfy scheduled maturities on existing financings through other sources of liquidity, which could result in a lender foreclosure on the apartment communities securing such debt and loss of income and asset value, both of which would adversely affect our liquidity.

Increases in interest rates would increase our interest expense and reduce our profitability and could adversely affect our business, operating results, and financial condition.

Our revolving secured credit facility contains a variable interest rate, which may be based, in part, on the Secured Overnight Financing Rate ("SOFR"). We also have certain non-recourse property debt and construction loans that are based on variable interest rate indexes. An increase or decrease in these variable interest rate indexes would likely increase or decrease our interest expense. An increase in interest expense may affect our profitability.

16

 


 

 

Covenant restrictions may limit our operations and impact our ability to make payments to our investors.

Some of our existing and/or future debt and other securities may contain covenants that restrict our activities. These may include covenants that limit our operations or impact our ability to make distributions or other payments unless certain financial tests or other criteria are satisfied, as well as certain other customary affirmative and negative covenants.

We may increase leverage in executing our development plan, which could further exacerbate the risks associated with our indebtedness.

We may decide to increase our leverage to execute our development plan. We will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, including the estimated market value of our assets and the ability of particular assets, and our company as a whole, to generate cash flow to cover the expected debt service. Although our credit facility may limit our ability to incur additional indebtedness, our governing documents do not limit the amount of debt we may incur, and we may change our target debt levels at any time without the approval of our stockholders. In addition, we may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we increase leverage, the risk related to our indebtedness could also increase.

RISKS RELATED TO TAX LAWS AND REGULATIONS

Aimco may fail to qualify as a REIT.

If Aimco fails to qualify as a REIT, Aimco will not be allowed a deduction for dividends paid to its stockholders in computing its taxable income and will be subject to United States federal income tax at regular corporate rates. This would substantially reduce our funds available for general corporate usage or for distribution to our investors. Unless entitled to relief under certain provisions of the Code, Aimco also would be disqualified from taxation as a REIT for the four taxable years following the year during which it ceased to qualify as a REIT. In addition, Aimco's failure to qualify as a REIT may place us in default under our credit facilities.

We believe Aimco operates, and has since its taxable year ended December 31, 1994, operated, in a manner that enables it to meet the requirements for qualification and taxation as a REIT. However, qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Moreover, even a technical or inadvertent mistake could jeopardize Aimco's REIT status. Aimco's continued qualification as a REIT will depend on its satisfaction of certain asset, income, investment, organizational, distribution, stockholder ownership, and other requirements on a continuing basis. Aimco's ability to satisfy the asset tests depends upon the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we do not obtain independent appraisals. Aimco's compliance with the REIT annual income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debt or equity for United States federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements. Accordingly, there can be no assurance that the Internal Revenue Service (the “IRS”), will not contend that Aimco's interests in subsidiaries or other issuers constitute a violation of the REIT requirements. Moreover, future economic, market, legal, tax, or other considerations may cause Aimco to fail to qualify as a REIT, or the Board may determine to revoke its REIT status.

REIT distribution requirements limit our available cash.

As a REIT, Aimco is subject to annual distribution requirements. Aimco pays distributions, including taxable stock dividends, intended to enable it to satisfy its distribution requirements. This limits the amount of cash available for other business purposes, including amounts to fund our growth. Aimco generally must distribute annually at least 90% of its “real estate investment trust taxable income,” which is generally equivalent to net taxable ordinary income, determined without regard to the dividends paid deduction and excluding any net capital gain, in order to qualify as a REIT. To the extent that Aimco does not distribute all of its net capital gain, or distributes at least 90% but less than 100%, of its "real estate investment trust taxable income," it will be required to pay United States federal corporate income tax on the undistributed amount. We intend to make distributions to Aimco's stockholders to comply with the requirements applicable to REITs under the Code (which may be all cash or combination of cash and stock satisfying the requirements of applicable law). However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell apartment communities or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code.

17

 


 

 

Aimco may be subject to federal, state, and local income taxes in certain circumstances.

Even as a REIT, Aimco may be subject to United States federal income and excise taxes in various situations, such as on its undistributed income, as described above. Aimco could also be required to pay a 100% tax on any net income on non-arm’s-length transactions between us and a taxable REIT subsidiary (“TRS”) and on any net income from sales of apartment communities or other property treated as held primarily for sale to customers in the ordinary course of its business. State and local tax laws may not conform to the United States federal income tax treatment, and Aimco may be subject to state or local taxation in various state or local jurisdictions in which Aimco transacts business. Any taxes imposed on Aimco would reduce our operating cash flow and net income and could negatively impact our ability to pay dividends and distributions.

Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.

REITs are entitled to a United States federal income tax deduction for dividends paid to their stockholders. Through this dividends paid deduction, a REIT may reduce or eliminate its entity-level United States federal income tax liability, which generally results in a lower combined tax liability of the REIT and its stockholders as compared to that of the combined tax liability of other taxable C-corporations and their stockholders. Notwithstanding this combined benefit, as discussed below, dividends payable by REITs may result in marginally higher taxes to the stockholder.

C-corporations are generally required to pay a corporate-level United States federal income tax on their income, which will reduce the amount available for distribution to stockholders. Dividends paid by a C-corporation may constitute "qualified dividends." The maximum United States federal tax rate applicable to income from “qualified dividends” payable to United States stockholders that are individuals, trusts, and estates is currently 20%, plus the 3.8% investment tax surcharge. While dividends payable by REITs are generally not eligible for the qualified dividend reduced rates, stockholders that are individuals, trusts, or estates, and meet certain requirements, may generally deduct 20% of the aggregate amount of ordinary dividends from REITs. This deduction is available for taxable years beginning after December 31, 2017, and before January 1, 2026, and will generally cause the maximum tax rate for ordinary dividends from REITs to be 29.6%, plus the 3.8% investment tax surcharge. The more favorable tax rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts, and estates to perceive investments in REITs to be relatively less attractive than investments in the shares of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including Aimco Common Stock.

Complying with the REIT requirements may cause Aimco to forgo otherwise attractive business opportunities.

To qualify as a REIT, Aimco must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of its assets, the amounts distributed to its stockholders, and the ownership of its stock. As a result of these tests, Aimco may be required to make distributions to stockholders at disadvantageous times or when Aimco does not have funds readily available for distribution, forgo otherwise attractive investment opportunities, liquidate assets in adverse market conditions, or contribute assets to a TRS that is subject to regular corporate federal income tax.

Changes to United States federal income tax laws could materially and adversely affect Aimco and Aimco’s stockholders.

The present United States federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial, or administrative action at any time, which could affect the United States federal income tax treatment of an investment in Aimco's Common Stock. The United States federal income tax rules dealing with REITs are constantly under review by persons involved in the legislative process, the IRS, and the United States Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. We cannot predict how changes in the tax laws might affect Aimco or its stockholders. Revisions in federal tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT and the tax considerations relevant to an investment in Aimco's Common Stock or could cause us to change our investments and commitments.

 

18

 


 

 

If the Aimco Operating Partnership were to fail to qualify as a partnership for federal income tax purposes, Aimco would fail to qualify as a REIT and suffer other adverse consequences.

We believe that the Aimco Operating Partnership has been organized and operated in a manner that will allow it to be treated as a partnership, and not an association or publicly traded partnership taxable as a corporation, for federal income tax purposes. As a partnership, the Aimco Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including Aimco, is allocated, and may be required to pay tax with respect to, that partner’s share of the Aimco Operating Partnership’s income. No assurance can be provided, however, that the IRS will not challenge the Aimco Operating Partnership’s status as a partnership for federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in treating the Aimco Operating Partnership as an association or publicly traded partnership taxable as a corporation for federal income tax purposes, Aimco would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT. Such REIT qualification failure could impair our ability to expand our business and raise capital, and could materially adversely affect the value of Aimco’s stock and the Aimco Operating Partnership’s units. Also, the failure of the Aimco Operating Partnership to qualify as a partnership would cause it to become subject to federal corporate income tax, which could reduce significantly the amount of its cash available for debt service and for distribution to its partners, including Aimco.

RISKS RELATED TO AIMCO OPERATING PARTNERSHIP UNITS

There are restrictions on the ability to transfer and redeem Aimco Operating Partnership Units, there is no public market for Aimco Operating Partnership Units and holders of Aimco Operating Partnership Units are subject to dilution.

The Aimco Operating Partnership agreement restricts the transferability of OP Units. Until the expiration of a one-year holding period, subject to certain exceptions, investors may not transfer OP Units without the consent of Aimco Operating Partnership’s general partner. Thereafter, investors may transfer such OP Units subject to the satisfaction of certain conditions, including the general partner’s right of first refusal. In addition, after the expiration of the one-year holding period, investors have the right, subject to the terms of Aimco Operating Partnership’s agreement, to require Aimco Operating Partnership to redeem all or a portion of such investor’s OP Units (in exchange for shares of our Common Stock or cash, at the Aimco Operating Partnership’s discretion) once per quarter on an exchange date set by Aimco Operating Partnership, provided such investor provides notice at least 45 days prior to the quarterly exchange date. There is no public market for the OP Units. Aimco Operating Partnership has no plans to list any OP Units on a securities exchange. It is unlikely that any person will make a market in the OP Units, or that an active market for the OP Units will develop. If a market for the OP Units develops and the OP Units are considered “readily tradable” on a “secondary market (or the substantial equivalent thereof),” Aimco Operating Partnership would be classified as a publicly traded partnership for U.S. federal income tax purposes, which could have a material adverse effect on Aimco Operating Partnership and its unitholders.

In addition, Aimco Operating Partnership may issue an unlimited number of additional OP Units or other securities for such consideration and on such terms as it may establish, without the approval of the holders of OP Units. Such securities could have priority over the OP Units as to cash flow, distributions, and liquidation proceeds. The effect of any such issuance may be to dilute the interests of holders of OP Units.

Cash distributions by Aimco Operating Partnership are not guaranteed and may fluctuate with partnership performance.

Aimco Operating Partnership does not intend to make regular distributions to holders of OP Units (other than what is required for Aimco to maintain its REIT status). There can be no assurance regarding the amounts of available cash that Aimco Operating Partnership will generate or the portion that its general partner will choose to distribute. The actual amounts of available cash will depend upon numerous factors, including profitability of operations, required principal and interest payments on its debt, the cost of acquisitions (including related debt service payments), its issuance of debt and equity securities, fluctuations in working capital, capital expenditures, adjustments in reserves, prevailing economic conditions, and financial, business, and other factors, some of which may be beyond Aimco Operating Partnership’s control. Cash distributions depend primarily on cash flow, including from reserves, and not on profitability, which is affected by non-cash items. Therefore, cash distributions may be made during periods when our operating partnership records losses and may not be made during periods when it records profits. The Aimco Operating Partnership agreement gives the general partner discretion in establishing reserves for the proper conduct of the partnership’s business that will affect the amount of available cash. Aimco Operating Partnership may be required to make reserves for the future payment of principal and interest under its credit facilities and other indebtedness. In addition, Aimco Operating Partnership’s credit facilities may limit its ability to distribute cash to holders of OP Units. As a result of these and other factors, there can be no assurance regarding actual levels of cash distributions on OP Units, and Aimco Operating Partnership’s ability to distribute cash may be limited during the existence of any events of default under any of its debt instruments.

19

 


 

 

Holders of OP Units have limited voting rights and are limited in their ability to effect a change of control.

Aimco Operating Partnership is managed and operated by its general partner, Aimco. Unlike the holders of common stock in a corporation, holders of OP Units have only limited voting rights on matters affecting Aimco Operating Partnership’s business. Such matters relate to certain amendments of the partnership agreement and certain transactions such as the institution of bankruptcy proceedings, an assignment for the benefit of creditors and certain transfers by the general partner of its interest in Aimco Operating Partnership or the admission of a successor general partner. Holders of OP Units have no right to elect the general partner on an annual or other continuing basis, or to remove the general partner. As a result, holders of OP Units have limited influence on matters affecting the operation of Aimco Operating Partnership, and third parties may find it difficult to attempt to gain control over, or influence the activities of, Aimco Operating Partnership.

The limited partners of Aimco Operating Partnership are unable to remove the general partner or to vote in the election of our directors unless they own shares of Aimco. In order to comply with specific REIT tax requirements, Aimco's charter has restrictions on the ownership of its equity securities. As a result, Aimco Operating Partnership limited partners and Aimco's stockholders are limited in their ability to effect a change of control of Aimco Operating Partnership and Aimco, respectively.

Holders of OP Units may not have limited liability in specific circumstances.

The limitations on the liability of limited partners for the obligations of a limited partnership have not been clearly established in some states. If it were determined that Aimco Operating Partnership had been conducting business in any state without compliance with the applicable limited partnership statute, or that the right or the exercise of the right by the holders of OP Units as a group to make specific amendments to the agreement of limited partnership or to take other action under the agreement of limited partnership constituted participation in the “control” of Aimco Operating Partnership’s business, then a holder of OP Units could be held liable under specific circumstances for our operating partnership’s obligations to the same extent as the general partner.

Aimco may have conflicts of interest with holders of OP Units.

Conflicts of interest could arise in the future as a result of the relationships between the general partner of Aimco Operating Partnership and its affiliates (including us), on the one hand, and Aimco Operating Partnership or any partner thereof, on the other. The directors and officers of the general partner have fiduciary duties to manage the general partner in a manner beneficial to us, as the sole stockholder of the general partner. At the same time, as the general partner of our operating partnership, we have fiduciary duties to manage Aimco Operating Partnership in a manner beneficial to Aimco Operating Partnership and its limited partners. The duties of the general partner of Aimco Operating Partnership to Aimco Operating Partnership and its partners may therefore come into conflict with the duties of the directors and officers of the general partner to its sole stockholder, Aimco. Such conflicts of interest might arise in the following situations, among others:

decisions of the general partner with respect to the amount and timing of cash expenditures, borrowings, issuances of additional interests and reserves in any quarter, will affect whether or the extent to which there is available cash to make distributions in a given quarter;
whenever possible, the general partner seeks to limit Aimco Operating Partnership’s liability under contractual arrangements to all or particular assets of Aimco Operating Partnership, with the other party thereto having no recourse against the general partner or its assets;
any agreements between Aimco Operating Partnership and the general partner and its affiliates will not grant to the holders of OP Units, separate and distinct from Aimco Operating Partnership, the right to enforce the obligations of the general partner and such affiliates in favor of our operating partnership. Therefore, the general partner, in its capacity as the general partner of Aimco Operating Partnership, will be primarily responsible for enforcing such obligations; and
under the terms of the Aimco Operating Partnership agreement, the general partner is not restricted from causing Aimco Operating Partnership to pay the general partner or its affiliates for any services rendered on terms that are fair and reasonable to Aimco Operating Partnership or entering into additional contractual arrangements with any of such entities on behalf of our operating partnership. Neither the Aimco Operating Partnership agreement nor any of the other agreements, contracts, and arrangements between Aimco Operating Partnership, on the one hand, and the general partner of Aimco Operating Partnership and its affiliates, on the other, are or will be the result of arm’s-length negotiations.

 

20

 


 

 

Provisions in the Aimco Operating Partnership agreement may limit the ability of a holder of OP Units to challenge actions taken by the general partner.

Delaware law provides that, except as provided in a partnership agreement, a general partner owes the fiduciary duties of loyalty and care to the partnership and its limited partners. The Aimco Operating Partnership agreement expressly authorizes the general partner to enter into, on behalf of Aimco Operating Partnership, a right of first opportunity arrangement and other conflict avoidance agreements with various affiliates of Aimco Operating Partnership and the general partner, on such terms as the general partner, in its sole and absolute discretion, believes are advisable. The latitude given in the Aimco Operating Partnership agreement to the general partner in resolving conflicts of interest may significantly limit the ability of a holder of OP Units to challenge what might otherwise be a breach of fiduciary duty. The general partner believes, however, that such latitude is necessary and appropriate to enable it to serve as the general partner of Aimco Operating Partnership without undue risk of liability.

The Aimco Operating Partnership agreement limits the liability of the general partner for actions taken in good faith. Aimco Operating Partnership’s partnership agreement expressly limits the liability of the general partner by providing that the general partner, and its officers and directors, will not be liable or accountable in damages to Aimco Operating Partnership, the limited partners, or assignees for errors in judgment or mistakes of fact or law or of any act or omission if the general partner or such director or officer acted in good faith. In addition, Aimco Operating Partnership is required to indemnify the general partner, its affiliates, and their respective officers, directors, employees, and agents to the fullest extent permitted by applicable law, against any and all losses, claims, damages, liabilities, joint or several, expenses, judgments, fines, and other actions incurred by the general partner or such other persons, provided that Aimco Operating Partnership will not indemnify for (i) willful misconduct or a knowing violation of the law or (ii) for any transaction for which such person received an improper personal benefit in violation or breach of any provision of the partnership agreement. The provisions of Delaware law that allow the common law fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court of law, and the general partner has not obtained an opinion of counsel covering the provisions set forth in the Aimco Operating Partnership agreement that purport to waive or restrict the fiduciary duties of the general partner that would be in effect under common law were it not for the partnership agreement.

RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

Aimco Operating Partnership and its subsidiaries may be prohibited from making distributions and other payments.

All of Aimco Operating Partnership’s real estate assets are owned by subsidiaries of our operating partnership. As a result, Aimco Operating Partnership depends on distributions and payments from its subsidiaries in order to satisfy our financial obligations and make payments to our equity holders, as applicable. The ability of Aimco Operating Partnership and its subsidiaries to make such distributions and other payments depends on their earnings and cash flows and may be subject to statutory or contractual limitations, including covenants in some of our existing and/or future debt agreements. As an equity investor in our subsidiaries, our right to receive assets upon their liquidation or reorganization are effectively subordinated to the claims of their creditors and any holders of preferred equity senior to our equity investments. To the extent that we are recognized as a creditor of such subsidiaries, our claims may still be subordinate to any security interest in or other lien on their assets and to any of their debt or other obligations that are senior to our claims.

Limits on ownership of shares specified in Aimco’s charter may result in the loss of economic and voting rights by purchasers that violate those limits.

Aimco's charter limits ownership of Common Stock by any single stockholder (applying certain “beneficial ownership” rules under the federal tax and securities laws) to 8.7% (or up to 12.0% upon a waiver from Aimco’s Board) of outstanding shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies, and certain individuals (or up to 20.0% for such pension trusts or registered investment companies upon a waiver from Aimco’s Board). Aimco's charter also limits ownership of Aimco's Common Stock and preferred stock by any single stockholder to 8.7% of the value of the outstanding Common Stock and preferred stock, or 15% in the case of certain pension trusts, registered investment companies, and certain individuals. The charter also prohibits anyone from buying shares of Aimco's capital stock if the purchase would result in Aimco losing its REIT status. This could happen if a transaction results in fewer than 100 persons owning all of Aimco's shares of capital stock or results in five or fewer persons (applying certain attribution rules of the Code) owning more than 50% of the value of all of Aimco's shares of capital stock. If anyone acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs:

the transfer will be considered null and void;
we will not reflect the transaction on Aimco’s books;

21

 


 

 

we may institute legal action to enjoin the transaction;
we may demand repayment of any dividends received by the affected person on those shares;
we may redeem the shares;
the affected person will not have any voting rights for those shares; and
the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more charitable organizations designated by Aimco.

Aimco may purchase the shares of capital stock held in trust at a price equal to the lesser of the price paid by the transferee of the shares or the then current market price. If the trust transfers any of the shares of capital stock, the affected person will receive the lesser of the price paid for the shares or the then current market price. An individual who acquires shares of capital stock that violate the above rules bears the risk that the individual:

may lose control over the power to dispose of such shares;
may not recognize profit from the sale of such shares if the market price of the shares increases;
may be required to recognize a loss from the sale of such shares if the market price decreases; and
may be required to repay to us any dividends received from us as a result of his or her ownership of the shares.

Aimco’s charter may limit the ability of a third-party to acquire control of Aimco.

The 8.7% and other ownership limits discussed above may have the effect of delaying or precluding acquisition by a third-party of control of Aimco without the consent of Aimco's Board. Aimco's charter authorizes its Board to issue up to 510,587,500 shares of capital stock, which consists entirely of Common Stock as of December 31, 2023. Under Aimco's charter, Aimco's Board has the authority to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, conversion or other rights, voting power restrictions, limitations as to dividends, qualifications, or terms or conditions of redemptions as the Board may determine. The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of Aimco, where there is a difference of opinion between Aimco's Board and others as to what is in Aimco's stockholders’ best interests.

The Maryland General Corporation Law may limit the ability of a third-party to acquire control of Aimco.

As a Maryland corporation, Aimco is subject to various Maryland laws that may have the effect of discouraging offers to acquire us and increasing the difficulty of consummating any such offers, where there is a difference of opinion between our Board and others as to what is in our stockholders’ best interests or where our Board does not approve an offer. The Maryland General Corporation Law, specifically the Maryland Business Combination Act, restricts mergers and other business combination transactions between us and any person who acquires, directly or indirectly, beneficial ownership of shares of our stock representing 10% or more of the voting power without our Board's prior approval. Any such business combination transaction could not be completed until five years after the person acquired such voting power, and generally only with the approval of stockholders representing 80% of all votes entitled to be cast and 66-2/3% of the votes entitled to be cast, excluding the interested stockholder, or upon payment of a fair price. The Maryland General Corporation Law, specifically the Maryland Control Share Acquisition Act, provides generally that a person who acquires shares of our capital stock representing 10% or more of the voting power in electing directors will have no voting rights unless approved by a vote of two-thirds of the shares eligible to vote. Additionally, the Maryland General Corporation Law provides, among other things, that the Board has broad discretion in adopting stockholders’ rights plans and has the sole power to fix the record date, time, and place for special meetings of the stockholders. To date, we have not adopted a stockholders’ rights plan. In addition, the Maryland General Corporation Law provides that a corporation that:

has at least three directors who are not officers or employees of the entity or related to an acquiring person; and
has a class of equity securities registered under the Securities Exchange Act of 1934, as amended, may elect in its charter or bylaws or by resolution of the board of directors to be subject to all or part of a special subtitle (which we refer to as the “Maryland Unsolicited Takeovers Act” or “MUTA”) that provides that:
o
the corporation will have a classified board of directors;
o
any director may be removed only for cause and by the vote of two-thirds of the votes entitled to be cast in the election of directors generally, even if a lesser proportion is provided in the charter or bylaws;

22

 


 

 

o
the number of directors may only be set by the board of directors, even if the procedure is contrary to the charter or bylaws;
o
vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or bylaws; and
o
the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting, even if the procedure is contrary to the charter or bylaws.

In connection with the Separation, the board of directors of Aimco Predecessor elected for Aimco to be subject to all of the provisions of MUTA until the 2024 annual meeting of stockholders. As of the 2023 annual meeting of stockholders, (i) Aimco is no longer subject to any of the provisions of MUTA, and (ii) Aimco is prohibited from electing to be subject to MUTA without the approval of its stockholders. Additionally, at the 2023 annual meeting of stockholders, Aimco’s Charter was amended to (i) lower the threshold for stockholders to remove directors to a simple majority of shares outstanding, eliminate the requirement that such removal be for “cause,” and enable stockholders to fill vacancies on the Board created by stockholder action, and (ii) reduce to a simple majority the stockholder vote required to amend the Charter and Amended and Restated Bylaws.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

 

Cybersecurity Risk Management and Strategy

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.

We use the NIST Cybersecurity Framework and CIS Critical Security Controls as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. This does not imply that we meet any particular technical standards, specifications, or requirements.

Our cybersecurity risk management program is integrated with our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.

Our cybersecurity risk management program includes the following key elements:

risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment;
a team comprised of IT personnel principally responsible for directing (1) our cybersecurity risk assessment processes, (2) our security processes, and (3) our response to cybersecurity incidents;
the use of external cybersecurity service providers, where appropriate, to monitor, assess, test or otherwise assist with aspects of our security processes;
cybersecurity awareness training of employees with access to our IT systems;
a cybersecurity incident response plan and Security Operations Center (SOC) to respond to cybersecurity incidents; and
a third-party risk management process for service providers.

There can be no assurance that our cybersecurity risk management program, including our controls, procedures and processes, will be fully complied with or that our program will be fully effective in protecting the confidentiality, integrity and availability of our information systems, product and network.

 

23

 


 

 

We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face certain ongoing risks from cybersecurity threats that, if realized and material, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. These and other risks related to cybersecurity matters are described in more detail in Item 1A. Risk Factors.

Cybersecurity Governance

Our Board considers cybersecurity risk as critical to the enterprise and delegates the cybersecurity risk oversight function to the Audit Committee. The Audit Committee oversees management’s design, implementation, and enforcement of our cybersecurity risk management program.

Our Chief Information Officer (CIO) reports to the Chief Administrative Officer & General Counsel and leads the Company’s overall cybersecurity function. Prior to December 31, 2023, the Audit Committee received regular reports from AIR on our cybersecurity risks. Since December 31, 2023, the Audit Committee has begun receiving and will continue to receive regular reports from our CIO on our cybersecurity risks, including briefings on our cyber risk management program and cybersecurity incidents. Audit Committee members also receive periodic presentations on cybersecurity topics from our CIO, supported by our internal security staff, or external experts as part of the Board’s continuing education on topics that impact public companies.

Our CIO supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external cybersecurity service providers; and alerts and reports produced by security tools deployed in the IT environment.

Our CIO is responsible for assessing and managing our material risks from cybersecurity threats. Our CIO has primary responsibility for leading our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our external cybersecurity service providers. Our CIO has been publicly recognized as a cybersecurity thought leader by leading industry analysts. Our CIO has over 24 years of technical leadership and industry experience, which is inclusive of global experience in managing and leading IT and cybersecurity teams. Our cybersecurity team holds industry standard certifications and participates in routine training.

ITEM 2. PROPERTIES

We own a geographically diversified portfolio of operating properties that produce stable cash flow and serves to balance the risk and highly variable cash flows associated with our portfolio of development and redevelopments and value-add investments. Our entire portfolio of operating properties includes 26 apartment communities (22 consolidated properties and four unconsolidated properties) located in eight major U.S. markets and 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 a land assemblage with an adjacent apartment building. Our current development and redevelopment portfolio consists of 11 properties, including developable land, located primarily in Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range.

Additional information about our consolidated real estate, including property debt, is contained in “Schedule III - Real Estate and Accumulated Depreciation” in this Annual Report on Form 10-K.

From time to time, we may be a party to certain legal proceedings, incidental to the normal course of business. While the outcome of the legal proceedings cannot be predicted with certainty, we believe there are no legal proceedings pending that would have a material effect upon our financial condition or result of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

24

 


 

 

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Aimco

Aimco's Common Stock is listed and traded on the NYSE under the symbol “AIV.”

On February 23, 2024, there were 144,811,666 shares of Common Stock outstanding, held by 934 stockholders of record. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency but does include each such broker or clearing agency as one record holder.

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 year ended December 31, 2023, 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.

Repurchases of Equity Securities

The following table summarizes Aimco's share repurchases, 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)

 

October 1 - 31, 2023

 

 

577,871

 

 

$

6.53

 

 

 

577,871

 

 

 

21,958,302

 

November 1 - 30, 2023

 

 

568,846

 

 

 

6.74

 

 

 

568,846

 

 

 

21,389,456

 

December 1 - 31, 2023

 

 

271,900

 

 

 

7.20

 

 

 

271,900

 

 

 

21,117,556

 

Total

 

 

1,418,617

 

 

$

6.75

 

 

 

1,418,617

 

 

 

 

(1) Aimco's 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 February 23, 2024, there were 156,752,191 OP Units and equivalents outstanding (of which 144,811,666 were held by Aimco), that were held by 1,984 unitholders of record.

Unregistered Sales of Equity Securities

Aimco Operating Partnership did not issue any unregistered OP Units during the twelve months ended December 31, 2023.

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 December 31, 2023, no OP Units were redeemed in exchange for shares of Common Stock and 57,127 OP Units were redeemed in exchange for cash at an aggregate weighted average price per unit of $6.51.

 

25

 


 

 

The following table summarizes repurchases, or redemptions in exchange for cash, of the Aimco Operating Partnership's equity securities for the three months ended December 31, 2023.

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)

October 1 - 31, 2023

 

 

 

 

$

 

 

N/A

 

N/A

November 1 - 30, 2023

 

 

 

 

 

 

 

N/A

 

N/A

December 1 - 31, 2023

 

 

57,127

 

 

 

6.51

 

 

N/A

 

N/A

Total

 

 

57,127

 

 

$

6.51

 

 

 

 

 

(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. Aimco's Board determines and declares Aimco's dividends. In making a dividend determination, Aimco's 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.

Stockholders receiving any dividend, whether payable in cash or cash and shares of Aimco Common Stock, will be required to include the full amount of such dividend as income to the extent of our current and accumulated earnings and profits, as determined for United States federal income tax purposes for the year of such dividend and may be required to pay income taxes with respect to such dividend in excess of the cash dividend received. With respect to certain non-United States stockholders, Aimco may be required to withhold United States tax with respect to such dividend, including in respect of all or a portion of such dividend that is payable in Common Stock.

The Board of Aimco Operating Partnership’s general partner determines and declares distributions on OP Units. Aimco, through a wholly-owned subsidiary, is the sole general partner of Aimco Operating Partnership. As of December 31, 2023, Aimco owned 92.4% of the legal interest in the OP Units of Aimco Operating Partnership and 94.8% of the economic interest of Aimco Operating Partnership. Aimco Operating Partnership holds all of our assets and manages the daily operations of our business. The distributions paid by Aimco Operating Partnership to Aimco are used to fund the dividends paid to Aimco's stockholders. Accordingly, the per share dividends Aimco pays to its stockholders generally equal the per unit distributions paid by Aimco Operating Partnership to holders of its OP Units.

Our revolving credit agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends and distributions as may be necessary to maintain Aimco's REIT status.

Performance Graph

The following graph compares cumulative total returns for Aimco's Common Stock, the FTSE Nareit Equity Apartments Index, and the Russell 2000. The FTSE Nareit Equity Apartments Index is published by The National Association of Real Estate Investment Trusts (“Nareit”), a representative of multifamily real estate investment trusts and publicly traded real estate companies with interests in United States real estate and capital markets. The FTSE Nareit Equity Apartments Index serves as our sector comparison and the Russell 2000 serves as our broad-based market index.

The indices are weighted for all companies that fit the definitional criteria of the particular index and are calculated to exclude companies as they are acquired and to add companies to the index calculation as they become publicly traded companies. All companies that fit the definitional criteria and existed at the point in time presented are included in the index calculations. The graph assumes the investment of $100 in Aimco Common Stock and in each index on December 31, 2018, and that all dividends paid have been reinvested. The historical information set forth on the following page is not necessarily indicative of future performance.

26

 


 

 

img56395613_0.jpg 

 

 

 

For the years ended December 31,

 

Index

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

2022

 

 

2023

 

Apartment Investment and Management Company

 

 

100.00

 

 

 

121.53

 

 

 

106.86

 

 

 

156.23

 

 

 

144.39

 

 

 

158.77

 

FTSE Nareit Equity Apartment Index

 

 

100.00

 

 

 

126.32

 

 

 

106.94

 

 

 

174.97

 

 

 

119.06

 

 

 

126.05

 

Russell 2000

 

 

100.00

 

 

 

125.52

 

 

 

150.58

 

 

 

172.90

 

 

 

137.56

 

 

 

160.85

 

Source: Zacks Investment Research, Inc.

The Performance Graph will not be deemed to be incorporated by reference into any filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate the same by reference.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations for the year ended December 31, 2023, compared to 2022, should be read in conjunction with the accompanying consolidated financial statements in Part II, Item 8. For discussion of the year ended December 31, 2022, compared to 2021, please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form 10-K for the year ended December 31, 2022.

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.

Please refer to “Item 1. Business” for additional discussion of our business organization and strategy and “Item 2. Properties” and “Schedule III – Real Estate and Accumulated Depreciation” for details regarding the size, location, and key characteristics of our various properties.

27

 


 

 

Results for the Twelve Months Ended December 31, 2023

The results from the execution of our business plan during the twelve months ended December 31, 2023, are described below.

Financial Results and 2023 Highlights

For the year ended December 31, 2023, net loss attributable to common stockholders per share, on a fully dilutive basis, was a net loss per share of $1.16, compared to net income per share of $0.49 for the same period in 2022, due primarily to lower transaction-related income in 2023.
For the year ended December 31, 2023, NOI from our Stabilized Operating Properties was $105.7 million, up 9.3% year-over-year, with average monthly revenue per apartment home increasing by $194 to $2,305.
For the year ended December 31, 2023, we delivered over 350 apartment homes at The Hamilton in Miami, Florida, Upton Place in Washington, D.C., and Oak Shore in Corte Madera, California; and we opened the 106-key Benson Hotel and Faculty Club in Aurora, Colorado.
For the year ended December 31, 2023, we monetized $122.7 million of assets, including the sale of a development land parcel in Fort Lauderdale, Florida, the sale of a 20% stake of our Parkmerced mezzanine investment, and the associated swaption. In the fourth quarter of 2023, the purchaser of that position forfeited their option to acquire the remaining 80% of the Parkmerced mezzanine investment when they failed to make a required interest payment, resulting in the subordination of their earlier investment.

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 year ended December 31, 2023 include:

Revenue for our Operating segment was $149.8 million, up 8.4% year over year, resulting from a $194 increase in average monthly revenue per apartment home to $2,305, partially offset by a 70-basis point decrease in Average Daily Occupancy to 96.7%.
Expenses for our Operating segment were $44.1 million, up 6.4% year over year, due primarily to higher insurance costs.
Net operating income for our Operating segment was $105.7 million, up 9.3% year over year.

Value Add, Opportunistic and 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. We will focus our new investment activity in Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range. Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.

We currently have four active development and redevelopment projects, located in three U.S. markets, in varying phases of construction and lease-up. These projects remain on track, as measured by budget, lease-up metrics, and current market valuations. 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 year ended December 31, 2023, we invested $274.9 million in development and redevelopment activities compared to $279.4 million in the year ended December 31, 2022.

 

28

 


 

 

Highlights for the year ended December 31, 2023 include:

In Bethesda, Maryland, construction continued 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. This suburban infill project is located adjacent to the Grosvenor-Strathmore Metro station and the Strathmore Performing Arts Campus, and is 1.5 miles from The National Institutes of Health main campus. Funding for the project is fully secured with Aimco having already funded 100% of its equity commitment.
In Upper Northwest Washington, D.C., construction at Upton Place is nearing completion and remains on schedule and on budget. As of December 31, 2023, we have delivered 234 apartment homes, with the first residents at Upton Place having moved into their new homes during the fourth quarter of 2023.
In Corte Madera, California, construction is ongoing at Oak Shore where 16 luxury single-family rental homes and eight accessory dwelling units are being developed. As of December 31, 2023, initial homes had been delivered and we welcomed our first residents into their new home.
In Miami, Florida, construction was completed on The Hamilton, a 276-unit waterfront apartment community redevelopment and the property finished the initial lease-up of apartment homes in the third quarter 2023 at rates well ahead of underwritten rents.
In Aurora, Colorado, The Benson Hotel and Faculty Club, a 106-key boutique hotel and event center with 18 thousand square feet of event space, was completed in the second quarter 2023 and is open to guests.

Alternative Investments

Our current alternative investments are primarily those investments originated by Aimco Predecessor and include a mezzanine loan secured by a stabilized multifamily property with an option to participate in future multifamily development, as well as three passive equity investments. Over time, we plan to significantly reduce capital allocated to these investments.

Updates for our alternative investments include:

In 2023, we monetized $91.5 million of our Parkmerced mezzanine investments through the sale of a 20% interest in the loan, pre-paid interest, and the monetization of the associated interest rate swaption. The buyer of the partial interest in the loan received an option to purchase our remaining 80%, however, the option expired when the buyer did not make its contractual payment in the fourth quarter 2023 required to maintain its purchase option.
In accordance with GAAP and because we receive first priority and a higher annualized return than the buyer of the partial interest in the loan, we were required to record the $33.5 million of cash received from the buyer as a balance sheet liability. No amount is due to repay the liability until after we receive cash payments in a subsequent transaction or recapitalization that total $134 million (Aimco's 80% remaining ownership of the loan) plus its annualized return.
Additionally, considering various quantitative and qualitative factors including the buyer’s option expiration, the loan's maturity date, which is concurrent with the property's senior mortgage, and the financial condition of the borrower, we recorded a $158.0 million non-cash impairment to fully write off the remaining investment.
We continue to monitor the mezzanine investment and seek to recover value but expects to do so without a significant investment or allocation of resources.

 

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 invests when the risk adjusted returns are superior to other uses of capital.

 

29

 


 

 

Highlights for the year ended December 31, 2023 include:

The monetization of the Parkmerced mezzanine investments as described above.
In the fourth quarter 2023, our joint venture in Fort Lauderdale, Florida monetized an additional portion of its investment by closing on the sale of the second of three land parcels along Broward Avenue.

Balance Sheet and Financing Activities

We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of December 31, 2023, we had access to $289.3 million in liquidity, including $122.6 million of cash on hand, $16.7 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 includes properties 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, 2022, 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 consolidated financial statements in Item 8.

Results of Operations for the Year Ended December 31, 2023, Compared to the same period in 2022

Net income attributable to Aimco common stockholders decreased by $241.9 million for the year ended December 31, 2023 compared to the same period in 2022, as described more fully below.

Property Results

As of December 31, 2023, our Development and Redevelopment segment included 11 properties, three of which were under construction. Our Operating segment included 21 communities with approximately 5,600 apartment homes, and our Other segment included 1001 Brickell Bay Drive, our only office building and St. George Villas.

During the first quarter of 2023, we reclassified one residential apartment community from the Other segment to the Operating segment because it reached stabilization. During the fourth quarter of 2023, we sold one land parcel from the Development and Redevelopment segment, which resulted in its removal from the segment. Prior period segment information has been recast based upon our current segment population, and is consistent with how our chief operating decision maker ("CODM") evaluates the business. The recast conforms with our reportable segment classification as of December 31, 2023.

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, including utility reimbursements, for the consolidated communities; but:

excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ, the Mezzanine Investment, and investments in real estate technology funds; and
excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.

Please refer to Note 14 to the consolidated financial statements in Item 8 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.

 

30

 


 

 

Proportionate Property Net Operating Income

The results of our segments for the years ended December 31, 2023 and 2022, as presented below, are based on segment classifications as of December 31, 2023.

 

Year Ended December 31,

 

 

 

 

(in thousands)

2023

 

 

2022

 

 

$ Change

 

 

% Change

 

Rental and other property revenues, before utility reimbursements:

 

 

 

 

 

 

 

 

 

 

 

   Development and Redevelopment

$

15,744

 

 

$

919

 

 

$

14,825

 

 

nm

 

   Operating

 

149,768

 

 

 

138,137

 

 

 

11,631

 

 

 

8.4

%

   Other

 

14,482

 

 

 

15,116

 

 

 

(634

)

 

 

(4.2

%)

      Total

 

179,994

 

 

 

154,172

 

 

 

25,822

 

 

 

16.7

%

Property operating expenses, net of utility reimbursements:

 

 

 

 

 

 

 

 

 

 

 

   Development and Redevelopment

 

10,271

 

 

 

2,194

 

 

 

8,077

 

 

nm

 

   Operating

 

44,054

 

 

 

41,410

 

 

 

2,644

 

 

 

6.4

%

   Other

 

5,726

 

 

 

4,993

 

 

 

733

 

 

 

14.7

%

      Total

 

60,051

 

 

 

48,597

 

 

 

11,454

 

 

 

23.6

%

Proportionate property net operating income:

 

 

 

 

 

 

 

 

 

 

 

   Development and Redevelopment

 

5,473

 

 

 

(1,275

)

 

 

6,748

 

 

nm

 

   Operating

 

105,714

 

 

 

96,727

 

 

 

8,987

 

 

 

9.3

%

   Other

 

8,756

 

 

 

10,123

 

 

 

(1,367

)

 

 

(13.5

%)

      Total

$

119,943

 

 

$

105,575

 

 

$

14,368

 

 

 

13.6

%

For the year ended December 31, 2023, compared to the same period in 2022:

Development and Redevelopment proportionate net operating income increased by $6.7 million primarily due to the lease up of apartment homes at The Hamilton.
Operating proportionate property net operating income increased by $9.0 million, or 9.3%. The increase was attributable primarily to a $11.6 million, or 8.4% increase in rental and other property revenues due to higher average revenues of $194 per apartment home, partially offset by a 70-basis point decrease in occupancy.
Other proportionate property net operating income decreased by $1.4 million, or 13.5%. The decrease was attributable primarily to a lease termination fee recognized in 2022 and decreases in occupancy following lease expirations earlier in 2023 at our commercial office building in Miami, Florida.

 

The results of our segments for the years ended December 31, 2022 and 2021, as presented below, are based on segment classifications as of December 31, 2023.

 

Year Ended December 31,

 

 

(in thousands)

2022

 

2021

 

$ Change

 

% Change

Rental and other property revenues, before utility reimbursements:

 

 

 

 

 

 

 

   Development and Redevelopment

$919

 

$2,036

 

$(1,117)

 

nm

   Operating

138,137

 

123,257

 

14,880

 

12.1%

   Other

15,116

 

13,605

 

1,511

 

11.1%

      Total

154,172

 

138,898

 

15,274

 

11.0%

Property operating expenses, net of utility reimbursements:

 

 

 

 

 

 

 

   Development and Redevelopment

2,194

 

1,446

 

748

 

nm

   Operating

41,410

 

39,694

 

1,716

 

4.3%

   Other

4,993

 

4,336

 

657

 

15.2%

      Total

48,597

 

45,476

 

3,121

 

6.9%

Proportionate property net operating income:

 

 

 

 

 

 

 

   Development and Redevelopment

(1,275)

 

590

 

(1,865)

 

nm

   Operating

96,727

 

83,563

 

13,164

 

15.8%

   Other

10,123

 

9,269

 

854

 

9.2%

      Total

$105,575

 

$93,422

 

$12,153

 

13.0%

For the year ended December 31, 2022, compared to the same period in 2021:

Development and redevelopment proportionate net operating income decreased by $1.9 million.
Operating proportionate property net operating income increased by $13.2 million, or 15.8% for the year ended December 31, 2022, compared to 2021. The increase was attributable to a $14.9 million, or 12.1% increase in rental and other property revenues, offset partially by a $1.7 million, or 4.3% increase in property operating expenses due primarily to higher real estate taxes and insurance.

31

 


 

 

Other proportionate property net operating income increased by $0.9 million, or 9.2% for the year ended December 31, 2022, compared to 2021, due primarily to the increase in rental and other revenues at 1001 Brickell, offset primarily by the increase in property insurance.

 

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 year ended December 31, 2023, compared to the same period in 2022, Depreciation and amortization expense decreased by $90.1 million, or 56.7%, due primarily to $85.7 million of accelerated depreciation recognized relating to the 2022 lease termination as described in Note 4 to the consolidated financial statements.

General and Administrative Expenses

For the year ended December 31, 2023, compared to the same period in 2022, General and administrative expenses decreased by $6.8 million, or 17.2%, primarily due to a decrease in expenses for consulting services per the Separation Agreement with AIR, which concluded at December 31, 2022.

Interest Income

For the year ended December 31, 2023, compared to the same period in 2022, Interest income increased by $5.7 million, or more than 100%. The increase is due primarily to higher rates of interest earned on excess cash invested in treasury bill investments and money market funds in 2023.

Interest Expense

For the year ended December 31, 2023, compared to the same period in 2022, Interest expense decreased by $36.1 million, or 48.9% due primarily to the prepayment of the notes payable due to AIR and other property debt, as well as the 2022 lease termination described in Note 4 to the consolidated financial statements.

Mezzanine Investment Income (Loss), Net

For the years ended December 31, 2023 and 2022, we recorded Mezzanine Investment (Loss), Net of $155.8 million and $179.2 million, respectively. This is due primarily to non-cash impairment charges of $158.0 million and $212.8 million for the years ended December 31, 2023 and 2022, respectively. The prior year non-cash impairment charge was partially offset by interest income, which we ceased to recognize in 2023 following the impairment.

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 $3.8 million and unrealized gains of $36.9 million during the years ended December 31, 2023, and 2022, respectively. In addition, we realized gains of $4.9 million and $11.3 million during the years ended December 31, 2023, and 2022, respectively.

 

32

 


 

 

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 gains of $0.7 million during the year ended December 31, 2023, compared to unrealized losses of $5.9 million for the same period in 2022.

We measure our investment in IQHQ at cost, less impairment if 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. During the year ended December 31, 2022, we recognized realized and unrealized gains on our investment in IQHQ totaling $26.2 million resulting from a partial redemption of our investment during June 2022. There were no observable price changes in 2023.

Gain on Dispositions of Real Estate

During the year ended December 31, 2023, we recognized gains on the disposition of real estate of $8.0 million comprised of $1.9 million from the contribution of real estate to an unconsolidated joint venture and a $6.1 million gain that resulted from the sale of one land parcel, compared to gains of $175.9 million recognized for the same period in 2022, that resulted from the sale of three apartment communities and one land parcel.

Lease Modification Income

No lease modifications occurred during the year ended December 31, 2023. For the year ended December 31, 2022, we recognized $207.0 million of lease modification income related to the agreement entered into with AIR for the termination of the leases of four properties.

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. For the year ended December 31, 2023, compared to the same period in 2022, Other income (expense), net decreased by $4.8 million, or 36.2%, due primarily to advisory expenses related to a strategic business review and the annual stockholder meeting incurred in 2022.

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 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 year ended December 31, 2023, we had consolidated net losses subject to tax of $15.2 million, compared to consolidated net income subject to tax of $88.8 million for the same period in 2022.

For the year ended December 31, 2023, we recognized income tax benefit of 12.8 million, compared to income tax expense of $17.3 million for the same period in 2022. The year-to-year change is due primarily to GAAP income taxes associated with the net lease modification income recognized in 2022.

 

33

 


 

 

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 December 31, 2023, our available liquidity was $289.3 million, which consisted of:

$122.6 million in cash and cash equivalents;
$16.7 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance; and
$150.0 million of available capacity to borrow under our revolving secured credit facility.

As of December 31, 2023, we had sufficient capacity on our construction loans to cover our remaining commitments on development and redevelopment projects of approximately $63.8 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 $2.0 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.

As of December 31, 2023, 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 6.7 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 construction loans, we also have a secured $150.0 million credit facility with a syndicate of financial institutions. As of December 31, 2023, 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% 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 Consolidated Statements of Cash Flows in Item 8 of this report.

34

 


 

 

Operating Activities

For the year ended December 31, 2023, net cash provided by operating activities was $50.5 million. Our operating cash flow is primarily affected by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities and general and administrative costs. Cash provided by operating activities for the year ended December 31, 2023, decreased by $153.8 million compared to the same period in 2022, due primarily to cash received from development and redevelopment property lease terminations in 2022, lower net operating income associated with apartment communities sold in the latter part of 2022, and timing of balance sheet position changes, partially offset by decreased interest payments.

Investing Activities

For the year ended December 31, 2023, net cash used in investing activities of $260.4 million consisted primarily of capital expenditures of $272.5 million, offset by $9.3 million of proceeds received from the disposition of real estate. Net cash used in investing activities for the year ended December 31, 2023, increased by $139.6 million compared to the same period in 2022, due primarily to increased capital expenditures and lower proceeds from dispositions of real estate, offset by decreased funding for net real estate and investment transactions.

Financing Activities

For the year ended December 31, 2023, net cash provided by financing activities of $119.4 million consisted primarily of proceeds from construction loans, the sale of a participation in the Mezzanine Investment, and the monetization of interest rate options, partially offset by repayments on non-recourse property debt and common stock repurchases. Net cash provided by financing activities for the year ended December 31, 2023, increased by $217.7 million compared to the same period ended in 2022, due primarily to prior year repayment and borrowing activity, offset by current year activity, including increased proceeds from construction loans, the sale of a participation in the Mezzanine Investment and the monetization of interest rate options.

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:

gains and losses on the dispositions of depreciated property;
impairment write-downs of depreciated property;
impairment write-downs of investments in unconsolidated partnerships caused by a decrease in the value of the depreciated property in such partnerships; and
adjustments to reflect our share of EBITDAre of investments in unconsolidated entities.

EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate investment trusts. We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and 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. Additionally, we exclude the (income) loss recognized on our Mezzanine Investment.

35

 


 

 

The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the years ended December 31, 2023 and 2022 is as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

Net income (loss)

 

$

(157,319

)

 

$

92,158

 

Adjustments:

 

 

 

 

 

 

Interest expense

 

 

37,718

 

 

 

73,842

 

Income tax (benefit) expense

 

 

(12,752

)

 

 

17,264

 

Gain on dispositions of real estate

 

 

(7,984

)

 

 

(175,863

)

Lease modification income

 

 

 

 

 

(206,963

)

Depreciation and amortization

 

 

68,834

 

 

 

158,967

 

Adjustment related to EBITDAre of unconsolidated partnerships

 

 

806

 

 

 

1,004

 

EBITDAre

 

$

(70,697

)

 

$

(39,591

)

Net (income) loss attributable to redeemable noncontrolling
   interests in consolidated real estate partnerships

 

 

(13,924

)

 

 

(8,829

)

Net (income) loss attributable to noncontrolling interests
   in consolidated real estate partnerships

 

 

(3,991

)

 

 

(3,672

)

EBITDAre adjustments attributable to noncontrolling interests

 

 

(272

)

 

 

(491

)

Mezzanine investment (income) loss, net

 

 

155,814

 

 

 

179,239

 

Realized and unrealized (gains) losses on interest rate options

 

 

(1,119

)

 

 

(48,205

)

Unrealized (gains) losses on IQHQ investment

 

 

 

 

 

(20,501

)

Adjusted EBITDAre

 

$

65,811

 

 

$

57,950

 

 

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Impairment of Real Estate and Other Long-Lived Assets

Quarterly, or when changes in circumstances warrant, we will assess our real estate properties and other long-lived assets for indicators of impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such factors include, among other things, operational performance, market conditions, our intent and ability to hold the related asset, as well as any significant cost overruns on development projects.

If a real estate property or other long-lived asset has an indicator of impairment, we assess its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the asset. If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset. There were no such impairments for the years ended December 31, 2023, 2022, and 2021.

Mezzanine Investment

On a periodic basis, we assess the Mezzanine Investment for impairment. An investment is considered impaired if we determine that its fair value is less than the net carrying value of the investment on an other-than-temporary basis. We determined our Mezzanine Investment was impaired on an other-than-temporary basis after considering various factors, including the purchaser's option expiration, the loan’s maturity date, and the decline in value of the real estate collateral due to an increased capitalization rate. As a result, we have recognized a $158.0 million non-cash impairment to reduce the carrying value of the Mezzanine Investment to zero as of December 31, 2023. This non-cash impairment is inclusive of the 20% non-controlling participation sold in June 2023. Although we do not expect proceeds from the Mezzanine Investment to exceed our first priority return requiring repayment of the $33.5 million received, we are unable to derecognize the Mezzanine investment - participation sold in accordance with GAAP.

 

36

 


 

 

ITEM 7A. 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.

Market Risk

As of December 31, 2023, on a consolidated basis, we had approximately $81.3 million of variable-rate property-level debt outstanding and $267.7 million of variable-rate construction loans. The impact of rising interest rates is mitigated by our use of interest rate caps, which as of December 31, 2023, 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. We estimate that 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 on an annual basis.

As of December 31, 2023, we held interest rate caps with $627.4 million notional value. These instruments were acquired for $5.8 million and at December 31, 2023, were valued at $5.2 million.

As of December 31, 2023, we had $139.3 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The independent registered public accounting firm’s reports, consolidated financial statements and schedule listed in the “Index to Financial Statements” on page F-1 of this Annual Report are filed as part of this report and incorporated herein by this reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 its 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 are effective.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by Aimco's Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;

 

37

 


 

 

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Aimco's internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 Framework).

Based on their assessment, management concluded that, as of December 31, 2023, Aimco's internal control over financial reporting is effective.

Aimco's independent registered public accounting firm has issued an attestation report on Aimco's internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There were no changes in the internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of Aimco.

38

 


 

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and the Board of Directors of

Apartment Investment and Management Company

Opinion on Internal Control Over Financial Reporting

We have audited Apartment Investment and Management Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Apartment Investment and Management Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Denver, Colorado

February 26, 2024

39

 


 

 

Aimco Operating Partnership

Disclosure Controls and Procedures

Aimco Operating Partnership’s management, with the participation of Aimco Operating Partnership’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of its 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 Operating Partnership’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, Aimco Operating Partnership’s disclosure controls and procedures are effective.

Management’s Report on Internal Control Over Financial Reporting

Aimco Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, Aimco Operating Partnership's principal executive and principal financial officers and effected by Aimco Operating Partnership's Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Aimco Operating Partnership’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 Framework).

Based on their assessment, management concluded that, as of December 31, 2023, Aimco Operating Partnership’s internal control over financial reporting is effective.

Aimco Operating Partnership’s independent registered public accounting firm has issued an attestation report on Aimco Operating Partnership’s internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There were no changes in the internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of Aimco Operating Partnership.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40

 


 

 

Report of Independent Registered Public Accounting Firm

 

To the Partners and the Board of Directors of

Aimco OP L.P.

Opinion on Internal Control Over Financial Reporting

We have audited Aimco OP L.P.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Aimco OP L.P. (the Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2023 and 2022, the related consolidated statements of operations, partners’ capital and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Denver, Colorado

February 26, 2024

41

 


 

 

 

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

 

42

 


 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

 

The Board is composed of nine highly qualified directors who bring strong skills, industry experience and track records of driving value. All nine directors have joined the Board within the past approximately three years, demonstrating a commitment to refreshment and providing fresh perspectives through their varied backgrounds.

 

The directors of the Company, their ages, dates they began serving on the Board, and their positions on the Board are set forth below.

 

Name

 

Age

 

Director Since

 

Position

Wes Powell

 

44

 

December 2020

 

Director, President and Chief Executive Officer

Quincy L. Allen

 

54

 

December 2020