We believe combining the periodic reports of Aimco and the 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 the 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 the Aimco Operating Partnership as one enterprise, the management of Aimco directs the management and operations of the Aimco Operating Partnership, and the members of the Board of Directors of Aimco are identical to those of the Aimco Operating Partnership’s general partner.
We believe it is important to understand the few differences between Aimco and the Aimco Operating Partnership in the context of how Aimco and the Aimco Operating Partnership operate as a consolidated company. Aimco has no assets or liabilities other than its investment in the Aimco Operating Partnership. Also, Aimco is a corporation that issues publicly traded equity from time to time, whereas the 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 the 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), the Aimco Operating Partnership generates all remaining capital required by its business. These sources include the 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 apartment communities.
Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the consolidated financial statements of Aimco and those of the Aimco Operating Partnership. Interests in the Aimco Operating Partnership held by entities other than Aimco, which we refer to as OP Units, are classified within partners’ capital in the Aimco Operating Partnership’s financial statements and as noncontrolling interests in Aimco’s financial statements.
To help investors understand the differences between Aimco and the Aimco Operating Partnership, this report provides separate consolidated financial statements for Aimco and the 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.
This report also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for Aimco and the Aimco Operating Partnership in order to establish that the requisite certifications have been made and that Aimco and the 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.
AIMCO PROPERTIES, L.P.
TABLE OF CONTENTS
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2018
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7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
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9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 42 |
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12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 48 |
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13. | Certain Relationships and Related Transactions, and Director Independence | 48 |
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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, including, without limitation, statements regarding: our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, redevelopments, and developments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our redevelopment and development investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; and our ability to comply with debt covenants, including financial coverage ratios.
Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond our control, including, without limitation:
• | 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 of acquisitions, dispositions, redevelopments, and developments; and changes in operating costs, including energy costs; |
• | Financing risks, including the availability and cost of capital markets’ financing; the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; and the risk that our earnings may not be sufficient to maintain compliance with debt covenants; |
• | Insurance risks, including the cost of insurance, natural disasters, and severe weather such as hurricanes; and |
• | Legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of governmental regulations that affect us and interpretations of those regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously 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 and depends on our ability to meet the various requirements imposed by the Internal Revenue 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 the section entitled “Risk Factors” described in Item 1A of this Annual Report and the other documents we file from time to time with the Securities and Exchange Commission.
As used herein and except as the context otherwise requires, “we,” “our”“our,” and “us” refer to Apartment Investment and Management Company (which we refer to as Aimco), AIMCO Properties, L.P. (which we refer to as the Aimco Operating Partnership) and their consolidated entities, collectively.
Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States, or GAAP. These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading and include: Nareit Funds From Operations, Pro forma Funds From Operations, Adjusted Funds From Operations, Free Cash Flow, Net Asset Value, Economic Income, and the measures used to compute our leverage ratios.
PART I
ITEM 1.
The Company
Aimco is a Maryland corporation incorporated on January 10, 1994. Aimco is a self-administered and self-managed real estate investment trust, or REIT, focused on the ownership, management, redevelopment, and limitedsome development of quality apartment communities located in someseveral of the largest markets in the United States.
Aimco, through its wholly-ownedwholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, owns a majority of the ownership interests in AIMCO Properties, L.P., or the Aimco Operating Partnership, a Delaware limited partnership formed on May 16, 1994. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership.
Please refer to Note 13 to the consolidated financial statements in Item 8 for discussion regarding our segments.
Business Overview
Our business activities are defined by a commitment to our core values of integrity, respect, collaboration, performance, and a focus on our customers. These values and our corporate mission, “to consistently provide quality apartment homes in a respectful environment delivered by a team of people who care,” shape our culture. In all of our interactions with residents, team members, business partners, lenders, and equity holders, we aim to be the best owner and operator of apartment communities and an outstanding corporate citizen.
Our principal financial objective is to provide predictable and attractive returns to our equity holders. We measure our long- term total return using Economic Income, defined as Net Asset Value, or NAV, growth plus dividends. NAV is used by many investors because the value of company assets can be readily estimated, even for non-earning assets such as land or properties under development. NAV has the advantage of incorporating the investment decisions of thousands of real estate investors, enhancing comparability among companies that have differences in their accounting and avoiding disparity that can result from application of GAAP to investment properties and various ownership structures. Over the past five years as of December 31, 2019, we have generated Economic Income at a compounded annual return of 10%. Some investors focus on multiples of Adjusted Funds From Operations, or AFFO, and Funds From Operations as defined by Nareit, or Nareit FFO. Our disclosure of AFFO, a measure of current return, complements our focus on Economic Income. We also use Pro forma Funds From Operations, or Pro forma FFO, as a secondary measure of operational performance. Over the past five years, we have generated Economic Income at a compounded annual return of 11.5%.
Our business plan to achieve thisour principal financial objective is to:
• | operate our portfolio of desirable apartment homes with a high level of focus on customer selection and customer satisfaction and in an efficient manner that produces predictable and growing |
• | improve our portfolio of apartment communities, which is diversified both by geography and price point, by selling communities with lower projected FCF internal rates of return and investing the proceeds from such sales through capital enhancements, redevelopment, some development, and acquisitions with greater land value, higher expected rent growth, and projected FCF internal rates of return in excess of those expected from the communities sold; |
• | use low levels of financial leverage primarily in the form of non-recourse, long-dated, fixed-rate property debt and perpetual preferred equity, a combination that reduces our refunding and re-pricing risk and provides a hedge against increases in interest rates; and |
• | focus intentionally on a collaborative and productive culture based on respect for others and personal responsibility. |
The results from the communities sold;
Our business is organized around five areas of strategic focus: operational excellence; redevelopment;redevelopment and development; portfolio management; balance sheet; and team and culture. Our areas
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Operational Excellence
We own and operate a portfolio of market rate apartment communities, diversified by both geography and price point, which we refer to as our Real Estate portfolio. Atpoint. As of December 31, 2018,2019, our Real Estate portfolio included 134124 apartment communities with 36,54932,839 apartment homes in which we held an average ownership of approximately 99%. This, and approximately 80% of the value of our portfolio, measured by gross asset value (the estimated fair value of our communities), was divided about two thirds by valueattributable to our “Same Store” portfolio of stabilized apartment communities and about one third by value to “Other Real Estate,” which includes recently acquired communities and communities under redevelopment or development whose long-term financial contribution is not yet stabilized.
To manage our property operations efficiently and to increase the benefits from our local management expertise, we give direct responsibility for operations within each area to area operations leaders with regular oversight by senior management. To enable the area operations leaders to focus on sales and service, as well as to improve financial control and budgeting, we have dedicated area financial officers who support the operations leaders. Additionally, with the exception of routine maintenance and purchases and installation of equipment, we have specialized teams that manage capital spending related to larger and more complicated construction.
We seek to improve our property operations by: employing service-oriented, well-trained team members; taking advantage of advances in technology; increasing automation; centralizing operational tasks where efficient to do so; standardizing business processes, operational measurements, and internal reporting; and enhancing financial controls over field operations. We focus on the following areas:
• | Customer Satisfaction. Our operating culture is focused on our residents and providing them with a high level of service in a clean, safe, and respectful living environment. We regularly monitor and evaluate our performance by providing customers with numerous opportunities to grade our work. In 2019, we received 75,000 customer grades averaging 4.3 on a five-point scale. We use this customer feedback as a daily management tool. We also publish these customer evaluations online as important and credible information for prospective customers. We have automated certain aspects of our on-site operations to enable current and future residents to interact with us using methods that are efficient and effective for them, such as making online requests for service work, and executing leases and lease renewals. In addition, we emphasize the quality of our on-site team members through recruiting, training, and retention programs, which, with continuous and real-time customer feedback, contributes to improved customer service. We believe that greater customer satisfaction leads to higher resident retention and increased occupancy rates, which in turn leads to increased revenue and reduced costs. |
• | Resident Selection and Retention. In our apartment communities, we believe that one’s neighbors are a meaningful part of the customer experience, together with the location of the community and the physical quality of the apartment homes. Part of our property operations strategy is to focus on attracting and retaining stable, credit-worthy residents who are also good neighbors and are likely to live with us longer. We have explicit criteria for resident selection, which we apply to new and renewal leases, including creditworthiness and behavior in accordance with our apartment community standards and our written “Good Neighbor Commitment.” Our focus on resident selection and retention led to 43% of our apartment homes turning over, an improvement (reduction) of approximately 150 basis points from 2018. |
• | Revenue Management and Ancillary Services. We have a centralized revenue management system that leverages people, processes, and technology to work in partnership with our local property management teams to develop rental rate pricing. We seek to increase FCF, which we define as net operating income less Capital Replacements, by optimizing the balance between rental and occupancy rates, as well as taking into consideration costs such as preparing an apartment home for a new resident. We are focused on careful measurements of on-site operations, as we believe that timely and accurate collection of apartment community performance and resident profile data allows us to maximize FCF through better property management and leasing decisions. We seek to maximize profit by performing timely data analysis of new and renewal pricing for each apartment home, thereby enabling us to adjust rents quickly in response to changes in supply and demand and minimize vacancy time. We also generate incremental revenue by providing or facilitating the provision of services to our residents, including, at certain apartment communities, telecommunications services, parking options, package lockers, and storage space rental. |
• | Controlling Expenses. Innovation is the foundation of our cost control efforts. Innovative activities we have undertaken include: moving administrative tasks to our shared service center, which reduces costs and allows site teams to focus on sales and service; taking advantage of economies of scale at the corporate level through electronic procurement, which reduces complexity and increases purchasing volume discounts; focusing on life cycle costs by investing in more durable, longer-lived materials, which reduce turn times and costs; and leveraging technology through such items as smart home capabilities, website design, and package lockers, which meet today’s customer preference for self-service. Additionally, our efforts to maximize resident retention through our resident selection process described above has resulted in reduced turn costs. These and other innovations contributed to a growth rate in controllable operating expense, which we define as property expenses less taxes, insurance, and utility expenses, compounding for the past 12 years at an annual rate of negative 0.2%. |
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• | Improving and Maintaining Apartment Community Quality. We believe that the physical condition and amenities of our apartment communities are important factors in our ability to maintain and increase rental rates. We invest in the maintenance and improvement of our communities primarily through: Capital Replacements, which are capital additions made to replace the portion of an apartment community consumed during our ownership; Capital Improvements, which extend the useful life of a community from its condition at our date of purchase; Capital Enhancements, which may include kitchen and bath remodeling, energy conservation projects, and investments in longer-lived materials as described above, all of which are generally lesser in scope than is a redevelopment and do not significantly disrupt property operations; and Initial Capital Expenditures, which are capital additions contemplated in the underwriting of an acquired asset. During 2019, we invested $1,109 per apartment home in Capital Replacements, $374 per apartment home in Capital Improvements, and $2,686 per apartment home in Capital Enhancements. We also invested a total of $22.9 million in Initial Capital Expenditures, which were planned as part of our initial investment in communities acquired in 2019 and 2018. |
Redevelopment and providing them with a high level of service in a clean, safe, and respectful living environment. We regularly monitor and evaluate our performance by providing customers with numerous opportunities to grade our work. In 2018, we received 78,000 customer grades averaging 4.25 on a five-point scale. We use this customer feedback as a daily management tool. We also publish on-line these customer evaluations as important and credible information for prospective customers. We have automated certain aspects of our on-site operations to enable current and future residents to interact with us using methods that are efficient and effective for them, such as making on-line requests for service work and executing leases and lease renewals on-line. In addition, we emphasize the quality of our on-site team members through recruiting, training and retention programs, which, with continuous and real-time customer feedback, contributes to improved customer service. We believe that greater customer satisfaction leads to higher resident retention and increased occupancy rates, which in turn leads to increased revenue and reduced costs.
Our second line of business is the redevelopment and limitedsome development of apartment communities. Through theseredevelopment activities, we expect to create value by repositioning apartment communities within our portfolio. Over the past five years, we have spent approximately $1.0 billion on redevelopment and development, resulting in estimated value creation of approximately $400.0 million. We measure the rate and quality of financial returns by NAV creation, an important component of Economic Income, our primary measure of
We undertake a range of redevelopments, including: those in which buildings or exteriors are renovated without the need to vacate a significant percentage of apartment homes, or short-cycle redevelopments; those in which significant renovation of apartment homes may be accomplished upon lease expiration and turnover; and those in which an entire building or community is vacated, or long-cycle redevelopments. We often execute redevelopment using a phased approach, in which we renovate an apartment community in stages. Redevelopment work may include seeking entitlements from local governments, which enhance the value of our existing portfolio by increasing density; that is, the right to add apartment homes to a site.
We invest to earn risk-adjusted returns in excess of those expected from the communities sold in paired trades to fund the redevelopment or development. Of these two activities, we generally favor redevelopment because it permits adjustment to the scope and timing of spending to align with changing market conditions and customer preferences.
Portfolio Management
Our portfolio management strategy involves the allocation of investment capital to enhance rent growth and increase long-term capital values through portfolio design, emphasizing land value as well as location and submarket. We target geographic diversification in our portfolio in order to reduce the volatility of our rental revenue and to reduce the risk of undue concentration in any particular market. Similarly, we seek price point diversification by owning apartment communities that offer apartment homes at rents below those asked by competitive new building supply.
Our portfolio of apartment communities is diversified across “A,” “B,” and “C+” price points, averaging “B/B+” in quality and is also diversified across several of the largest markets in the United States. Please refer to the Executive Overview heading undersection in Item 7 for a description of our portfolio quality ratings. AtAs of December 31, 2018,2019, our Real Estate portfolio was allocated about one-half to “A” rated properties, and about one-half to “B” and “C+” rated properties.
As part of our portfolio strategy, we seek to sell up to 10% of our portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, limited developmentsome developments, and selective acquisitions with projected Free Cash FlowFCF internal rates of return higher than expected from the communities being sold.
Balance Sheet
Our leverage strategy seeks to magnifyincrease financial returns whileby using leverage with appropriate caution. We limit risk through our balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; build financial flexibility by maintaining ample unused and available credit as well as holding properties with substantial value unencumbered by property debt; and use partners’ capital when it enhances financial returns or reduces investment risk.
Our leverage includes our share of long-term, non-recourse, property debt encumbering apartment communities, outstanding borrowings under our revolving credit facility, and outstanding preferred equity.
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We target a ratio of Proportionate Debt and Preferred Equity to adjusted earnings before interest, taxes, depreciation, and amortization for real estate, or Adjusted EBITDAEBITDAre, as defined by Nareit, below 7.0x and we target a ratio of Adjusted EBITDAEBITDAre to Adjusted Interest Expense and Preferred Dividends greater than 2.5x.
Our ratios as of December 31, 20182019, were 7.2x7.6x and 3.4x,3.5x, respectively.
Please refer to the Leverage Ratios subsection to the Non-GAAP Measures section in Item 7 for additional information regarding our leverage ratios.
Our liquidity consists of cash balances and available capacity on our revolving line of credit.credit facility. As of December 31, 2018,2019, we had cash and restricted cash of $72.6$177.7 million and had capacity to borrow $632.5$517.8 million under our revolving credit facility.
We manage our financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt. As of December 31, 2018,2019, we held unencumbered apartment communities with an estimated fair market value of approximately $2.7 billion, up 50% from December 31, 2017.
Please refer to the Executive Overview and Liquidity and Capital Resources headings undersections in Item 7 for additional information regarding our balance sheet and liquidity.
Team and Culture
Our team and culture are keys to our success. Our intentional focus on a collaborative and productive culture based on respect for others and personal responsibility is reinforced by a preference for promotion from within. We focus on succession planning and talent development to produce a strong, stable team that is the enduring foundation of our success. In 2018, we were recognized
Competition
In attracting and retaining residents to occupy our apartment communities we compete with numerous other housing providers. Our apartment communities compete directly with other rental apartments, as well as condominiums and single-family homes that are available for rent or purchase in the markets in which our apartment communities are located. Principal factors of competition include rent or price charged, attractiveness of the location and apartment community, and the quality and breadth of services. The number of competitive apartment communities relative to demand in a particular area has a material effect on our ability to lease apartment homes at our apartment communities and on the rents we charge. In certain markets, there exists an oversupply of newly-constructed apartment homes, single-family homes, and condominiums relative to consumer demand, which affects the pricing and occupancy of our rental apartments.
We also compete with other real estate investors, including other apartment REITs, pension and investment funds, partnerships, and investment companies in acquiring, redeveloping, managing, obtaining financing for, and disposing of apartment communities. This competition affects our ability to acquire apartment communities we want to add to our portfolio and the price that we pay in such acquisitions; our ability to finance or refinance communities in our portfolio and the cost of such financing; and our ability to dispose of communities we no longer desire to retain in our portfolio and the timing and price available to us when we seek to dispose of such communities.
Taxation
Aimco
Aimco has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1994, 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
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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, Aimco 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 Aimco’s operations, or a portion thereof, including property management and risk management are conducted through taxable REIT subsidiaries, each of which we refer to as a TRS. A TRS is a subsidiary C-corporation that has not elected REIT status and, as such, is subject to United States federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents and investment partners that cannot be offered directly by a REIT. We also use TRS entities to hold investments in certain apartment communities.
The Aimco Operating Partnership
The 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 the 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 the Aimco Operating Partnership during the taxable year. Generally, the characterization of any particular item is determined by the 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 the Aimco Operating Partnership’s Partnership Agreement. The Aimco Operating Partnership is subject to tax in certain states.
Regulation
General
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 apartment 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 would 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 regulating multifamily housing, may reduce rental revenue or increase operating costs in particular markets.
Environmental
Various federal, state, and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present at an apartment community. 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, operation, and management of apartment communities, we could potentially be liable for environmental liabilities or costs associated with our current apartment communities, communities we acquire or manage in the future, or communities we previously owned or operated in the past. These and other risks related to environmental matters are described in more detail in Item 1A. Risk Factors.
Corporate Responsibility
At Aimco, 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 team members, our communities, and the environment. Highlights of our corporate responsibility program can be found in our proxy statement for Aimco’s 2020 annual meeting of stockholders and is incorporated herein by reference.
Insurance
Our primary lines of insurance coverage are property, general liability, and workers’ compensation. We believe that our insurance coverages adequately insure our apartment communities against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, terrorism, and other perils, and adequately insure us against other risk. Our coverage includes deductibles, retentions, and limits that are customary in the industry. We have established loss prevention, loss mitigation, claims handling, and litigation management procedures to manage our exposure.
As of December 31, 2018,2019, we had approximately 1,050950 team members, of whom about 700600 were at the apartment community level performing on-site functions or at our shared service center performing tasks that have been centralized there, with the balance managing corporate and area functions, including investment and debt transactions, legal, finance and accounting, information systems, human resources, and other support functions. As of December 31, 2018,2019, unions represented approximately 50 of our team members. We have never experienced a work stoppage and believe we maintain satisfactory relations with our team members.
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 Aimco or the 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 through Aimco’s website at
ITEM 1A.
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 Our Real Estate Investments and Our Operations
Redevelopment, development, and construction risks could affect our profitability.
We are currently redeveloping and developing certain of our apartment communities. During
• | 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 costs, such as litigation; |
• | we may be unable to complete construction and lease-up of an apartment community on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues; |
• | 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 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 redevelopment or development process; |
• | unexpected events or circumstances may arise during the redevelopment or development process that affect the timing of completion and the cost and profitability of the redevelopment or development; and |
• | loss of a key member of a redevelopment or development team could adversely affect our ability to deliver redevelopments and developments on time and within our budget. |
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 apartment communities depends on, among other things, our ability to generate net operating income in excess of required debt payments. If we are unable to fund capital expenditures on our apartment 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.
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Our ability to make payments to our investors depends on our ability to generate net operating income in excess of required debt payments and capital expenditure requirements. 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; |
• | 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. |
Competition could limit our ability to lease apartment homes or increase or maintain rents.
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 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.
Because real estate investments are relatively illiquid, we may not be able to sell apartment communities 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.
If we are not successful in our acquisition of apartment communities, our results of operations could be adversely affected.
The selective acquisition of apartment communities is a component of our strategy. However, we may not be able to complete transactions successfully in the future. Although we seek to acquire apartment communities when such acquisitions increase our Free Cash FlowFCF internal raterates of returnsreturn and are accretive to Net Asset Value,NAV, such transactions may fail to perform in accordance with our expectations. In particular, following acquisition, the value and operational performance of an apartment community may be diminished if obsolescence or neighborhood changes occur before we are able to redevelop or sell the apartment community. This could have an adverse effect on our financial condition or results of operations.
Potential liability or other expenditures associated with potential environmental contamination may be costly.
Various federal, state, and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present in the land or buildings of an apartment community. 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
Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
Under the Americans with Disabilities Act of 1990, or 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, or FHAA, requires apartment communities first occupied after March 13, 1991, to comply with design and construction
8
requirements for disabled access. For those apartment communities receiving federal funds, the Rehabilitation Act of 1973 also has requirements regarding disabled access. These and other 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.
Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our operating results and financial condition.
We are insured for a portion of our consolidated apartment communities’ 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 apartment community 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 employee health insurance plans, 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 operating results and financial condition.
Natural disasters such as earthquakes and severe weather such as hurricanes may result in significant damage to our apartment communities. 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
We depend on our senior management.
Our success depends upon the retention of our senior management, including Terry Considine, our chief executive officer. We have a succession planning and talent development process that is designed to identify potential replacements and develop our team members to provide depth in the organization and a bench of talent on which to draw. However, there are no assurances that we would be able to find qualified replacements for the individuals who make up our senior management if their services were no longer available. The loss of services of one or more members of our senior management team could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain key-man life insurance for any of our employees.
9
Our business and operations would suffer in computing its taxable income, and will be subject to United States federal income tax at regular corporate rates. This would substantially reducethe event of significant disruptions or cyber attacks of our funds available for distribution toinformation technology systems or 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 would place uscomply with laws, rules and regulations related to privacy and data protection.
Information technology, communication networks, and related systems are essential to the operation of our business. We use these systems to manage our resident and 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 and other information in default under our revolving credit agreement.
Despite system redundancy, risk transfer, insurance, indemnification, the implementation of security measures, required employee awareness training, and the existence of a precise determination,disaster recovery plan for our internal information technology systems, our systems and forsystems maintained by third party vendors with which we do not obtain independent appraisals. Aimco’s compliancebusiness are vulnerable to damage from any number of sources. We face risks associated with energy blackouts, natural disasters, terrorism, war, telecommunication failures, and cyber attacks and intrusions, such as computer viruses, malware, attachments to e-mails, intrusion, and unauthorized access, including from persons inside our organization or from persons outside our organization with access to our systems. We may also incur additional costs to remedy damages caused by such disruptions. Although we make efforts to maintain the REIT annual incomesecurity and quarterly asset requirements also depends uponintegrity of our abilitysystems and have implemented various measures to manage successfully the compositionrisk of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debta security breach 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,disruption, there can be no assurance that the Internal Revenue Service,our security efforts and measures will be effective or the IRS, willthat attempted security breaches or disruptions would not contend thatbe successful or damaging. Any compromise of our interestssecurity could also result in subsidiaries or other issuers constitutes a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the REIT requirements. Moreover,information (which may be confidential, proprietary, and/or commercially sensitive in nature), and a loss of confidence in our security measures, which could harm our business.
We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act, or CCPA (which will become effective on January 1, 2020), relating to the collection, use, and security of employee and other data. Evolving compliance and operational requirements under the CCPA and the privacy laws of other jurisdictions in which we operate impose significant costs that are likely to increase over time. Our failure to comply with laws, rules, and regulations related to privacy and data protection could harm our business or reputation.
Risks Related to Our Indebtedness and Financing
Our existing and future debt financing could result in foreclosure of our apartment communities, prevent us from making distributions on our equity, or otherwise adversely affect our liquidity.
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 existing indebtedness may not be refinanced or that the terms of any refinancing will not be as favorable as the terms of existing indebtedness. If we fail to make required payments of principal and interest on our non-recourse 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. As of December 31, 2019, the majority of our apartment communities were encumbered by debt. 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 be paid in order to maintain Aimco’s qualification as a REIT.
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 market, legal, tax or other considerationsuncertainty the United States credit markets may experience significant liquidity disruptions, which may cause Aimcothe spreads on debt financings to failwiden considerably and make obtaining financing, both non-recourse property debt and corporate borrowings such as those under our revolving credit agreement, more difficult. In particular, apartment borrowers have benefited from the historic willingness of Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac, to qualify as a REIT, or Aimco’s Boardmake substantial amounts of Directors may determineloans secured by multi-family properties, even in times of economic distress. These two lenders are federally chartered and subject to revoke its REIT status.
If our ability to obtain financing is adversely affected, we may be unable to satisfy scheduled maturities on existing financing through other sources of liquidity, which could result in lender foreclosure on the apartment communities securing such debt and loss of income and asset value, both of which would adversely affect our liquidity.
10
Increases in interest rates would increase our interest expense and reduce our profitability.
As of December 31, 2019, we had approximately $445.1 million of variable-rate indebtedness outstanding. We estimate that an increase or decrease in 30-day LIBOR of 100 basis points with constant credit risk spreads would increase or reduce interest expense by approximately $4.5 million on an annual distribution requirements. basis.
As of December 31, 2019, we had approximately $177.7 million in cash and cash equivalents and restricted cash, a portion of which bear interest at variable rates indexed to LIBOR-based rates, which may partially mitigate the effect of an increase in variable rates on our variable-rate indebtedness discussed above.
The potential phasing out of LIBOR after 2021 may affect our financial results.
In July 2017, the Financial Conduct Authority, which regulates LIBOR, announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. In 2018, the Alternative Reference Rates Committee identified the Secured Overnight Financing Rate, or SOFR, as the alternative to LIBOR. Whether or not SOFR attains market traction as a LIBOR replacement remains a question, and the future of LIBOR at this time is uncertain. At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere. Due to the broad use of LIBOR as a reference rate, all financial market participants, including us, are impacted by the risks associated with this transition. Any of these proposals or consequences could have a material adverse effect on our financing costs, and as a result, our financial condition, operating results, and cash flows.
Covenant restrictions may limit our ability to make payments to our investors.
Some of our debt and other securities contain covenants that restrict our ability to make distributions or other payments to our investors unless certain financial tests or other criteria are satisfied. Our revolving credit agreement provides, among other things, that we may not make distributions to our investors during any four consecutive fiscal quarters in an aggregate amount greater than 95% of our Nareit FFO for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain Aimco’s REIT status. Our outstanding preferred units prohibit the payment of dividends on our Common Stock or common partnership units if we fail to pay the dividends to which the holders of the preferred units are entitled.
Risks Related to Aimco’s Corporate Structure
The Aimco Operating Partnership paysand its subsidiaries may be prohibited from making distributions intended to enableand other payments.
All of Aimco’s apartment communities are owned, and all of Aimco’s operations are conducted, by the Aimco Operating Partnership. Further, many of the Aimco Operating Partnership’s apartment communities are owned by subsidiaries of the Aimco Operating Partnership. As a result, Aimco depends on distributions and other payments from the Aimco Operating Partnership, and the Aimco Operating Partnership depends on distributions and payments from its subsidiaries in order to satisfy our financial obligations and make payments to our investors. The ability of the Aimco Operating Partnership and 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 REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, in order for its distributed earnings not to be subject to United States federal corporate income tax. We intendsubsidiaries to make such distributions to Aimco’s stockholders to comply with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt ofother payments depends on their earnings and 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.
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 securities laws) to 8.7% (or up to 12.0% upon a waiver from Aimco’s Board of Directors) of outstanding shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies and Mr. Considine (or up to 18.0%20.0% for such pension trusts or registered investment companies upon a waiver from Aimco’s Board of Directors). 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 Mr. Considine. 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 50% or more 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; |
11
• | 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 of Directors. Aimco’s charter authorizes its Board of Directors to issue up to 510,587,500 shares of capital stock. As of December 31, 2018,2019, 500,787,260 shares were classified as Common Stock, of which 149,133,826148,885,197 were outstanding, and 9,800,240 shares were classified as preferred stock of which 5,000,000no shares were outstanding. Under Aimco’s charter, its Board of Directors has the authority to classify and reclassify any of Aimco’s 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 of Directors 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 the Aimco Board of Directors 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 Aimco and increasing the difficulty of consummating any such offers, where there is a difference of opinion between the Aimco Board of Directors and others as to what is in Aimco’s stockholders’ best interests. The Maryland General Corporation Law, specifically the Maryland Business Combination Act, restricts mergers and other business combination transactions between Aimco and any person who acquires, directly or indirectly, beneficial ownership of shares of Aimco’s stock representing 10% or more of the voting power without Aimco’s Board of Directors’ 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 Aimco’s 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 boardBoard of directorsDirectors 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, Aimco has 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 that provides that: |
• | the corporation will have a staggered board of directors; |
• | 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; |
12
Table of the entity or related to an acquiring person; andContents
• | the number of directors may only be set by the board of directors, even if the procedure is contrary to the charter or bylaws; |
• | vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or bylaws; and |
• | 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. |
To date, Aimco has not made any of the elections described above.
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 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 would place us in default under our revolving credit agreement.
We believe that 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 as a REIT for United States federal income tax purposes. 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 our 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 our analysis of 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 manage successfully 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, or the IRS, will not contend that our interests in subsidiaries or other issuers constitutes 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 Aimco’s Board of Directors may determine to revoke its REIT status.
REIT distribution requirements limit our available cash.
As a REIT, Aimco is subject to annual distribution requirements. The Aimco Operating Partnership pays distributions intended to enable Aimco 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 REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, in order for its distributed earnings not to be subject to United States federal corporate income tax. We intend to make distributions to Aimco’s stockholders to comply with the requirements of the Code. 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.
Aimco may be subject to federal and state income taxes, in certain circumstances.
Even if Aimco qualifies as a REIT, Aimco may be subject to United States federal income and excise taxes in various situations, such as on its undistributed income. Aimco could also be required to pay a 100% tax on any net income on non-arm’s length transactions between Aimco and a taxable REIT subsidiary and on any net income from sales of apartment communities that were held for sale primarily in the ordinary course. 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 do not qualify for the reduced tax rates available for some dividends.
REITs are entitled to a United States federal tax deduction for dividends paid to their stockholders. As compared to other taxable corporations, this ability to reduce or eliminate the REIT’s taxable income by paying dividends to stockholders is a principal benefit of maintaining REIT status, generally resulting in a lower combined tax liability of the REIT and its
13
stockholders as compared to that of the combined tax liability of other taxable corporations and their stockholders. Notwithstanding this combined benefit, dividends payable by REITs may result in marginally higher taxes to the stockholder.
C-corporations are generally required to pay United States federal income tax on earnings. After tax earnings are then available for stockholder 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 may 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 corporates 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 for United States federal income tax purposes, 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 Aimco stockholders, and the ownership of Aimco 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 Common Stock. The United States federal income tax rules dealing with REITs constantly are 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 Aimco’s stockholders. Revisions in federal tax laws and interpretations thereof could significantly and negatively affect Aimco’s ability to qualify as a REIT and the tax considerations relevant to an investment in Aimco Common Stock, or could cause Aimco to change its investments and commitments.
Government housing regulations may limit the opportunities at some of our apartment communities and failure to comply with resident qualification requirements may result in financial penalties and/or loss of benefits, such as rental revenues paid by government agencies. Additionally, the government may cease to operate or reduce funding for government housing programs which would result in a loss of benefits from those programs.
We own equity interests in entities that own certain apartment communities that benefit from governmental programs intended to provide housing to people with low or moderate incomes. These programs, which are usually administered by the United States Department of Housing and Urban Development, or HUD, or state housing finance agencies, typically provide one or more of the following: mortgage insurance; favorable financing terms; tax-exempt interest; historic or low-income housing tax credits; or rental assistance payments to the apartment community owners. As a condition of the receipt of assistance under these programs, the apartment communities must comply with various requirements, which typically limit rents to pre-approved amounts and limit our choice of residents to those with incomes at or below certain levels. Failure to comply with these requirements may result in financial penalties or loss of benefits. We are usually required to obtain the approval of HUD in order to acquire or dispose of a significant interest in or manage a HUD-assisted apartment community. We may not always receive such approval.
ITEM 1B.
None.
ITEM 2.
Additional information about our consolidated apartment communitiesreal estate, including property debt, is contained in “Schedule III - Real Estate and Accumulated Depreciation” in this Annual Report on Form 10-K. Refer to
Our Real Estate portfolio is diversified by both price point and geography and consists of market rate apartment communities in which we own a substantial interest. Our Real Estate portfolio includes garden style, mid-rise, and high-rise apartment communities located in 17 states and the District of Columbia. Our portfolio strategy seeks predictable rent growth from a portfolio of apartment communities diversified among some of the largest markets in the United States, and that is diversified across “A,” “B”“B,” and “C+” price points, averaging “B/B+” in quality. As of December 31, 2018,2019, our Real Estate portfolio consisted of roughly one-half “A” quality communities and one-half “B” and “C+” quality communities (as measured by gross asset value).communities. Please refer to the Executive Overview heading undersection in Item 7 for a description of our portfolio quality ratings. The following table sets forth information on the apartment communities in our Real Estate portfolio as of December 31, 2018:2019:
|
| Number of Apartment Communities |
|
| Number of Apartment Homes |
|
| Average Economic Ownership |
|
| Average Quality Rating (1) | |||
Atlanta |
|
| 4 |
|
|
| 505 |
|
|
| 100 | % |
| A |
Bay Area |
|
| 12 |
|
|
| 2,632 |
|
|
| 100 | % |
| B |
Boston |
|
| 15 |
|
|
| 4,689 |
|
|
| 100 | % |
| C+ |
Chicago |
|
| 7 |
|
|
| 1,671 |
|
|
| 100 | % |
| B |
Denver |
|
| 8 |
|
|
| 2,151 |
|
|
| 98 | % |
| B |
Greater New York |
|
| 18 |
|
|
| 1,039 |
|
|
| 100 | % |
| B |
Greater Washington, D.C. |
|
| 12 |
|
|
| 5,457 |
|
|
| 100 | % |
| C+ |
Los Angeles |
|
| 13 |
|
|
| 4,347 |
|
|
| 100 | % |
| A |
Miami |
|
| 5 |
|
|
| 2,448 |
|
|
| 100 | % |
| A |
Philadelphia |
|
| 9 |
|
|
| 2,748 |
|
|
| 97 | % |
| A |
San Diego |
|
| 12 |
|
|
| 2,423 |
|
|
| 97 | % |
| B |
Seattle |
|
| 2 |
|
|
| 239 |
|
|
| 100 | % |
| B |
Other markets |
|
| 7 |
|
|
| 2,490 |
|
|
| 99 | % |
| B |
Total portfolio (2) |
|
| 124 |
|
|
| 32,839 |
|
|
| 99 | % |
| B/B+ |
(1) | Average quality rating is based on REIS market data as of September 30, 2019. |
| Number of Apartment Communities | Number of Apartment Homes | Average Economic Ownership | ||||||
| Atlanta | 5 | 817 | 100 | % | ||||
| Bay Area | 12 | 2,632 | 100 | % | ||||
| Boston | 15 | 4,689 | 100 | % | ||||
| Chicago | 10 | 3,246 | 100 | % | ||||
| Denver | 8 | 2,151 | 98 | % | ||||
| Greater New York | 18 | 1,040 | 100 | % | ||||
| Greater Washington, DC | 14 | 5,900 | 100 | % | ||||
| Los Angeles | 13 | 4,347 | 100 | % | ||||
| Miami | 5 | 2,671 | 100 | % | ||||
| Philadelphia | 8 | 2,638 | 97 | % | ||||
| San Diego | 12 | 2,423 | 97 | % | ||||
| Seattle | 2 | 239 | 100 | % | ||||
| Other markets | 12 | 3,756 | 99 | % | ||||
| Total Real Estate portfolio | 134 | 36,549 | 99 | % | ||||
(2) | Total portfolio represents the number of apartment communities we owned an equity interest in. Of our total portfolio, we consolidate 120 apartment communities with 32,697 apartment homes. |
Our consolidated apartment communities contained, on average, 280272 apartment homes, with the largest community containing 2,113 apartment homes. These apartment communities offer residents a range of amenities, including resort pools with cabanas, grills, clubhouses, spas, fitness centers, package lockers, dog parks, and large open spaces. Many of the apartment homes offer features such as granite countertops, wood flooring, stainless steel appliances, fireplaces, spacious closets, washer and dryer connections, balconies, and patios.
The majority of our consolidated apartment communities are encumbered by property debt. AtAs of December 31, 2018,2019, apartment communities in our Real Estate portfolio were encumbered by, in aggregate, $3.9$4.3 billion of property debt with a weighted averageweighted-average interest rate of 4.18%3.89% and a weighted averageweighted-average maturity of 8.07.5 years. The apartment communities collateralizing this non-recourse property debt have an estimated aggregate fair value of $10.2$10.9 billion. AtAs of December 31, 2018,2019, we held unencumbered apartment communities with an estimated fair value of approximately $2.7 billion
On July 2, 2019, we acquired a 95% interest in 1001 Brickell Bay Drive, a 1.8-acre waterfront parcel in Miami, Florida, currently improved with an office building. 1001 Brickell Bay Drive is excluded from our apartment communities table above.
ITEM 3.
As further discussed in
NoteITEM 4.
Not applicable.
PART II
ITEM 5.
Aimco
Aimco’s Common Stock has been listed and traded on the NYSE under the symbol “AIV” since July 22, 1994.
On February 15, 2019,21, 2020, there were 148,766,616148,930,402 shares of Common Stock outstanding, held by 1,673815 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 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 common OP Unit. Please refer to
NoteRepurchases of Equity Securities
There were no repurchases (in thousands, except for per share data) forby Aimco of its common equity securities during the three months ended December 31, 2018:
| Fiscal period | Total Number of Shares Purchased | 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 - October 31, 2018 | 1,708 | $ | 43.91 | 1,708 | 17,616 | |||||||
| November 1 - November 30, 2018 | 1,828 | 45.50 | 1,828 | 15,788 | ||||||||
| December 1 - December 31, 2018 | 4,683 | 46.00 | 4,683 | 11,105 | ||||||||
| Total | 8,219 | $ | 45.43 | 8,219 | ||||||||
| For the fiscal years ended December 31, | ||||||
| Index | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
| Aimco (1) | 100.00 | 148.04 | 164.54 | 192.98 | 191.69 | 199.60 |
| MSCI US REIT (1) | 100.00 | 130.38 | 133.67 | 145.16 | 152.52 | 145.55 |
| NAREIT Apartment Index (2) | 100.00 | 139.62 | 162.60 | 167.24 | 173.46 | 179.88 |
| S&P 500 (1) | 100.00 | 113.69 | 115.26 | 129.05 | 157.22 | 150.33 |
The Aimco Operating Partnership
Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as OP Units. OP Units include common partnership units, which we refer to as common OP Units, as well as partnership preferred units, or preferred OP Units. There is no public market for the Aimco Operating Partnership’s common partnership units, including common OP Units, and we have no intention of listing the common partnership units on any securities exchange. In addition, the Aimco Operating Partnership’s Partnership Agreement restricts the transferability of common partnership units, including common OP Units.
On February 15, 2019,21, 2020, there were 158,495,487159,442,294 common partnership units and equivalents outstanding (148,766,616(148,930,402 of which were held by Aimco) that were held by 2,5152,394 unitholders of record.
Unregistered Sales of Equity Securities
The Aimco Operating Partnership did not issue any unregistered OP units during the three months ended December 31, 2019.
Repurchases of Equity Securities
The Aimco Operating Partnership’s Partnership Agreement generally provides that after holding common OP Units for one year, limited partners other than Aimco have the right to redeem their common OP Units for cash or, at our election, shares of Aimco Common Stock on a one-for-one basis (subject to customary antidilution adjustments).
16
The following table summarizes the Aimco Operating Partnership’s repurchases, or redemptions in exchange for cash, of common OP Units for the three months ended December 31, 2018:2019:
Fiscal period |
| Total Number of Units Purchased |
|
| 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 | ||
October 1 - October 31, 2019 |
|
| 13,676 |
|
| $ | 51.46 |
|
| N/A |
| N/A |
November 1 - November 30, 2019 |
|
| 9,575 |
|
|
| 54.32 |
|
| N/A |
| N/A |
December 1 - December 31, 2019 |
|
| 5,484 |
|
|
| 53.62 |
|
| N/A |
| N/A |
Total |
|
| 28,735 |
|
| $ | 52.83 |
|
|
|
|
|
| Fiscal period | Total Number of Units Purchased | 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 | ||||||
| October 1 - October 31, 2018 | 11,150 | $ | 43.96 | N/A | N/A | |||||
| November 1 - November 30, 2018 | 3,765 | 43.47 | N/A | N/A | ||||||
| December 1 - December 31, 2018 | 11,360 | 46.45 | N/A | N/A | ||||||
| Total | 26,275 | $ | 44.97 | |||||||
Dividend and Distribution Payments
As a REIT, Aimco is required to distribute annually to holders of its Common Stock at least 90% 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 of Directors determines and declares its dividends. In making a dividend determination, Aimco’s Board of Directors considers a variety of factors, including: REIT distribution requirements; current market conditions; liquidity needs; and other uses of cash, such as for deleveraging and accretive investment activities. Aimco’s Board of Directors targets a dividend payout ratio between 65% and 70% of Adjusted Funds From Operations.
Stockholders receiving such dividend and any future dividend payable in cash and shares of Aimco Common SockStock will be required to include the full amount of such dividends as ordinary income to the extent of Aimco’s current and accumulated earnings and profits, as determined for United States federal income tax purposes for the year of such dividends, and may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. With respect to certain non-United States stockholders, Aimco may be required to withhold United States tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in Common Stock.
The Board of Directors of the Aimco Operating Partnership’s general partner determines and declares distributions on OP Units. Aimco, through wholly-owned subsidiaries, is the general and special limited partner of and, as of December 31, 2018,2019, owned a 94.3%94.0% ownership interest in the common partnership units of the Aimco Operating Partnership. The Aimco Operating Partnership holds all of Aimco’s assets and manages the daily operations of Aimco’s business. The distributions paid by the Aimco Operating Partnership to Aimco are used by Aimco to fund the dividends paid to its stockholders. Accordingly, the per share dividends Aimco pays to its stockholders generally equal the per unit distributions paid by the Aimco Operating Partnership to holders of its common partnership units.
Our revolving credit agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends and distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of Aimco’s Funds From Operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain Aimco’s REIT status.
17
Performance Graph
The following graph compares cumulative total returns for Aimco’s Common Stock, the MSCI US REIT Index, the Nareit Equity Apartment Index, and the Standard & Poor’s 500 Total Return Index, or S&P 500 Index. The MSCI US REIT Index is published by Morgan Stanley Capital International Inc., a provider of equity indices. The Nareit Equity Apartment Index is published by The National Association of Real Estate Investment Trusts, or Nareit, a representative of real estate investment trusts and publicly traded real estate companies with interests in United States real estate and capital markets. The MSCI US REIT Index reflects total shareholder return for a broad range of REITs and the Nareit Equity Apartment Index provides a more direct multifamily peer comparison of total shareholder return. 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’s Common Stock and in each index on December 31, 2014, and that all dividends paid have been reinvested. The historical information set forth below is not necessarily indicative of future performance.
|
| For the years ended December 31, |
| |||||||||||||||||||||
Index (1) |
| 2014 |
|
| 2015 |
|
| 2016 |
|
| 2017 |
|
| 2018 |
|
| 2019 |
| ||||||
Aimco |
|
| 100.00 |
|
|
| 111.15 |
|
|
| 130.36 |
|
|
| 129.48 |
|
|
| 134.83 |
|
|
| 163.89 |
|
MSCI US REIT Index |
|
| 100.00 |
|
|
| 102.52 |
|
|
| 111.34 |
|
|
| 116.98 |
|
|
| 111.64 |
|
|
| 140.48 |
|
Nareit Equity Apartment Index |
|
| 100.00 |
|
|
| 116.45 |
|
|
| 119.78 |
|
|
| 124.24 |
|
|
| 128.83 |
|
|
| 162.74 |
|
S&P 500 Index |
|
| 100.00 |
|
|
| 101.38 |
|
|
| 113.51 |
|
|
| 138.29 |
|
|
| 132.23 |
|
|
| 173.86 |
|
(1) | Source: S&P Global Market Intelligence ©2020 |
The Performance Graph will not be deemed to be incorporated by reference into any filing by Aimco under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Aimco specifically incorporates the same by reference.
18
ITEM 6.
The following selected financial data is based on audited historical financial statements of Aimco and the Aimco Operating Partnership.Partnership, unless otherwise noted. This information should be read in conjunction with such financial statements, including the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein or in previous filings with the Securities and Exchange Commission.
(dollar amounts in thousands, except per share data) |
| Years Ended December 31, |
| |||||||||||||||||
|
| 2019 |
|
| 2018 (1) |
|
| 2017 |
|
| 2016 |
|
| 2015 |
| |||||
OPERATING DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| $ | 914,294 |
|
| $ | 972,410 |
|
| $ | 1,005,437 |
|
| $ | 995,854 |
|
| $ | 981,310 |
|
Net income |
|
| 508,027 |
|
|
| 716,603 |
|
|
| 347,079 |
|
|
| 483,273 |
|
|
| 271,983 |
|
Net income attributable to Aimco/the Aimco Operating Partnership per common share/unit – diluted (2) |
| $ | 3.15 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
| $ | 2.75 |
|
| $ | 1.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 6,828,739 |
|
| $ | 6,190,004 |
|
| $ | 6,079,040 |
|
| $ | 6,232,818 |
|
| $ | 6,118,681 |
|
Total indebtedness |
|
| 4,505,590 |
|
|
| 4,075,665 |
|
|
| 3,861,770 |
|
|
| 3,648,206 |
|
|
| 3,599,648 |
|
Non-recourse property debt of partnerships served by Asset Management business |
|
| — |
|
|
| — |
|
|
| 227,141 |
|
|
| 236,426 |
|
|
| 249,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends/distributions declared per common share/unit |
| $ | 1.56 |
|
| $ | 1.52 |
|
| $ | 1.44 |
|
| $ | 1.32 |
|
| $ | 1.18 |
|
(1) | In July 2018, we sold our Asset Management business and our four affordable apartment communities located in the Hunters Point area of San Francisco. |
| Years Ended December 31, | |||||||||||||||||||
| 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
| (dollar amounts in thousands, except per share data) | |||||||||||||||||||
| OPERATING DATA: | |||||||||||||||||||
| Total revenues | $ | 972,410 | $ | 1,005,437 | $ | 995,854 | $ | 981,310 | $ | 984,363 | |||||||||
| Net income | 716,603 | 347,079 | 483,273 | 271,983 | 356,111 | ||||||||||||||
| Net income attributable to Aimco/the Aimco Operating Partnership per common share/unit – diluted | $ | 4.21 | $ | 1.96 | $ | 2.67 | $ | 1.52 | $ | 2.06 | |||||||||
| BALANCE SHEET INFORMATION: | |||||||||||||||||||
| Total assets | $ | 6,190,004 | $ | 6,079,040 | $ | 6,232,818 | $ | 6,118,681 | $ | 6,068,631 | |||||||||
| Total indebtedness | 4,075,665 | 3,861,770 | 3,648,206 | 3,599,648 | 3,852,885 | ||||||||||||||
| Non-recourse property debt of partnerships served by Asset Management business | — | 227,141 | 236,426 | 249,493 | 255,140 | ||||||||||||||
| OTHER INFORMATION: | |||||||||||||||||||
| Dividends/distributions declared per common share/unit | $ | 1.52 | $ | 1.44 | $ | 1.32 | $ | 1.18 | $ | 1.04 | |||||||||
(2) | On February 20, 2019, we completed a reverse stock split whereby every 1.03119 Aimco common share and Aimco Operating Partnership common partnership unit was combined into one Aimco common share and Aimco Operating Partnership common partnership unit, respectively. We have revised the outstanding share and unit counts, presentation of share and unit activity, and earnings per share and unit, as if the reverse split occurred on December 31, 2014. |
ITEM 7.
Executive Overview
We are focused on the ownership, management, redevelopment, and limitedsome development of quality apartment communities located in several of the largest markets in the United States.
Our principal financial objective is to provide predictable and attractive returns to our equity holders. We measure our long-term total return using Economic Income, defined as Net Asset Value, or NAV growth plus dividends. NAV is used by many investors because the value of company assets can be readily estimated, even for non-earning assets such as land or properties under development. NAV has the advantage of incorporating the investment decisions of thousands of real estate investors, enhancing comparability among companies that have differences in their accounting, avoiding disparity that can result from application of GAAP to investment properties and various ownership structures. Some investors focus on multiples of Adjusted Funds From Operations, or AFFO and Funds From Operations, orNareit FFO. Our disclosure of AFFO, a measure of current return, complements our focus on Economic Income. We also use Pro forma Funds From Operations, or Pro forma FFO as a secondary measure of operational performance. Over the last five years as of December 31, 2019, our Economic Income grew at a compoundcompounded annual return of 11.5%
Year-over-year as of strategic focus are described in more detail within the Business Overview in Item 1. The results from execution of our business plan in 2018 are further described in the sections that follow.
Financial Highlights
Net income attributable to common stockholders per common share, on a dilutive basis, decreased by $1.19 during the year ended December 31, 2019 compared to 2018, primarily due to lower gains from dispositions.
We sold our Asset Management business in July 2018, accepting near-term earnings dilution as the price of an increased long-term growth rate. In 2019, we overcame these earnings headwinds and Pro forma FFO per share increased $0.02,by $0.05, or 0.8%2.0%, for the year ended December 31, 2018, as2019 compared to 20172018. For the three months ended December 31, 2019 compared to 2018, the first comparative period without the Asset Management business, our Pro forma FFO and AFFO per share increased 5% and 12%, respectively.
The year-over-year increase in Pro Forma FFO was due primarily to the following items:
Our business is organized around five areas of strategic focus: operational excellence; redevelopment and development; portfolio management; balance sheet; and team and culture. The results from the execution of our business plan in 2019 are further described in the sections that follow.
Operational Excellence
We own and operate a portfolio of market rate apartment communities, diversified by both geography and price point, which we refer to as our Real Estate portfolio. Atpoint. As of December 31, 2018,2019, our Real Estate portfolio included 134124 apartment communities with 36,54932,839 apartment homes in which we held an average ownership of approximately 99%. This, and approximately 80% of the value of our portfolio, measured by gross asset value (the estimated fair value of our communities), was divided about two-thirds by valueattributable to our “Same Store” portfolio of stabilized apartment communities and about one-third by value to “Other Real Estate,” which includes recently acquired communities and communities under redevelopment or development whose long-term financial contribution is not yet stabilized.
Our property operations team produced solid results for our Real Estate portfolio for the year ended December 31, 2018. Highlights include:
• | Average daily occupancy of 97.1%, 60 basis points higher than the year ended 2018; |
• | Net operating income increased 4.3% with a 73.7% net operating income margin, 40 basis points higher than the margin for the year ended 2018; and |
• | Rent increases on renewals and new leases averaged 4.9% and 1.9%, respectively, for a weighted-average increase of 3.4%, 40 basis points higher than the year ended 2018. |
Our focus on efficient operations through productivity initiatives such as centralization of administrative tasks, optimization of economies of scale at the corporate level, increased automation, and investment in more durable, longer-lived materials has
20
helped us control operating expenses. These and other innovations contributed to limiting growth in Same Store controllable operating expense, (defineddefined as property expenses less taxes, insurance, and utility expenses)expenses, compounding for the past decade12 years at an annual rate of 0.1%negative 0.2%.
Redevelopment and 67% Free Cash Flow margins.
Our second line of business is the redevelopment and limitedsome development of apartment communities. Through theseredevelopment activities, we expect to create value by repositioning communities within our portfolio. We measure the rate and quality of financial returns by NAV creation, an important component of Economic Income, our primary measure of long-term financial performance. Over the past five years, we have spent approximately $1.0 billion on redevelopment and development, resulting in estimated value creation of approximately $400.0 million. We also undertake limited ground-up development when warranted by risk-adjusted
We invest to earn risk-adjusted returns in excess of those expected from the apartment communities sold in paired trades to fund the redevelopment or development. Of these two activities, we generally favor redevelopment because it permits adjustment to the scope and timing of spending to align with changing market conditions and customer preferences.
During the year ended December 31, 2018,2019, we invested $175.9$229.8 million in redevelopment and development.
The following table summarizes our significant redevelopment and broke ground on the development of The Fremont, a 253-apartment home community. We expect to invest approximately $87.0 million to construct the community, which is expected to be ready for occupancycommunities (dollars in late 2020.millions):
| Location |
| Apartment Homes Approved for Redevelopment |
|
| Apartment Homes Completed |
|
| Percentage of Completed Homes Leased |
|
| Estimated Net Redevelopment Investment |
|
| Expected Initial Occupancy | ||||
Short-cycle redevelopments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bay Parc | Miami, FL |
|
| 105 |
|
|
| 60 |
|
|
| 97 | % |
| $ | 28.3 |
|
| N/A |
Long-cycle redevelopments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
707 Leahy (1) | Redwood City, CA |
|
| 110 |
|
|
| — |
|
|
| — | % |
|
| 23.7 |
|
| 1Q 2020 |
Eldridge (formerly Elm Creek) Townhomes | Elmhurst, IL |
|
| 58 |
|
|
| — |
|
|
| — | % |
|
| 35.1 |
|
| 2Q 2020 |
Flamingo Point (2) | Miami Beach, FL |
|
| 886 |
|
|
| — |
|
|
| — | % |
|
| 280.0 |
|
| 3Q 2021 |
The Fremont | Denver, CO (MSA) |
|
| 253 |
|
|
| — |
|
|
| — | % |
|
| 87.0 |
|
| 3Q 2020 |
Parc Mosaic (3) | Boulder, CO |
|
| 226 |
|
|
| 185 |
|
|
| 59 | % |
|
| 123.4 |
|
| 3Q 2019 |
Total |
|
|
| 1,638 |
|
|
| 245 |
|
|
|
|
|
| $ | 577.5 |
|
|
|
(1) | At 707 Leahy, we completed construction on the first building, containing 12 apartment homes, in January. Construction on the remaining homes is on schedule to be complete during the three months ending June 30, 2020. |
(2) | At Flamingo Point, we completed construction on the entryway, retail, and amenities during the three months ended December 31, 2019, and continued the full renovation of the North Tower. |
(3) | At Parc Mosaic, we completed three buildings in 2019, the first in August, the second in October, and the third in late December. As of December 31, 2019, the first two buildings were 81% leased and in January, we welcomed the first residents of the third building. The fourth, and final, building was delayed slightly and is now expected to be finished during the three months ending March 31, 2020. Notwithstanding this delay, we expect to achieve stabilized occupancy during the three months ending December 31, 2020, consistent with prior projections. |
As of December 31, 2018,2019, our total estimated net investment inat redevelopment and development activitiescommunities is $571.2$577.5 million, with a projected weighted averageweighted-average net operating income yield on these investments of 6.1%5.3%, assuming untrended rents. As of December 31, 2018, $361.02019, $309.2 million of this total has been funded.
When possible, we prefer redevelopments that can be completed one apartment home at a time, when that home is vacated and available for renovation, or one floor at a time, thereby limiting the number of down homes and lease-up risk. We currently have six short-cycle projects, including Bay Parc, ongoing in our portfolio. During the year ended December 31, 2018,2019, we completed 150 apartment homes, with another 21 homes under construction as of December 31, 2019.
During the year ended December 31, 2019, we leased 457251 redeveloped or newly developed apartment homes at our redevelopment and development communities. Athomes. As of December 31, 2018,2019, our exposure to lease-up at active redevelopment and development communitiesdevelopments was approximately 366866 apartment homes, or less than 3% of which 208 were being constructed at Parc Mosaic,our homes.
21
Please refer to the Redevelopment and 158 were located in four other communities. Additionally, we expectDevelopment subsection to acquire One Ardmore in 2019 upon its completion as part of the Philadelphia portfolio acquisition announced in April 2018. This acquisition will increase our exposure to lease-up risk by approximately 100 apartment homes.
Portfolio Management
Our portfolio of apartment communities is diversified across “A,” “B,” and “C+” price points, averaging “B/B+” in quality, and is also diversified across several of the largest markets in the U.S.United States. We measure the quality of apartment communities in our Real Estate portfolio based on average rents of our apartment homes compared to local market average rents as reported by a third-party provider of commercial real estate performance and analysis. Under this rating system, we classify as “A” quality apartment communities those earning rents greater than 125% of the local market average; as “B” quality apartment communities those earning rents between 90% and 125% of the local market average; as “C+” quality apartment communities those earning rents greater than $1,100 per month, but lower than 90% of local market average; and as “C” quality apartment communities those earning rents less than $1,100 per month and lower than 90% of local market average. We classify as “B/B+” quality a portfolio that on average earns rents between 100% and 125% of the local market average rents where the portfolio is located.rents. Although some companies and analysts within the multifamily real estate industry use apartment community quality ratings of “A,” “B,” and “C,” some of which are tied to local market rent averages, the metrics used to classify apartment community quality as well as the period for which local market rents are calculated may vary from company to company. Accordingly, our rating system for measuring apartment community quality is neither broadly nor consistently used in the multifamily real estate industry.
The following table summarizes information about our portfolio strategy, we seek to sell up to 10% of our portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, limited developments and selective acquisitions with projected Free Cash Flow internal rates of return higher than expected from the communities being sold. Through this disciplined approach to capital recycling, we have significantly increased the quality and expected growth rate of our portfolio.
| Three Months Ended | |||||||
| December 31, | |||||||
| 2018 | 2015 | ||||||
| Average Revenue per Aimco apartment home (1) | $ | 2,126 | $ | 1,771 | |||
| Portfolio Average Rents as a Percentage of Local Market Average Rents | 113 | % | 111 | % | |||
| Percentage A (4Q 2018 Average Revenue per Aimco Apartment Home $2,786) | 51 | % | 51 | % | |||
| Percentage B (4Q 2018 Average Revenue per Aimco Apartment Home $1,850) | 33 | % | 32 | % | |||
| Percentage C+ (4Q 2018 Average Revenue per Aimco Apartment Home $1,706) | 16 | % | 17 | % | |||
| (1) Represents average monthly rental and other property revenues (excluding resident reimbursement of utility cost) divided by the number of occupied apartment homes as of the end of the period. | |||||||
Average revenue per Aimco apartment home (1) |
| $ | 2,272 |
|
Portfolio average rents as a percentage of local market average rents |
|
| 113 | % |
Percentage A (4Q 2019 average revenue per Aimco apartment home $2,943) |
|
| 54 | % |
Percentage B (4Q 2019 average revenue per Aimco apartment home $2,006) |
|
| 29 | % |
Percentage C+ (4Q 2019 average revenue per Aimco apartment home $1,782) |
|
| 17 | % |
(1) | Represents average monthly rental and other property revenues (excluding resident reimbursement of utility cost) divided by the number of occupied apartment homes as of the end of the period. |
Our average revenue per apartment home was $2,126$2,272 for the three months ended December 31, 2019, representing an increase of 7% compared to the same period in 2018, and a 6.4%7.2% compounded annual growth rate compared to 2015.over the past five years. This increase is due to growth in Same Store revenue as well as our acquisition activities, lease-up of redevelopment and acquisition communities, and the sale of communities with average monthly revenues per apartment home lower than those of the retained portfolio.
During the year ended December 31, 2019, we reallocated capital from slower-growth markets such as Chicago and reinvested the proceeds in higher-growth markets such as Miami, Denver, and Boston.
As part of our portfolio strategy, we seek to sell up to 10% of our portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, some developments, and selective acquisitions with projected FCF internal rates of return higher than expected from the communities being sold. Through this disciplined approach to capital recycling, we increase the quality and expected growth rate of our portfolio.
As we execute our portfolio strategy, we expect to increase average revenue per Aimco apartment home at a rate greater than market rent growth;growth, increase Free Cash Flow margins;FCF margins, and maintain sufficient geographic and price point diversification to limit volatility and concentration risk.
Acquisitions
We follow a disciplined paired trade policy in making investments. We evaluate potential acquisitions with an eye for uniqueseeking FCF internal rates of returns higher than those of the communities being sold. We prefer well-located real estate where land is a significant percentage of total value and opportunistic investments, and fund acquisitions pursuant to our “paired trade” discipline.
During the year ended December 31, 2018,2019, we acquired six apartment communities.three properties: One Ardmore in Ardmore, Pennsylvania; Prism (50 Rogers), a community under construction in Cambridge, Massachusetts; and 1001 Brickell Bay Drive in Miami, Florida. Together, these acquisitions have an expected weighted-average FCF internal rate of return of 9%, approximately 300 basis points better than expected from the properties being sold, or to be sold, in paired trades to fund the acquisitions.
Mezzanine Investment
On November 26, 2019, we made a five-year, $275.0 million mezzanine loan at a 10% annual rate to the partnership owning Parkmerced Apartments. The loan is secured by a second-priority deed of trust. We acquired for $307.9 million four apartment communitiessimultaneously received a ten-year
22
option to acquire a 30% interest in the Philadelphia area including 665partnership at an exercise price of $1.0 million, increased by 30% of future capital spending to progress development and redevelopment of Parkmerced Apartments.
Parkmerced Apartments is a 152-acre site in the southwest corner of San Francisco, currently improved with 3,221 apartment homes completed shortly before and 153,000 square feetafter World War II. These apartment homes are subject to City of officeSan Francisco rent control. The development of the site is governed by a development agreement that allows for 8,900 total residential units, with the new units exempt from City of San Francisco rent control. The partnership, which is the borrower and retail space. We also acquired for $160.0 million Bent Tree Apartments,in which we have the option to acquire 30% ownership, owns 3,165 of the existing rent-controlled apartment homes, which excludes apartment homes transferred as part of an earlier phase of development to which we are not a 748-apartment home communityparty, as well as the vested right to develop 4,093 of the new market-rate homes.
The mezzanine loan provides us with current income with minimal expected downside risk. The option is expected to provide us with an opportunity to participate in Fairfax County, Virginia, and for $29.7 million Avery Row, a 67-apartment home community in Arlington, Virginia.
Dispositions
During the year ended December 31, 2018, we sold for $590.0 million our Asset Management business and four affordable apartment communities located in the Hunters Point area of San Francisco. After payment of transaction costs and repayment of property-level debt encumbering the Hunters Point apartment communities, net proceeds to us were $512.2 million.
Balance Sheet
Leverage
Our leverage strategy seeks to increase financial returns whileby using leverage with appropriate caution. We limit risk through our balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; build financial flexibility by maintaining ample unused and available credit as well as holding properties with substantial value unencumbered by property debt; and use partners’ capital when it enhances financial returns or reduces investment risk.
Our leverage includes our share of long-term, non-recourse property debt encumbering apartment communities, outstanding borrowings on the revolving credit facility, and outstanding preferred equity. For additional information regarding our leverage, please see the discussion underequity and redeemable noncontrolling interests in a consolidated real estate partnership. Please refer to the Liquidity and Capital Resources heading.
Our target the ratio ofleverage ratios are Proportionate Debt and Preferred Equity to Adjusted EBITDA to beEBITDAre below 7.0x and we target the ratio of Adjusted EBITDAEBITDAre to Adjusted Interest Expense and Preferred Dividends to be greater than 2.5x. Our leverage ratios for the three months ended December 31, 2018,2019, are presented below:
Proportionate Debt to Adjusted | 7.4x | |
Proportionate Debt and Preferred Equity to Adjusted | 7.6x | |
Adjusted | 3.7x | |
Adjusted | 3.5x |
We calculate Adjusted EBITDA has been calculatedEBITDAre and Adjusted Interest Expense used in our leverage ratios based on a pro forma basisthe most recent three month amounts, annualized. The sales delay mentioned above increased Proportionate Debt to adjust for significant items impacting the three months ended December 31, 2018 for which annualization would distort the results. Leverage ratios are elevated by 0.5x due to the use of debt to fund temporarily the Aimco common share repurchases completed during the three months ended December 31, 2018. We intend to reduce ourAdjusted EBITDAre and Proportionate Debt and Preferred Equity to Adjusted EBITDAEBITDAre by 0.3x as of December 31, 2019. We expect a gradual decline in leverage to 6.9x by the end of 2019 fromEBITDAre ratios throughout 2020, reaching approximately 6.4x and 6.5x, respectively, at year end. In future years, we expect earnings growth primarily duefrom completed redevelopments will increase EBITDAre and further reduce our leverage ratios.
Please refer to increasing contribution from Same Store apartment communities and reductionthe Leverage Ratios subsection of debt balances due to regularly-scheduled debt amortization and apartment community sales, partially offset by the lossNon-GAAP Measures section for further information about the calculation of earnings from communities sold. As used in the ratios above, Preferred Equity represents Aimco’s preferred stock and the Aimco Operating Partnership’s preferred OP units.
Refinancing Activity
During the year ended December 31, 2018,2019, we addressed approximately half of our property loans maturing in 2019, 2020, and 2021. We placed $867.4financed $772.6 million of new non-recourse, fixed-rate property debt. These loans $740.4 million of fixed-rate loans athave a weighted averageweighted-average interest rate of 4.20% and3.32%, a weighted averageweighted-average term to maturity of 9.311.4 years, and $127.0 millioncontributed an approximately 29 basis point decrease in our annual cost of variable-rate loans with rates floating at 115 basis points over 30-day LIBOR and a weighted average termleverage compared to 2018.
23
Liquidity
Our liquidity consists of cash balances and available capacity on our revolving line of credit. During the year ended December 31, 2018, we exercised our option to expand our revolving credit facility by $200.0 million, bringing the total borrowing capacity to $800.0 million.facility. As of December 31, 2018,2019, we had cash and restricted cash of $72.6$177.7 million and had the capacity to borrow up to $632.5$517.8 million on our revolving credit facility, after consideration of $7.1$7.2 million letters of credit backed by the facility. We use our credit facility primarily for working capital and other short-term purposes and to secure letters of credit.
We manage our financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt. AtAs of December 31, 2018,2019, we held unencumbered apartment communities with an estimated fair market value of approximately $2.7 billion, up 50% from December 31, 2017.
Two credit rating agencies rate our creditworthiness, using different methodologies and ratios for assessing our credit, and both have rated our credit and outlook as BBB- (stable), an investment grade rating. Although some of the ratios they use are similar to those we use to measure our leverage, there are differences in our methods of calculation and therefore our leverage ratios disclosed above are not indicative of the ratios that may be calculated by these agencies.
Equity Capital Activities
On February 3, 2019, Aimco’s Board of Directors declared a special dividend on the common stock that consistsconsisted of $67.1 million in cash and 4.5 million shares of common stock. The special dividend will be payable on March 22, 2019, to stockholders of record as of February 22, 2019.Common Stock. The special dividend also includesincluded the regular quarterly cash dividend which for 2019 is expected to beof $0.39 per share, which represents an increase of 3% compared to cash dividends paid during 2018.
On January 28, 2020, our Board of AimcoDirectors declared a quarterly cash dividend of $0.41 per share results before and after these transactions.
Team and Culture
Our team and culture are keys to our success. Our intentional focus on a collaborative and productive culture based on respect for others and personal responsibility is reinforced by a preference for promotion from within basedwithin. We focus on succession planning and talent development to produce a strong, stable team that is the enduring foundation of our success. In 2018, we were recognizedWe offer benefits reinforcing our value of caring for each other, including paid time for parental leave, paid time annually to volunteer in local communities, college scholarships for the children of team members, an emergency fund to help team members in crisis, financial support for our team members who are becoming United States citizens, and a bonus structure at all levels of the organization. We also pay full compensation and benefits for team members who are actively deployed by the
Results of Operations
Because our operating results depend primarily on income from our apartment communities, the supply of and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our apartment communities and the pace and price at which we redevelop, acquire, and dispose of our apartment communities affect our operating results.
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.
Year Ended December 31, 2018 as compared2019, Compared to 2017. The increase in income was primarily due to an increase in gain on dispositions of real estate, including theDecember 31, 2018 sale of our Asset Management business, and results of operations described more fully below, partially offset by an increase in depreciation and amortization resulting from redeveloped and developed apartment homes placed into service.
Net income attributable to Aimco and net income attributable to the Aimco Operating Partnership decreased by $114.6$192.1 million and $120.0$200.5 million, respectively, for the year ended December 31, 2017 as2019 compared to 2016. The decrease in income was principally due to a decrease in gain on dispositions2018, as described more fully below.
24
Property Operations
We have revised the 2017four segments: Same Store, Redevelopment and 2016 amounts to conform to this presentation.
As of December 31, 2018,2019, our Real Estate segment consisted of 93 Same Store segment included 91 apartment communities with 25,90526,649 apartment homes and 35 Other Real Estate communities with 9,720 apartment homes.
From December 31, 20172018 to December 31, 2018,2019, on a net basis, our Same Store portfoliosegment decreased by two apartment communities and increased by one community and decreased by 481744 apartment homes. These changes consisted of:
• | the addition of eight redeveloped and developed apartment communities with 3,008 apartment homes previously classified in the Redevelopment and Development segment, now classified as Same Store upon maintaining stabilized operations for the entirety of the periods presented; |
• | the addition of one apartment community with 463 apartment homes, previously classified in the Acquisition segment, now classified as Same Store because we have now owned it for the entirety of both periods presented; |
• | the addition of one apartment community with 246 apartment homes, previously classified in the Other Real Estate segment, which maintained stabilized operations for the entirety of the periods presented following a casualty event; |
• | the addition of one apartment community with 72 apartment homes that we separated into a newly branded stand-alone community from an existing community that was previously classified in the Redevelopment and Development segment, resulting in an increase of one community with no change in the total number of apartment homes; |
• | the reduction of two apartment communities with 153 apartment homes for which we commenced redevelopment during the period and were reclassified to the Redevelopment and Development segment; |
• | the reduction of one apartment community with 78 apartment homes that we expect to sell within 12 months that is now classified in the Other Real Estate segment; and |
• | the reduction of 10 apartment communities with 2,814 apartment homes that were sold as of December 31, 2019. |
As of one developedDecember 31, 2019: our Redevelopment and Development segment included seven apartment communitycommunities with 913,143 apartment homes; our Acquisition segment included seven apartment communities with 1,590 apartment homes; and our Other Real Estate segment included 15 apartment communities with 1,315 apartment homes and one redevelopedoffice building.
We use proportionate property net operating income to assess the operating performance of our communities. Proportionate property net operating income reflects our share of rental and other property revenues, excluding resident utility reimbursement, less direct property operating expenses, net of resident utility reimbursement, for consolidated communities. Accordingly, the results of operations of our segments discussed below are presented on a proportionate basis and exclude the results of four apartment communitycommunities with 104142 apartment homes that were classified as Same Store upon maintaining stabilized operations forwe do not consolidate.
We do not include offsite costs associated with property management, casualty losses, or the entiretyresults of the periods presented;
Please refer to Note 13 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 attributable to real estate and property operating expenses attributable to real estate.
25
Proportionate Property Net Operating Income
The results of our segments for the years ended December 31, 2019 and 2018, as presented below, are based on the apartment community classifications as of December 31, 2019.
| Year Ended December 31, |
|
|
|
|
|
|
|
|
| |||||
(in thousands) | 2019 |
|
| 2018 |
|
| $ Change |
|
| % Change |
| ||||
Rental and other property revenues, before utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store | $ | 691,379 |
|
| $ | 665,835 |
|
| $ | 25,544 |
|
|
| 3.8 | % |
Redevelopment and Development |
| 75,522 |
|
|
| 76,687 |
|
|
| (1,165 | ) |
|
| (1.5 | %) |
Acquisition |
| 42,038 |
|
|
| 27,923 |
|
|
| 14,115 |
|
|
| 50.5 | % |
Other Real Estate |
| 45,105 |
|
|
| 37,647 |
|
|
| 7,458 |
|
|
| 19.8 | % |
Total |
| 854,044 |
|
|
| 808,092 |
|
|
| 45,952 |
|
|
| 5.7 | % |
Property operating expenses, net of utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
| 181,802 |
|
|
| 177,466 |
|
|
| 4,336 |
|
|
| 2.4 | % |
Redevelopment and Development |
| 27,919 |
|
|
| 27,836 |
|
|
| 83 |
|
|
| 0.3 | % |
Acquisition |
| 11,715 |
|
|
| 7,689 |
|
|
| 4,026 |
|
|
| 52.4 | % |
Other Real Estate |
| 17,717 |
|
|
| 14,910 |
|
|
| 2,807 |
|
|
| 18.8 | % |
Total |
| 239,153 |
|
|
| 227,901 |
|
|
| 11,252 |
|
|
| 4.9 | % |
Proportionate property net operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
| 509,577 |
|
|
| 488,369 |
|
|
| 21,208 |
|
|
| 4.3 | % |
Redevelopment and Development |
| 47,603 |
|
|
| 48,851 |
|
|
| (1,248 | ) |
|
| (2.6 | %) |
Acquisition |
| 30,323 |
|
|
| 20,234 |
|
|
| 10,089 |
|
|
| 49.9 | % |
Other Real Estate |
| 27,388 |
|
|
| 22,737 |
|
|
| 4,651 |
|
|
| 20.5 | % |
Total | $ | 614,891 |
|
| $ | 580,191 |
|
| $ | 34,700 |
|
|
| 6.0 | % |
For the year ended December 31, 2019, compared to 2018, our Same Store proportionate property net operating income increased by $21.2 million, or 4.3%. This increase was attributable primarily to a $25.5 million, or 3.8%, increase in rental and other property revenues due to higher average revenues of $69 per apartment home comprised of increases in rental rates and a 60 basis point increase in average daily occupancy. Renewal rents increased by 4.9% and new lease rents increased by 1.9%, resulting in a weighted-average increase of 3.4%. The increase in Same Store rental and other property revenues was offset partially by a $4.3 million, or 2.4%, increase in property operating expenses due primarily to higher real estate taxes. Controllable operating expenses, which exclude utility costs, real estate taxes, and insurance, were flat for the year ended December 31, 2019, compared to 2018.
Redevelopment and Development proportionate property net operating income decreased by $1.2 million, or 2.6%, for the year ended December 31, 2019, compared to 2018. This decrease was attributable primarily to de-leasing at Flamingo Point and 707 Leahy in preparation for redevelopment, offset partially by increased occupancy driven by the lease-up of Park Towne Place.
Acquisition proportionate property net operating income increased by $10.1 million, or 49.9%, for the year ended December 31, 2019, compared to 2018. This increase was attributable primarily to the 2019 acquisition of One Ardmore and a full period of operating activity at the four Philadelphia communities acquired in 2018, compared to eight months of operations during the year ended December 31, 2018.
Other Real Estate proportionate property net operating income increased by $4.7 million, or 20.5%, for the year ended December 31, 2019, compared to 2018 due primarily to the acquisition of 1001 Brickell Bay Drive in 2019.
Year Ended December 31, 2018, Compared to December 31, 2017
Net income attributable to Aimco and net income attributable to the Aimco Operating Partnership increased by $350.5 million and $370.4 million, respectively, for the year ended December 31, 2018, as compared to 2017, as described more fully below.
Proportionate Property Net Operating Income
As of December 31, 2018, excluding apartment communities sold during 2019: our Other Real EstateSame Store segment consisted of 83 Same Store apartment communities included:
The results of Same Store because they are either subject to agreements that limit the amount by which we may increase rents or have not reached or maintained a stabilized level of occupancy as of the beginning of a two-year comparable period, often due to a casualty event.
| Year Ended December 31, | ||||||||||||||
| (in thousands) | 2018 | 2017 | $ Change | % Change | ||||||||||
| Rental and other property revenues before utility reimbursements: | ||||||||||||||
| Same Store communities | $ | 580,536 | $ | 563,040 | $ | 17,496 | 3.1 | % | ||||||
| Other Real Estate communities | 273,704 | 218,154 | 55,550 | 25.5 | % | |||||||||
| Total | 854,240 | 781,194 | 73,046 | 9.4 | % | |||||||||
| Property operating expenses, net of utility reimbursements: | ||||||||||||||
| Same Store communities | 150,042 | 145,301 | 4,741 | 3.3 | % | |||||||||
| Other Real Estate communities | 88,818 | 77,430 | 11,388 | 14.7 | % | |||||||||
| Total | 238,860 | 222,731 | 16,129 | 7.2 | % | |||||||||
| Proportionate property net operating income: | ||||||||||||||
| Same Store communities | 430,494 | 417,739 | 12,755 | 3.1 | % | |||||||||
| Other Real Estate communities | 184,886 | 140,724 | 44,162 | 31.4 | % | |||||||||
| Total | $ | 615,380 | $ | 558,463 | $ | 56,917 | 10.2 | % | ||||||
26
during 2018.2019. Based on the nature of our apartment community classifications, there is no comparison of the years ended December 31, 2018 and 2017. The results of operations for these communities are reflected in the comparable periods in the tablestable below.
| Year Ended December 31, |
|
|
|
|
|
|
|
|
| |||||
(in thousands) | 2018 |
|
| 2017 |
|
| $ Change |
|
| % Change |
| ||||
Rental and other property revenues, before utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store | $ | 534,389 |
|
| $ | 517,429 |
|
| $ | 16,960 |
|
|
| 3.3 | % |
Redevelopment and Development |
| 182,662 |
|
|
| 160,045 |
|
|
| 22,617 |
|
|
| 14.1 | % |
Acquisition |
| 48,474 |
|
|
| 17,475 |
|
|
| 30,999 |
|
|
| 177.4 | % |
Other Real Estate |
| 42,567 |
|
|
| 41,226 |
|
|
| 1,341 |
|
|
| 3.3 | % |
Total |
| 808,092 |
|
|
| 736,175 |
|
|
| 71,917 |
|
|
| 9.8 | % |
Property operating expenses, net of utility reimbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
| 138,187 |
|
|
| 133,517 |
|
|
| 4,670 |
|
|
| 3.5 | % |
Redevelopment and Development |
| 60,277 |
|
|
| 56,475 |
|
|
| 3,802 |
|
|
| 6.7 | % |
Acquisition |
| 14,031 |
|
|
| 7,040 |
|
|
| 6,991 |
|
|
| 99.3 | % |
Other Real Estate |
| 15,406 |
|
|
| 14,727 |
|
|
| 679 |
|
|
| 4.6 | % |
Total |
| 227,901 |
|
|
| 211,759 |
|
|
| 16,142 |
|
|
| 7.6 | % |
Proportionate property net operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Store |
| 396,202 |
|
|
| 383,912 |
|
|
| 12,290 |
|
|
| 3.2 | % |
Redevelopment and Development |
| 122,385 |
|
|
| 103,570 |
|
|
| 18,815 |
|
|
| 18.2 | % |
Acquisition |
| 34,443 |
|
|
| 10,435 |
|
|
| 24,008 |
|
|
| 230.1 | % |
Other Real Estate |
| 27,161 |
|
|
| 26,499 |
|
|
| 662 |
|
|
| 2.5 | % |
Total | $ | 580,191 |
|
| $ | 524,416 |
|
| $ | 55,775 |
|
|
| 10.6 | % |
| Year Ended December 31, | ||||||||||||||
| (in thousands) | 2017 | 2016 | $ Change | % Change | ||||||||||
| Rental and other property revenues before utility reimbursements: | ||||||||||||||
| Same Store communities | $ | 547,912 | $ | 530,619 | $ | 17,293 | 3.3 | % | ||||||
| Other Real Estate communities | 233,282 | 189,683 | 43,599 | 23.0 | % | |||||||||
| Total | 781,194 | 720,302 | 60,892 | 8.5 | % | |||||||||
| Property operating expenses, net of utility reimbursements: | ||||||||||||||
| Same Store communities | 141,773 | 140,007 | 1,766 | 1.3 | % | |||||||||
| Other Real Estate communities | 80,958 | 70,419 | 10,539 | 15.0 | % | |||||||||
| Total | 222,731 | 210,426 | 12,305 | 5.8 | % | |||||||||
| Proportionate property net operating income: | ||||||||||||||
| Same Store communities | 406,139 | 390,612 | 15,527 | 4.0 | % | |||||||||
| Other Real Estate communities | 152,324 | 119,264 | 33,060 | 27.7 | % | |||||||||
| Total | $ | 558,463 | $ | 509,876 | $ | 48,587 | 9.5 | % | ||||||
For the year ended December 31, 20172018, compared to 2016, our Real Estate segment’s proportionate property net operating income increased $48.6 million, or 9.5%.
Redevelopment and Development proportionate property net operating income increased by $18.8 million, or 18.2%, forthe year ended December 31, 2018, compared to 2017 due to leasing activities at communities, offset partially by decreases due to apartment homes taken out of service for redevelopment.
Acquisition proportionate property net operating income of Other Real Estate comm
Non-Segment Real Estate Operations
Operating income amounts not attributed to our Real Estate segmentsegments include offsite costs associated with property management, casualty losses, and the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our Real Estate segmentsegments for purposes of evaluating segment performance, as described in
For the years ended December 31, 2019, 2018, 2017 and 2016,2017, casualty losses totaled $9.0 million, $4.0 million, $8.2 million and $5.6$8.2 million, respectively. Casualty losses during the year ended December 31, 2019, included one major claim due to storm-related flooding at our One Canal apartment community and several other claims due to fire damage. Casualty losses for the year ended December 31, 2018, included several claims due primarily due to storm and fire damage, offset partially offset by recovery from insurance carriers for insured losses in excess of policy limits. Casualty losses were elevated during the year ended December 31, 2017, due primarily due to hurricane damage.
For the years ended December 31, 2019, 2018, 2017 and 2016,2017, apartment communities previously in our Real Estate portfolio that were sold or classified as held for sale generated net operating income of $22.3$16.6 million, $59.6$54.6 million, and $79.7$91.1 million, respectively.
Asset Management Results
For the year ended December 31, 2018 compared2019, there was no net operating income attributable to 2017, contribution fromthe Asset Management decreased $19.3business, which we sold in July 2018.
For the years ended December 31, 2018 and 2017, net operating income attributable to the Asset Management business was $28.9 million due to its July 2018 sale.
Depreciation and Amortization
For the year ended December 31, 20172019, compared to 2016, contribution from Asset Management decreased $8.8 million due to decreases in tax credit income as the result of delivering final credits2018 and acquiring certain partners’ interests in the partnerships, as well as transactional revenues.
General and Administrative Expenses
General and administrative expenses for the year ended December 31, 20172019, were relatively flat compared to 2016, depreciation and amortization expense increased by $33.1 million primarily due to renovated apartment homes placed in service after their completion, a fullthe year of depreciation following the 2016 completion of our One Canal development and 2016 acquisition of Indigo, and other capital additions, partially offset by decreases associated with apartment communities sold.
For the year ended December 31, 2018, compared to 2017, general and administrative expenses increased $2.6 million, due primarily due to higher variable incentive compensation cost.
Other Expenses, Net
Other expenses, net, includes costs associated with our risk management activities, partnership administration expenses, and certain non-recurring items.
For the year ended December 31, 2019, compared to 2018, other expenses, net, increased by $15.3 million, related primarily to the resolution of our litigation against Airbnb in 2018 and an increase in rent expense associated with our ground leases.
For the year ended December 31, 2018, compared to 2017, other expenses, net, decreased by $7.4 million, due primarily due to the resolution of our litigation against Airbnb and settlement of litigation related to the challenge to the title of the La Jolla Cove property, which we acquired in 2014.
Provision for Real Estate Impairment Loss
We recognized no provisions for impairment losses during the years ended December 31, 20182019 or 2016.
In January 2018, we agreed to sell our interests in the entities owning the La Jolla Cove property in settlement of legal actions filed in 2014 by a group of disappointed buyers who had hoped to acquire the property. As a result of the settlement, we recognized in our 2017 results a gross impairment loss of $35.8 million, $25.6 million of which related to the establishment of a deferred tax liability assumed in connection with our acquisition of the business entities. The tax liability was assumed by the buyer, resulting in no economic loss to us. The remaining $10.2 million loss was offset by cash distributions paid to us during our ownership and avoided legal costs for continued litigation. On an economic basis, we agreed to sell these entities at roughly our purchase price, adjusted for retained cash distributions and avoided legal costs.
Interest Income
Interest income for the year ended December 31, 2019, was relatively flat compared to the year ended December 31, 2018.
For the year ended December 31, 2018, compared to 2017, interest income increased $2.6 million, due primarily due to interest earned on the seller financing notes received as consideration in the sale of the La Jolla Cove property.
Interest Expense
For the year ended December 31, 2019, compared to 2018, interest expense, which includes the amortization of debt issuance costs, decreased by $31.8 million due primarily to lower interest on property-level debt following refinancing and debt payoff activity, including the 2018 repayment of our term loan, a decrease in property-level debt attributable to sold communities and an increase in capitalized interest attributable to redevelopment and development communities. This decrease was offset partially by interest on property-level debt assumed in connection with our acquisitions and a $9.9 million decrease in prepayment penalties.
28
For the year ended December 31, 2018, compared to 2017, interest expense which includes the amortization of debt issuance costs and amortization of deferred financing costs, increased by $6.0 million, or 3.1%.million. The increase was due primarily due to debt prepayment penalties of $14.9 million incurred in connection with 2018 property-level debt refinancing activity undertaken to refinanceof property-level debt that was scheduled to mature in 2019, 2020, and 2021, offset partially offset by a decrease in mortgage interest expense for communities sold and the sale of the Asset Management business in July 2018, and lower corporate-level interest.
Gain on Dispositions of Real Estate
The table below summarizes dispositions of apartment communities from our Real Estate portfolio during the years ended December 31, 2019, 2018, 2017 and 20162017 (dollars in millions):
| December 31, | ||||||||||||
| 2018 | 2017 | 2016 | ||||||||||
| Real Estate | ||||||||||||
| Number of apartment communities sold | 4 | 5 | 7 | |||||||||
| Gross proceeds | $ | 242.3 | $ | 397.0 | $ | 517.0 | ||||||
| Net proceeds (1) | $ | 235.7 | $ | 385.3 | $ | 511.0 | ||||||
| Gain on disposition | $ | 175.2 | $ | 297.9 | $ | 383.6 | ||||||
| Year Ended December 31, |
| |||||||||
| 2019 |
|
| 2018 (1) |
|
| 2017 |
| |||
Number of apartment communities sold |
| 12 |
|
|
| 4 |
|
|
| 5 |
|
Gross proceeds | $ | 696.2 |
|
| $ | 242.3 |
|
| $ | 397.0 |
|
Net proceeds (2) | $ | 619.4 |
|
| $ | 235.7 |
|
| $ | 385.3 |
|
Gain on dispositions | $ | 503.2 |
|
| $ | 175.2 |
|
| $ | 297.9 |
|
(1) | During the year ended December 31, 2018, we sold for $590 million our Asset Management business and our four Hunters Point communities, which are excluded from the table above. |
(2) | |
Net proceeds are after repayment of debt, if any, net working capital settlements, payment of transaction costs, and debt prepayment penalties, if applicable. |
The apartment communities sold from our Real Estate portfolio during 2019, 2018, 2017 and 20162017 were primarily located outside of our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.
Income from Unconsolidated Real Estate Partnerships
Income from unconsolidated real estate partnerships for the year ended December 31, 2019, was relatively flat compared to the year ended December 31, 2018.
For the year ended December 31, 2018, we sold for $590compared to 2017, income from unconsolidated real estate partnerships decreased by $7.6 million, our Asset Management business and our four Hunters Point communities. Please refer to
Income Tax Benefit
Certain of our operations, including property management and risk management, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, some of our apartment communities and 1001 Brickell Bay Drive are owned through TRS entities.
Our income tax benefit calculated in accordance with GAAP includes: (a) income taxes associated with the income or loss of our TRS entities including tax on gains on dispositions, for which the tax consequences have been realized or will be realized in future periods; (b) low income housing tax credits generated prior to the sale of our Asset Management business that offset REIT taxable income, primarily from retained capital gains; and (c) historic tax credits that offset income tax obligations of our TRS entities. Income taxes related to these items, as well as changes in valuation allowance and the establishment of incremental deferred tax items in conjunction with intercompany asset transfers (if applicable), are included in income tax benefit in our consolidated statements of operations.
For the year ended December 31, 2019, compared to 2018, income tax benefit decreased $9.9 million. The decrease is due primarily to lower tax benefit recognized in connection with the intercompany transfer of assets and release of a valuation allowance in 2018 related to sale of our Asset Management business, as well as lower tax benefit from historic tax credits. This decrease is offset partially by a lower tax provision on gains on dispositions.
For the year ended December 31, 2018, compared to 2017, income tax benefit decreased by $17.8 million, from $30.8 million to $13.0 million. The decrease is due primarily due to the reversal of a $19.3 million net tax benefit we recognized as a result of the December 2017 tax reform legislation in 2017 (as further discussed in
Non-GAAP Measures
Various of the key financial indicators we use in managing our business and in evaluating our financial condition and operating performance are non-GAAP measures. Key non-GAAP measures we use are defined and described below, and for those non-GAAP measures used or disclosed within this annual report, we provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP are provided.
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Free Cash Flow, or FCF, as calculated for our retained portfolio, represents an apartment community’s property net operating income, or NOI, less spending for Capital Replacements, which represents our estimation of the capital additions made to replace capital assets consumed during our ownership period (further discussed under the Nareit Funds From Operations, Pro forma Funds From Operations, and Adjusted Funds From Operations heading and the Liquidity and Capital Resources heading). FCF margin as calculated for apartment communities sold represents the sold apartment community’s NOInet operating income less $1,200 per apartment home of assumed annual capital replacement spending, as a percentage of the apartment community’s rental and other property revenues. Capital replacement spending represents a measure of capital asset usage during the period; therefore, we believe that FCF is useful to investors as a supplemental measure of apartment community performance because it takes into consideration costs incurred during the period to replace capital assets that have been consumed during our ownership.
Economic Income
Economic Income represents stockholder value creation as measured by the change in estimated NAV per share plus cash dividends per share. We believe Economic Income is important to investors as it represents a measure of the total return we have earned for our stockholders. NAV, as used in our calculation of Economic Income, is a non-GAAP measure and represents the estimated fair value of assets net of liabilities attributable to Aimco’s common stockholders and the Aimco Operating Partnership’s common unitholders on a diluted basis. We believe NAV is considered useful by some investors in real estate companies because the value of company assets can be readily estimated, even for non-earning assets such as land or properties under development. NAV has the advantage of incorporating the investment decisions of thousands of real estate investors. We believe it enhances comparability among companies that have differences in their accounting. WhileAlthough, NAV is not identical to liquidation value in that some costs and benefits are disregarded, it is often considered a floor with upside for value ascribed to the operating platform. NAV also provides an objective basis for the perceived quality and predictability of future cash flows as well as their expected growth as these are factors considered by real estate investors.
Our estimated NAV per share and the quoted share price of Aimco Common Stock are not necessarily equal. Although we use Economic Income and NAV for comparability in assessing our value creation compared to other REITs, not all REITs publish these measures and those who do may not compute them in the same manner. Accordingly, there can be no assurance that our basis for computing these measures is comparable with that of other REITs.
We report NAV on a semiannual basis, as of the end of the first and third quarters. Economic Income for 20182019 was calculated using the change in NAV per share between September 30, 20172018 and 2018.2019. NAV will fluctuate over time. This NAV information should not be relied upon as representative of the amount a stockholder could expect to receive in a liquidation event, now or in the future. Certain assets are excluded as are certain liabilities, such as taxes and transaction costs associated with a liquidation. In addition, NAV is based on management’s subjective judgments, assumptions and opinions as of the date of determination. We assume no obligation to revise or update NAV to reflect subsequent or future events or circumstances. Our NAV estimate is subject to a variety of risks and uncertainties, many of which are beyond our control, including, without limitation, those described in Item 1A. Risk Factors.
Economic Income does not represent the change in stockholder’s equity in accordance with GAAP. Additionally, NAV does not represent stockholder’s equity in accordance with GAAP and should not be considered an alternative to Aimco’s total equity, which we believe is the most directly comparable GAAP measure,measure. A reconciliation of NAV to Aimco’s total equity, as of September 30, 2018,2019, is provided below (in millions, except per share data):
Total equity |
| $ | 1,786 |
|
Fair value adjustment for portfolio |
|
|
|
|
Consolidated real estate, at depreciated cost |
|
| (6,051 | ) |
Fair value of real estate (1) |
|
|
|
|
Stabilized portfolio fair value (2) |
|
| 11,592 |
|
Non-stabilized portfolio fair value (3) |
|
| 1,706 |
|
Fair value adjustment for non-recourse property debt |
|
|
|
|
Non-recourse property debt, net |
|
| 4,255 |
|
Fair value of non-recourse property debt (4) |
|
| (4,329 | ) |
Adjustments to present other tangible assets, liabilities and preferred equity at fair value (5) |
|
| 91 |
|
Estimated NAV |
| $ | 9,050 |
|
Total shares, units and dilutive share equivalents (6) |
|
| 157 |
|
Estimated NAV per weighted-average common share and unit – diluted |
| $ | 58 |
|
30
| Total equity | $ | 2,194 | |||||||||||
| Fair value adjustment for Real Estate portfolio | |||||||||||||
| Less: consolidated real estate, at depreciated cost | $ | (5,731 | ) | ||||||||||
| Plus: fair value of real estate (1) | |||||||||||||
| Stabilized portfolio fair value (2) | $ | 10,806 | |||||||||||
| Non-stabilized portfolio fair value (3) | 2,052 | ||||||||||||
| Total real estate at fair value | 12,858 | ||||||||||||
| Adjustment to present real estate at fair value | 7,127 | ||||||||||||
| Fair value adjustment for total indebtedness | |||||||||||||
| Plus: consolidated total indebtedness, net related to Real Estate portfolio | 3,647 | ||||||||||||
| Less: fair value of indebtedness related to real estate shown above (4) | (3,591 | ) | |||||||||||
| Adjustment to present indebtedness at fair value | 56 | ||||||||||||
| Adjustments to present other tangible assets, liabilities and preferred equity at fair value (5) | (155 | ) | |||||||||||
| Estimated NAV | $ | 9,222 | |||||||||||
| Total shares, units and dilutive share equivalents (6) | 166 | ||||||||||||
| Estimated NAV per weighted average common share and unit - diluted | $ | 56 | |||||||||||
(1) | |
We compute NAV by estimating the value of our communities, using methods we believe are appropriate based on the characteristics of the communities. For purposes of estimating NAV, real estate at fair value disclosed above includes wholly owned apartment communities and 1001 Brickell Bay Drive, plus our proportionate share of communities held by non-wholly owned entities (both consolidated and unconsolidated). A reconciliation of our consolidated apartment communities to those communities included in total real estate at fair value in the table above is as follows: |
Consolidated apartment communities as of September 30, | 128 | |||
Plus: Unconsolidated apartment communities | 4 | |||
Apartment communities in total real estate at fair value for NAV | 132 |
For valuation purposes at September 30, 2018,2019, we segregated these 133 communities132 properties into the following categories: stabilized portfolio and non-stabilized portfolio.
(2) | |
As of September 30, |
(3) | |
The non-stabilized portfolio includes |
(4) | |
We calculate the fair value of indebtedness related to real estate as the carrying value of our non-recourse property debt adjusted for the mark-to-market asset on our fixed-rate property debt as of September 30, |
(5) | |
Other tangible assets consist of cash, restricted cash, accounts receivable, and other assets for which we reasonably expect to receive cash through the normal course of operations or another future event. Other tangible liabilities consist of accounts payable, accrued liabilities, and other tangible liabilities we reasonably expect to settle in cash through the normal course of operations or another future event. Other tangible assets and liabilities were generally valued at their carrying amounts and reduced by the noncontrolling interests’ portion of these amounts and exclude intangible assets and liabilities reflected on our consolidated balance sheet. |
(6) | |
Total shares, units, and dilutive share equivalents represents Common Stock, OP Units, participating unvested restricted shares, and the dilutive effect of common stock equivalents outstanding as of September 30, |
Nareit Funds From Operations, Pro forma Funds From Operations, and Adjusted Funds From Operations
Nareit FFO is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers, or other personal property. The National Association of Real Estate Investment Trusts, or Nareit defines FFO as net income computed in accordance with GAAP, excluding: depreciation and amortization related to real estate; gains and losses from sales and impairment of depreciable assets and land used in our primary business; and income taxes current or deferred, directly associated with a gain or loss on the sale of real estate, and including our share of the FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine Nareit
31
FFO. We calculate Nareit FFO attributable to Aimco common stockholders (diluted) by subtracting dividends on preferred stock and amounts allocated from Nareit FFO to participating securities.
In addition to Nareit FFO, we compute Pro forma FFO and AFFO, which are also non-GAAP financial measures that we believe are helpful to investors in understanding our short-term performance. Pro forma FFO represents Nareit FFO attributable to Aimco common stockholders (diluted), excluding preferred equity redemption-relatedcertain amounts and certain other incomethat are unique or costs, adjusted for noncontrolling interests. Preferred equity redemption-related amounts (gains or losses) are items that periodically affect our operating results and we exclude these items from our calculation ofoccur infrequently.
In computing 2019 Pro forma FFO, because such amounts are not representative of ourwe made the following adjustments to Nareit FFO:
• | Prepayment penalties: as a result of refinancing activity in 2019, we incurred debt extinguishment costs. We excluded such costs from Pro forma FFO because we believe these costs are not representative of ongoing operating performance. |
• | Straight-line rent: in 2018, we assumed a 99-year ground lease with scheduled rent increases. Due to the terms of the lease, GAAP rent expense will exceed cash rent payments until 2076. We include the cash rent payments for this ground lease in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. We include the rent expense for this lease in other expenses, net, in our consolidated statements of operations. |
• | Preferred equity redemption-related amounts: on May 16, 2019, we redeemed our Class A Perpetual Preferred Stock. We excluded the redemption-related costs from Pro forma FFO because we believe these costs are not representative of operating performance. |
• | Casualty losses: in 2019, we incurred casualty losses due to storm-related flooding in downtown Boston that caused damage to our One Canal apartment community. We excluded these costs from Pro forma FFO because of the unusual nature of the weather event that caused the loss. |
• | Severance and restructuring costs: in 2019, we incurred severance and restructuring costs in connection with the closure and relocation of administrative functions from our Greenville and Indianapolis offices to our Denver office. We excluded such costs from Pro forma FFO because we believe these costs are not representative of operating performance. |
In computing 2018 Pro forma FFO, we made a number of adjustments. We were engaged in litigation with Airbnb, which was resolved during the year. Duefollowing adjustments to the unpredictable nature of these proceedings, related amounts recognized, net of income tax effect, have been excluded from Pro forma FFO. In connection with the sale of our Asset Management business, we incurred severance costs during 2018. We exclude such costs from Pro forma FFO because we believe these costs incurred are closely related to the sale of the business. We also excluded from Pro forma FFO the tax benefit due to the release of a valuation allowance. Due to the sale of the Asset Management business, we expect to realize our deferred tax benefits. As a result, we determined the valuation allowance recorded in connection with recognizing the effect of the 2017 tax reform is no longer necessary. We excluded the effect of the establishment of the valuation allowance from Pro forma FFO and as such have excluded the benefit from its release. We have also excluded the impact of tax reform. Finally, we addressed approximately half of our property loans maturing in 2019, 2020 and 2021. In connection with this activity, we incurred debt extinguishment costs, which we have excluded from Pro forma FFO.Nareit FFO:
• | Prepayment penalties: in 2018, we addressed approximately half of our property loans maturing in 2019, 2020, and 2021. In connection with this activity, we incurred debt extinguishment costs, which we have excluded from Pro forma FFO because we believe these costs are not representative of operating performance. |
• | Severance and restructuring costs: in connection with the sale of our Asset Management business in 2018, we incurred severance and restructuring costs. We excluded such costs from Pro forma FFO because we believe these costs are not representative of operating performance. |
• | Litigation: during 2018, we were engaged in litigation with Airbnb, which was resolved in December 2018. Due to the unpredictable nature of these proceedings, we excluded from Pro Forma FFO related amounts recognized, net of income tax effect. We include these costs in other expenses, net, in our consolidated statements of operations. |
• | Tax benefit due to valuation allowance release: due to the sale of the Asset Management business in 2018, we determined that a valuation allowance was no longer necessary. We excluded the effect of the establishment of the valuation allowance from Pro forma FFO and, as such, excluded the benefit from its release. |
• | Change in lease accounting: effective January 1, 2019, we adopted accounting guidance that changed how we recognize costs incurred to obtain resident leases. For comparability of Pro forma FFO between periods, we have recast 2018 as if the new standard was effective as of January 1, 2018. AFFO is unchanged by the new standard. |
• | Tax provision related to tax reform legislation: in connection with the Tax Cuts and Jobs Act signed into law in December 2017, we recognized income tax benefit in 2017 and adjusted the estimated impact of tax reform upon the conclusion of our analysis of the effects during 2018. We excluded such amounts from Pro forma FFO as we believe these costs are not representative of operating performance. |
AFFO represents Pro forma FFO reduced by Capital Replacements, which representsrepresent our estimation of the actual capital additions made to replace capital assets consumed during our ownership period. When we make capital additions at an apartment community, we evaluate whether the additions extend the useful life of an asset as compared to its condition at the time we purchased the apartment community. We classify as Capital Improvements those capital additions that meet these criteria,this criterion, and we classify as Capital Replacements those that do not. AFFO is a key financial indicator we use to evaluate our short-term operational performance and is one of the factors that we use to determine the amounts of our dividend payments.
Nareit FFO, Pro forma FFO, and AFFO should not be considered alternatives to net income as determined in accordance with GAAP, as indications of our performance. Although we use these non-GAAP measures for comparability in assessing our
32
performance compared to other REITs, not all REITs compute these same measures and those who do may not compute them in the same manner. Additionally, computation of AFFO is subject to our definition of Capital Replacement spending. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other REITs.
For the years ended December 31, 2019 and 2018, 2017 and 2016, Aimco’s Nareit FFO, Pro forma FFO, and AFFO are calculated as follows (in thousands)thousands, except per share data):
|
| 2019 |
|
| 2018 |
| ||
Net income attributable to Aimco common stockholders (1) |
| $ | 466,144 |
|
| $ | 656,597 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Real estate depreciation and amortization, net of noncontrolling partners’ interest |
|
| 370,746 |
|
|
| 368,961 |
|
Gain on dispositions and other, net of noncontrolling partners’ interest |
|
| (503,168 | ) |
|
| (669,450 | ) |
Income tax adjustments related to gain on dispositions and other tax-related items (2) |
|
| 10,107 |
|
|
| 27,310 |
|
Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments |
|
| 6,448 |
|
|
| 14,063 |
|
Amounts allocable to participating securities |
|
| 163 |
|
|
| 402 |
|
Nareit FFO attributable to Aimco common stockholders |
| $ | 350,440 |
|
| $ | 397,883 |
|
Adjustments, all net of common noncontrolling interests in Aimco Operating Partnership, participating securities and tax effect: |
|
|
|
|
|
|
|
|
Prepayment penalties, net |
|
| 6,367 |
|
|
| 14,089 |
|
Straight-line rent |
|
| 4,472 |
|
|
| — |
|
Preferred equity redemption-related amounts |
|
| 3,864 |
|
|
| — |
|
Casualty losses |
|
| 2,913 |
|
|
| — |
|
Severance and restructuring costs |
|
| 2,499 |
|
|
| 1,282 |
|
Litigation, net |
|
| 147 |
|
|
| (8,558 | ) |
Tax benefit due to valuation allowance release |
|
| — |
|
|
| (19,349 | ) |
Change in lease accounting |
|
| — |
|
|
| (2,922 | ) |
Tax provision (benefit) related to tax reform legislation |
|
| — |
|
|
| 273 |
|
Pro forma FFO attributable to Aimco common stockholders |
| $ | 370,702 |
|
| $ | 382,698 |
|
Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities |
|
| (43,837 | ) |
|
| (45,560 | ) |
AFFO attributable to Aimco common stockholders |
| $ | 326,865 |
|
| $ | 337,138 |
|
|
|
|
|
|
|
|
|
|
Total share and dilutive share equivalents used to calculate Net income and Nareit FFO per share (3) |
|
| 147,944 |
|
|
| 151,334 |
|
Adjustment to weight reverse stock split (4) |
|
| 621 |
|
|
| 4,719 |
|
Pro forma shares and dilutive share equivalents used to calculate Pro forma FFO and AFFO per share |
|
| 148,565 |
|
|
| 156,053 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to Aimco per common share – diluted |
| $ | 3.15 |
|
| $ | 4.34 |
|
Nareit FFO per share – diluted |
| $ | 2.37 |
|
| $ | 2.63 |
|
Pro Forma FFO per share – diluted |
| $ | 2.50 |
|
| $ | 2.45 |
|
AFFO per share – diluted |
| $ | 2.20 |
|
| $ | 2.16 |
|
| 2018 | 2017 | 2016 | |||||||||
| Net income attributable to Aimco common stockholders (1) | $ | 656,597 | $ | 306,861 | $ | 417,781 | |||||
| Adjustments: | |||||||||||
| Real estate depreciation and amortization, net of noncontrolling partners’ interest | 368,961 | 352,109 | 314,840 | ||||||||
| Gain on dispositions and other, net of noncontrolling partners’ interest | (669,450 | ) | (262,583 | ) | (381,131 | ) | |||||
| Income tax adjustments related to gain on dispositions and other items (2) | 27,310 | (8,265 | ) | 6,374 | |||||||
| Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments | 14,063 | (3,810 | ) | 2,782 | |||||||
| Amounts allocable to participating securities | 402 | (81 | ) | 88 | |||||||
| FFO attributable to Aimco common stockholders – diluted | $ | 397,883 | $ | 384,231 | $ | 360,734 | |||||
| Adjustments, all net of common noncontrolling interests in Aimco OP and participating securities: | |||||||||||
| Preferred equity redemption related amounts | — | — | 1,877 | ||||||||
| Tax provision (benefit) related to tax reform legislation (3) | 273 | (498 | ) | — | |||||||
| Tax benefit due to release of valuation allowance (4) | (19,349 | ) | — | — | |||||||
| Litigation, net (5) | (8,558 | ) | — | — | |||||||
| Severance costs (6) | 1,282 | — | — | ||||||||
| Prepayment penalties, net (7) | 14,089 | — | — | ||||||||
| Pro forma FFO attributable to Aimco common stockholders – diluted | $ | 385,620 | $ | 383,733 | $ | 362,611 | |||||
| Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities | (48,493 | ) | (51,760 | ) | (55,289 | ) | |||||
| AFFO attributable to Aimco common stockholders – diluted | $ | 337,127 | $ | 331,973 | $ | 307,322 | |||||
Weighted average common shares outstanding – diluted (FFO, Pro forma FFO and AFFO) (8) | 156,053 | 156,796 | 156,391 | ||||||||
| Net income attributable to Aimco per common share – diluted | $ | 4.21 | $ | 1.96 | $ | 2.67 | |||||
| FFO per share – diluted | $ | 2.55 | $ | 2.45 | $ | 2.31 | |||||
| Pro Forma FFO per share – diluted | $ | 2.47 | $ | 2.45 | $ | 2.32 | |||||
| AFFO per share – diluted | $ | 2.16 | $ | 2.12 | $ | 1.97 | |||||
(1) | |
Represents the numerator for calculating Aimco’s earnings per common share in accordance with GAAP |
(2) | |
For the year ended December 31, 2019, income taxes related to gain on dispositions and other items primarily included tax on the gain on sale of apartment communities. For the year ended December 31, 2018, income taxes related to gain on dispositions and other items includes tax on the gain on the sale of the Asset Management business, as well as tax on the gain on the sale of apartment communities during the year ended December 31, 2018. |
(3) | |
Represents the denominator for Aimco’s earnings per common share – diluted, calculated in accordance with GAAP. |
(4) | During the three months ended March 31, 2019, we completed a reverse stock split and a special dividend paid primarily in stock. For stock splits, GAAP requires the restatement of weighted-average shares as if the reverse stock split occurred at the beginning of the period presented; while shares issued in the special dividend are included in weighted-average shares outstanding from the date issued. To minimize confusion and facilitate comparison of period-over-period Pro forma FFO and AFFO, we calculated pro forma weighted-average shares for the years ended December 31, 2019 and 2018, based on the effective date of the reverse stock split and ex-dividend date for the shares issued in the special dividend, thereby eliminating the per-share impact of the GAAP treatment to Aimco's reported Pro forma FFO and AFFO. |
Please refer to the Executive OverviewResults of Operations section for discussion of our Pro forma FFO and AFFO results for 2018,2019, as compared to their comparable periods in 2017.
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The Aimco Operating Partnership does not separately compute or report Nareit FFO, Pro forma FFO, or AFFO. However, based on Aimco’s method for allocation of such amounts to noncontrolling interests in the Aimco Operating Partnership, as well as limited differences between the amounts of net income attributable to Aimco’s common stockholders and the Aimco Operating Partnership’s unit holders during the periods presented, Nareit FFO, Pro forma FFO, and AFFO amounts on a per unit basis for the Aimco Operating Partnership would be expected to be substantially the same as the corresponding per share amounts for Aimco.
Leverage Ratios
As discussed under the Balance Sheet and Liquidity heading, as part of our leverage strategy we targettargets the ratio of Proportionate Debt and Preferred Equity to Adjusted EBITDAEBITDAre to be below 7.0x and we target the ratio of Adjusted EBITDAEBITDAre to Adjusted Interest Expense and Preferred Dividends to be greater than 2.5x. We believe these ratios, which are important measures as theybased in part on non-GAAP financial information, are commonly used by investors and analysts to assess the relative financial risk associated with balance sheets of companies within the same industry, and they are believed to be similar to measures used by rating agencies to assess entity credit quality.
Proportionate Debt, as used in our leverage ratios, is a non-GAAP measure and includes our share of the long-term, non-recourse property debt secured by apartment communities in the Real Estate portfolio and outstanding borrowings under our revolving credit facility, reduced by our share of the cash and restricted cash of our consolidated and unconsolidated partnerships owning communities in our Real Estate portfolio, and also by our investment in the subordinate tranches of a securitization trust that holds certain of our property debt, which is essentially an investment in our own non-recourse property loans.
We believe Proportionate Debt is useful to investors as it is a measure of our net exposure to debt obligations. Proportionate Debt, as used in our leverage ratios, is calculated as set forth in the table below.
Preferred Equity, as used in our leverage ratios, represents the redemption amounts for Aimco’s preferred stock and the Aimco Operating Partnership’s preferred OP Units. Preferred Equity, although perpetual in nature, is another component of our overall leverage.
The reconciliation of total indebtedness to Proportionate Debt and Preferred Equity, as used in our leverage ratios as of December 31, 2019, is as follows (in thousands):
|
| December 31, 2019 |
| |
Total indebtedness |
| $ | 4,505,590 |
|
Adjustments: |
|
|
|
|
Debt issuance costs related to non-recourse property debt |
|
| 20,749 |
|
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships |
|
| (7,722 | ) |
Cash and restricted cash |
|
| (177,702 | ) |
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships |
|
| 1,107 |
|
Securitization trust investment and other |
|
| (94,251 | ) |
Proportionate Debt |
| $ | 4,247,771 |
|
Preferred Equity |
|
| 97,064 |
|
Redeemable noncontrolling interests in consolidated real estate partnership |
|
| 4,716 |
|
Proportionate Debt and Preferred Equity |
| $ | 4,349,551 |
|
We calculated Adjusted EBITDAEBITDAre used in our leverage ratios based on the most recent three month amounts, annualized. 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 a non-GAAP measure. We believe Adjusted EBITDA provides investors relevant and useful information because it allows investors to viewcomparable with that of other real estate investment trusts. Nareit defines EBITDAre as net income from our operations on an unleveraged basis,computed in accordance with GAAP, before the effects ofinterest expense, income taxes, depreciation, and amortization gains or losses on salesexpense, 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 |
34
• | adjustments to reflect Aimco’s share of EBITDAre of investments in unconsolidated entities. |
We define Adjusted EBITDA represents Aimco’s share of the consolidated amount of our net income,EBITDAre as EBITDAre adjusted to exclude the effect of the following items for the reasons set forth below:
• | net income attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, to 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; |
• | the amount of interest income related to our investment in the subordinated tranches in a securitization trust holding primarily Aimco property debt, as we view our interest cost on this debt to be net of any interest income received from the investment; and |
• | the amount by which GAAP rent expense exceeds cash rents for a long-term ground lease for which expense exceeds cash payments until 2076. The excess of GAAP rent expense over the cash payments for this lease does not reflect a current obligation that affects our ability to service debt. |
EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate industry;
|
| Three Months Ended |
| |
|
| December 31, 2019 |
| |
Net income |
| $ | 142,766 |
|
Adjustments: |
|
|
|
|
Interest expense |
|
| 45,846 |
|
Income tax benefit |
|
| (1,193 | ) |
Depreciation and amortization |
|
| 97,144 |
|
Gain on dispositions of real estate |
|
| (146,239 | ) |
Adjustment related to EBITDAre of unconsolidated partnerships |
|
| 211 |
|
EBITDAre |
| $ | 138,535 |
|
Net income attributable to noncontrolling interests in Aimco Operating Partnership |
|
| (84 | ) |
EBITDAre adjustments attributable to noncontrolling interests |
|
| (615 | ) |
Interest income received on securitization investment |
|
| (2,127 | ) |
Straight-line rent |
|
| 657 |
|
Severance and restructuring costs (1) |
|
| 800 |
|
Casualty losses (2) |
|
| 2,913 |
|
Pro forma adjustment, net (3) |
|
| 2,656 |
|
Adjusted EBITDAre |
| $ | 142,735 |
|
Annualized Adjusted EBITDAre |
| $ | 570,940 |
|
(1) | In 2019, we incurred severance and restructuring costs in connection with office closures and relocation of administrative functions from our Greenville and Indianapolis offices to our Denver office. We excluded such costs from Adjusted EBITDAre because we believe these costs are not representative of operating performance. |
(2) | We incurred casualty losses due to storm-related flooding in downtown Boston that caused damage to our One Canal apartment community. We excluded such costs from Adjusted EBITDAre because of the unusual nature of the weather event that caused the loss. |
(3) | We calculated Adjusted EBITDAre on a pro forma basis to reflect the dispositions of four apartment communities during the period and the Parkmerced mezzanine loan investment, including related transaction costs, as if the transactions had closed on October 1, 2019. |
We calculate Adjusted Interest Expense, as calculatedused in our leverage ratios, based on the most recent three months, annualized. Adjusted Interest Expense is a non-GAAP measure that we believe is meaningful for investors and analysts as it presents our share of current recurring interest requirements associated with leverage. Adjusted Interest Expense represents our proportionate share of interest expense on non-recourse property debt encumbering apartment communities in the Real Estate portfolio and interest expense on our term loan and revolving credit facility borrowings. We exclude from our calculation of Adjusted Interest Expense:
• | debt prepayment penalties, which are items that, from time to time, affect our interest expense, but are not representative of our scheduled interest obligations; and |
• | the income we receive on our investment in the securitization trust that holds certain of our property debt, as this income is being generated indirectly from interest we pay with respect to property debt held by the trust. |
35
Preferred Dividends represents the preferred dividends paid on Aimco’s preferred stock and the preferred distributions paid on the Aimco Operating Partnership’s preferred OP Units, exclusive of preferred equity redemption related amounts.Units. We add Preferred Dividends to Adjusted Interest Expense for a more complete picture of the interest and dividend requirements of our leverage, inclusiveleverage.
The reconciliation of perpetual preferred equity.
|
| Three Months Ended |
| |
|
| December 31, 2019 |
| |
Interest expense |
| $ | 45,846 |
|
Adjustments: |
|
|
|
|
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships |
|
| (77 | ) |
Debt prepayment penalties and other non-interest items |
|
| (5,034 | ) |
Interest income earned on securitization trust investment |
|
| (2,127 | ) |
Adjusted Interest Expense |
| $ | 38,608 |
|
Preferred dividends |
|
| 1,908 |
|
Adjusted Interest Expense and Preferred Dividends |
| $ | 40,516 |
|
Annualized Adjusted Interest Expense |
| $ | 154,432 |
|
Annualized Adjusted Interest Expense and Preferred Dividends |
| $ | 162,064 |
|
| December 31, 2018 | |||
| Total indebtedness associated with Real Estate portfolio | $ | 4,075,665 | |
| Adjustments: | |||
| Debt issue costs related to non-recourse property debt | 21,695 | ||
| Debt related to assets classified as held for sale | 22,693 | ||
| Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships | (9,533 | ) | |
| Cash and restricted cash | (72,595 | ) | |
| Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships | 912 | ||
| Securitization trust investment and other | (88,457 | ) | |
| Proportionate Debt | $ | 3,950,380 | |
| Preferred stock | $ | 125,000 | |
| Preferred OP Units | 101,291 | ||
| Preferred Equity | 226,291 | ||
| Proportionate Debt and Preferred Equity | $ | 4,176,671 | |
| Three Months Ended | |||
| December 31, 2018 | |||
| Net income attributable to Aimco Common Stockholders | $ | 5,226 | |
| Adjustments: | |||
| Adjusted Interest Expense | 38,424 | ||
| Income tax benefit | (409 | ) | |
| Depreciation and amortization, net of noncontrolling interest | 91,249 | ||
| Gain on dispositions and other, inclusive of related income taxes and net of noncontrolling partners’ interests | 2,311 | ||
| Preferred stock dividends | 2,148 | ||
| Net income attributable to noncontrolling interests in Aimco Operating Partnership | 2,291 | ||
| Pro forma adjustment (1) | 3,342 | ||
| Adjusted EBITDA | $ | 144,582 | |
| Annualized Adjusted EBITDA | $ | 578,328 | |
| Three Months Ended | |||
| December 31, 2018 | |||
| Interest expense | $ | 57,441 | |
| Adjustments: | |||
| Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships | (84 | ) | |
| Debt prepayment penalties and other non-interest items | (15,531 | ) | |
| Amortization of debt issue costs | (1,441 | ) | |
| Interest income earned on securitization trust investment | (1,961 | ) | |
| Adjusted Interest Expense | $ | 38,424 | |
| Preferred stock dividends | 2,148 | ||
| Preferred OP Unit distributions | 1,934 | ||
| Preferred Dividends | 4,082 | ||
| Adjusted Interest Expense and Preferred Dividends | $ | 42,506 | |
| Annualized Adjusted Interest Expense | $ | 153,696 | |
| Annualized Adjusted Interest Expense and Preferred Dividends | $ | 170,024 | |
Liquidity and Capital Resources
Liquidity
Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flow from operations. Additional sources are proceeds from salesdispositions of apartment communities, proceeds from refinancings ofrefinancing existing property debt, borrowings under new property debt, borrowings under our revolving credit facility, and proceeds from equity offerings.
As of December 31, 2019, our primary sources of liquidity were as follows:
• | $142.9 million in cash and cash equivalents; |
• | $34.8 million of restricted cash, which consists primarily of escrows related to resident security deposits and reserves and escrows held by lenders for capital additions, property taxes, and insurance; and |
• | $517.8 million of available capacity to borrow under our revolving credit facility after consideration of $7.2 million of letters of credit backed by the facility. |
Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding property debt, capital expenditures, dividends paid to stockholders, distributions paid to noncontrolling interest partners, and acquisitions of apartment communities. We use our cash and cash equivalents and our cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and cash provided by operating activities are not sufficient to cover our short-term liquidity needs, we have additional means, such as short-term borrowing availability and proceeds from apartment community sales and refinancings. We may use our revolving credit facility for working capital and other short-term purposes, such as funding investments on an interim basis. We expect to meet our long-term liquidity requirements, such as debt maturities, redevelopment spending, and apartment community acquisitions, through primarily non-recourse, long-term borrowings, the issuance of equity securities (including OP Units), the sale of apartment communities, and cash generated from operations.
As of December 31, 2018, our primary sources of liquidity were as follows:
Leverage and Capital Resources
The availability 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. Currently, interest rates are low compared to historical levels and many lenders are active in the market. However, any adverse changes in the lending environment could negatively affect our liquidity. We believe we have mitigated much of this exposure by reducing our short and intermediate term maturity risk through refinancing such loans with long-dated, fixed-rate property debt. However, if property financing options become unavailable for our furtherfuture debt needs, we may consider alternative sources of liquidity, such as reductions in capital spending or proceeds from apartment community dispositions.
36
Two credit rating agencies rate our creditworthiness and both have rated our credit and outlook as BBB- (stable), an investment grade rating. Our investment grade rating would be useful in accessing capital through the sale of bonds in private or public transactions. However, our intention and historical practice has been to raise debt capital in the form of property-level, non-recourse, long-dated, fixed-rate, amortizing debt, the cost of which is generally less than that of recourse debt and the terms of which also provide for greater balance sheet safety.
As of December 31, 2018,2019, approximately 91.0%91.8% of our leverage consisted of property-level, non-recourse, long-dated, amortizing debt. Approximately 93.4%96.0% of our property-level debt is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates, and inflation. The weighted averageweighted-average remaining term to maturity of our property-level debt was 8.07.5 years.
During 2019, we financed $772.6 million of new non-recourse, fixed-rate property debt. These loans have a weighted-average interest rate of 3.32%, a weighted-average remaining term to maturity of 11.4 years, and contributed to an approximately 29 basis point decrease in our annual cost of leverage compared to 2018.
While our primary source of leverage is property-level, non-recourse, long-dated, fixed-rate, amortizing debt, we also have a revolving credit facility with a syndicate of financial institutions. During the year ended December 31, 2018, we exercised our $200.0 million expansion option on the credit facility, increasing the total capacity to $800.0 million. As of December 31, 2018,2019, we had $160.4$275.0 million of outstanding borrowings under our revolving credit facility, which represented 3.7%6.0% of our total leverage.
As of December 31, 2018,2019, our outstanding perpetual preferred equityOP units represented approximately 5.2%2.1% of our total leverage. Our preferred securitiesPreferred OP units are perpetual in nature;redeemable at the holder’s option; however, for illustrative purposes, we compute the weighted averageweighted-average maturity of our total leverage assuming a 40-year10-year maturity on our preferred securities.
The combination of non-recourse property levelproperty-level debt, borrowings under our revolving credit facility, preferred OP units, and perpetual preferred equity that comprisesredeemable noncontrolling interests in a consolidated real estate partnership comprise our total leverage, reduces our refunding and re-pricing risk.leverage. The weighted averageweighted-average remaining term to maturity for our total leverage described above was 9.57.3 years as of December 31, 2018.
Under the revolving credit facility, we have agreed to maintain a Fixed Charge Coverage ratio of 1.40x, as well as other covenants customary for similar revolving credit arrangements. For the year ended December 31, 2018,2019, our Fixed Charge Coverage ratio was 2.05x,2.06x, compared to ratio of 2.01x2.05x for the year ended December 31, 2017.2018. We expect to remain in compliance with this covenant during the next 12 months.
We like the discipline of financing our investments in real estate through the use of fixed-rate, amortizing, non-recourse property debt, as the amortization gradually reduces our leverage and reduces our refunding risk, and the fixed-rate provides a hedge against increases in interest rates, and the non-recourse feature avoids entity risk.
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.
Operating Activities
For the year ended December 31, 2018,2019, our net cash provided by operating activities was $396.4$374.5 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment communities. Cash provided by operating activities for the year ended December 31, 2018, increased2019, decreased by $4.3$21.9 million compared to 2017,2018, due to lower net operating income associated with communities sold and the Asset Management business sold in 2018, offset partially by improved operating results of our Same Store communities contribution from acquired communities and increased contribution from redevelopmentour Acquisition and lease-up communities, partially offset by a decrease in the net operating income associated with apartment communities we sold during 2018 and our sale of the Asset Management business.
Investing Activities
For the year ended December 31, 2018,2019, net cash provided byused in investing activities of $121.8$205.4 million consisted primarily of $708.8 million inthe cash payment for the mezzanine loan and related transaction costs, the acquisitions of 1001 Brickell Bay Drive, One Ardmore, and Prism, and capital expenditures, offset partially by proceeds from the disposition of the Asset Management business, four12 apartment communities located in the Hunters Point area of San Francisco, and four other apartment communities, partially offset by the acquisitions of Bent Tree Apartments, Avery Row, four apartment communities in Philadelphia, and capital expenditures.
Capital additions for our Real Estate segmentsegments totaled $338.8$396.0 million, $321.9$329.3 million, and $312.8$310.5 million during the years ended December 31, 2019, 2018, 2017 and 2016,2017, respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.
37
We categorize capital spending for communities in our Real Estate portfolio broadly into sixseven primary categories:
• | capital replacements, which do not increase the useful life of an asset from its original purchase condition. Capital replacements represent capital additions made to replace the portion of our investment in acquired apartment communities consumed during our period of ownership; |
• | capital improvements, which represent capital additions made to replace the portion of acquired apartment communities consumed prior to |
• | capital enhancements, which may include kitchen and bath remodeling, energy conservation projects, and investments in more durable, longer-lived materials designed to reduce costs, all of which differ from redevelopment additions in that they are generally lesser in scope and do not significantly disrupt property operations; |
• | initial capital expenditures, which represent capital additions contemplated in the underwriting of our recently acquired communities; |
• | redevelopment additions, which represent capital additions intended to enhance the value of the apartment community through the ability to generate higher average rental rates, and may include costs related to entitlement, which enhance the value of a community through increased density, and costs related to renovation of exteriors, common areas, or apartment homes; |
• | development additions, which represent construction and related capitalized costs associated with the ground-up development of apartment communities; and |
• | casualty capital additions, which represent capitalized costs incurred in connection with the restoration of an apartment community after a casualty event. |
We exclude the amounts of capital spending related to commercial spaces and to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures.
A summary of the capital spending for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying consolidated statements of cash flows for the years ended December 31, 2019, 2018, 2017 and 2016,2017, are presented below (dollars in thousands):
|
| Year Ended December 31, |
| |||||||||
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Capital replacements |
| $ | 36,245 |
|
| $ | 33,613 |
|
| $ | 30,714 |
|
Capital improvements |
|
| 12,240 |
|
|
| 13,722 |
|
|
| 16,392 |
|
Capital enhancements |
|
| 87,824 |
|
|
| 95,595 |
|
|
| 86,405 |
|
Redevelopment |
|
| 110,996 |
|
|
| 112,630 |
|
|
| 154,724 |
|
Development |
|
| 118,781 |
|
|
| 61,185 |
|
|
| 14,249 |
|
Initial capital expenditures |
|
| 22,913 |
|
|
| 6,406 |
|
|
| — |
|
Casualty |
|
| 7,017 |
|
|
| 6,118 |
|
|
| 7,974 |
|
Total capital additions |
| $ | 396,016 |
|
| $ | 329,269 |
|
| $ | 310,458 |
|
Plus: additions related to commercial spaces |
|
| 5,559 |
|
|
| 1,245 |
|
|
| 1,428 |
|
Plus: additions related to apartment communities sold or held for sale and Asset Management business |
|
| 3,321 |
|
|
| 18,203 |
|
|
| 42,343 |
|
Consolidated capital additions |
| $ | 404,896 |
|
| $ | 348,717 |
|
| $ | 354,229 |
|
Plus: net change in accrued capital spending |
|
| (11,435 | ) |
|
| (8,228 | ) |
|
| 3,875 |
|
Capital expenditures per consolidated statement of cash flows |
| $ | 393,461 |
|
| $ | 340,489 |
|
| $ | 358,104 |
|
| 2018 | 2017 | 2016 | |||||||||
| Real Estate | |||||||||||
| Capital replacements | $ | 37,472 | $ | 34,892 | $ | 38,088 | |||||
| Capital improvements | 16,055 | 16,729 | 14,922 | ||||||||
| Capital enhancements | 102,910 | 91,360 | 68,340 | ||||||||
| Redevelopment additions | 114,756 | 156,140 | 155,398 | ||||||||
| Development additions | 61,185 | 14,249 | 31,823 | ||||||||
| Casualty capital additions | 6,425 | 8,556 | 4,201 | ||||||||
| Real Estate capital additions | 338,803 | 321,926 | 312,772 | ||||||||
| Plus: additions related to consolidated Asset Management communities and apartment communities sold or held for sale | 9,914 | 32,303 | 25,742 | ||||||||
| Consolidated capital additions | 348,717 | 354,229 | 338,514 | ||||||||
| Plus: net change in accrued capital spending | (8,228 | ) | 3,875 | 8,131 | |||||||
| Capital expenditures per consolidated statement of cash flows | $ | 340,489 | $ | 358,104 | $ | 346,645 | |||||
For the years ended December 31, 2019, 2018, 2017 and 2016,2017, we capitalized $7.6$11.8 million, $7.6 million, and $9.6$7.6 million of interest costs, respectively, and $37.8 million, $36.8 million, $36.0 million and $32.9$36.0 million of other direct and indirect costs, respectively.
Redevelopment and Development
As of December 31, 2019, our total estimated net investment in approved and active redevelopment and development is $577.5 million, with a projected weighted-average net operating income yield on these investments of 5.3%, assuming untrended rents. Of this total, we have funded $309.2 million as of December 31, 2019. We expect to fund the remaining estimated net investment of $268.3 million on these communities in 2020 and future years, on a leverage-neutral basis, with proceeds from sales of apartment communities with lower forecasted FCF internal rates of return.
38
We execute redevelopments using a range of approaches. We prefer to limit risk by executing redevelopments using a phasedshort-cycle approach, in which we renovate an apartment community in stages. Smaller phasesShorter cycles provide us the flexibility to maintain current earnings while aligning the timing of the completed apartment homes with market demand. The following table summarizesWe currently have six short-cycle projects, including Bay Parc, ongoing redevelopmentsin our portfolio. During 2019, we completed 150 apartment homes, with another 21 homes under construction as of this nature at December 31, 2018 (dollars2019.
When short-cycle redevelopments are not possible, we may engage in millions):
| Location | Apartment Homes Approved for Redevelopment | Estimated/Potential Net Investment | Inception-to-Date Net Investment | |||||||||
| Bay Parc | Miami, FL | 60 | $ | 24.1 | $ | 20.6 | ||||||
| Calhoun Beach Club | Minneapolis, MN | 275 | 28.7 | 10.5 | ||||||||
| Flamingo South Beach | Miami Beach, FL | — | 39.7 | 14.2 | ||||||||
| Palazzo West at The Grove | Los Angeles, CA | 389 | 24.5 | 19.1 | ||||||||
| Yorktown | Lombard, IL | 292 | 25.7 | 20.0 | ||||||||
| Other | Various | 92 | 12.9 | 12.9 | ||||||||
| Total | 1,108 | $ | 155.6 | $ | 97.3 | |||||||
| Location |
| Apartment Homes Approved for Redevelopment or Development |
|
| Estimated Net Redevelopment Investment (1) |
|
| Inception-to- Date Net Investment |
|
| Expected Stabilized Occupancy (2) |
| Expected NOI Stabilization (3) | |||
707 Leahy | Redwood City, CA |
|
| 110 |
|
| $ | 23.7 |
|
| $ | 10.7 |
|
| 3Q 2020 |
| 4Q 2021 |
Eldridge (formerly Elm Creek) Townhomes | Elmhurst, IL |
|
| 58 |
|
|
| 35.1 |
|
|
| 15.8 |
|
| 2Q 2021 |
| 3Q 2022 |
Flamingo Point | Miami Beach, FL |
|
| 886 |
|
|
| 280.0 |
|
|
| 74.4 |
|
| 4Q 2022 |
| 1Q 2024 |
The Fremont | Denver, CO (MSA) |
|
| 253 |
|
|
| 87.0 |
|
|
| 61.4 |
|
| 3Q 2021 |
| 4Q 2022 |
Parc Mosaic | Boulder, CO |
|
| 226 |
|
|
| 123.4 |
|
|
| 122.3 |
|
| 4Q 2020 |
| 1Q 2022 |
Total |
|
|
| 1,533 |
|
| $ | 549.2 |
|
| $ | 284.6 |
|
|
|
|
|
(1) | Estimated net redevelopment investment represents the total actual or estimated investment, net of tax and other credits earned as a direct result of our redevelopment or development of the community. |
| Location | Apartment Homes Approved for Redevelopment or Development | Estimated/Potential Net Investment | Inception-to-Date Net Investment | Stabilized Occupancy | NOI Stabilization | |||||||||||
| The Fremont (formerly Anschutz Expansion) | Denver, CO (MSA) | 253 | $ | 87.0 | $ | 10.6 | 3Q 2021 | 4Q 2022 | ||||||||
| Elm Creek Townhomes | Elmhurst, IL | 58 | 35.1 | 11.3 | 2Q 2021 | 3Q 2022 | ||||||||||
| Parc Mosaic | Boulder, CO | 226 | 117.0 | 68.9 | 4Q 2020 | 1Q 2022 | ||||||||||
| Park Towne Place | Philadelphia, PA | 940 | 176.5 | 172.9 | 1Q 2019 | 2Q 2020 | ||||||||||
| Total | 1,477 | $ | 415.6 | $ | 263.7 | |||||||||||
(2) | Expected stabilized occupancy represents the period in which we expect to achieve stabilized occupancy, generally greater than 90%. |
(3) | Expected net operating income, NOI, stabilization represents the period in which we expect the communities to achieve stabilized rents and operating costs, generally five quarters after occupancy stabilization. |
During the year ended December 31, 2018,2019, we invested $175.9$229.8 million in redevelopment and development. Further details regarding our redevelopment and development activities.
We expect our total development and redevelopment spending to range from $225$250 million to $275$300 million for the year ending December 31, 2019.
Financing Activities
For the year ended December 31, 2018,2019, our net cash used in financing activities of $588.2$64.0 million was attributed to the items discussed below.
Net borrowings on our revolving credit facility of $114.6 million primarily relate to the timing of short-term working capital needs. During
Principal payments on property loans during the year ended December 31, 2018, we repaid the $250.0period totaled $520.0 million, term loan in full.
Proceeds from non-recourse property debt borrowings during the yearperiod consisted of the closing of 1410 fixed-rate, amortizing, non-recourse property loans totaling $982.4$774.6 million. On a weighted basis,
Repurchases of Preferred Stock of $125.0 million represents the termcash paid upon redemption of these loans averaged 9.4 years and their interest rates averaged 4.03%, 112 basis points more than the corresponding Treasury rate at the time of pricing. The net effect of 2018 fixed-rate property debt refinancing activities has been to lower our weighted average fixed interest rate by 42 basis points since December 31, 2017, to 4.22%.
Net cash used in financing activities also includes $275.3$266.2 million of dividend and distribution payments to equity holders, as further detailed in the table below.
The following table presents the Aimco Operating Partnership’s distribution activity (including distributions paid to Aimco) during the year ended December 31, 2018 (dollars in2019 (in thousands):
Cash distributions paid by the Aimco Operating Partnership to preferred unitholders (1) |
| $ | 10,954 |
|
Cash distributions paid by the Aimco Operating Partnership to common unitholders (2) |
|
| 254,687 |
|
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships |
|
| 513 |
|
Total cash distributions paid by the Aimco Operating Partnership |
| $ | 266,154 |
|
| Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships | $ | 9,469 | |
| Cash distributions paid by the Aimco Operating Partnership to preferred unitholders (1) | 16,334 | ||
| Cash distributions paid by the Aimco Operating Partnership to common unitholders (2) | 249,491 | ||
| Total cash distributions paid by the Aimco Operating Partnership | $ | 275,294 | |
(1) | |
$ |
(2) | |
$ |
The following table presents Aimco’s dividend activity during the year ended December 31, 2018 (dollars in2019 (in thousands):
Cash distributions paid to holders of OP Units |
| $ | 21,107 |
|
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships |
|
| 513 |
|
Cash dividends paid by Aimco to preferred stockholders |
|
| 3,246 |
|
Cash dividends paid by Aimco to common stockholders |
|
| 241,288 |
|
Total cash dividends and distributions paid by Aimco |
| $ | 266,154 |
|
| Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships | $ | 9,469 | |
| Cash distributions paid to holders of OP Units (other than Aimco) | 19,727 | ||
| Cash dividends paid by Aimco to preferred stockholders | 8,594 | ||
| Cash dividends paid by Aimco to common stockholders | 237,504 | ||
| Total cash dividends and distributions paid by Aimco | $ | 275,294 | |
Contractual Obligations
This table summarizes information contained elsewhere in this Annual Report on Form 10-K regarding payments due under contractual obligations and commitments as of December 31, 20182019 (in thousands):
|
| Total |
|
| Less than One Year (2020) |
|
| 2-3 Years (2021-2022) |
|
| 4-5 Years (2023-2024) |
|
| More than Five Years (2025 and Thereafter) |
| |||||
Non-recourse property debt (1) |
| $ | 4,251,339 |
|
| $ | 171,107 |
|
| $ | 1,021,270 |
|
| $ | 673,661 |
|
| $ | 2,385,301 |
|
Revolving credit facility borrowings (2) |
|
| 275,000 |
|
|
| — |
|
|
| 275,000 |
|
|
| — |
|
|
| — |
|
Interest related to debt (3) |
|
| 1,021,589 |
|
|
| 174,275 |
|
|
| 269,600 |
|
|
| 200,503 |
|
|
| 377,211 |
|
Operating lease obligations (4) |
|
| 452,042 |
|
|
| 5,156 |
|
|
| 10,196 |
|
|
| 8,755 |
|
|
| 427,935 |
|
Construction obligations (5) |
|
| 254,462 |
|
|
| 187,546 |
|
|
| 66,916 |
|
|
| — |
|
|
| — |
|
Total |
| $ | 6,254,432 |
|
| $ | 538,084 |
|
| $ | 1,642,982 |
|
| $ | 882,919 |
|
| $ | 3,190,447 |
|
| Total | Less than One Year | 1-3 Years | 3-5 Years | More than Five Years | |||||||||||
| Non-recourse property debt - Real Estate (1) | $ | 3,937,000 | $ | 246,345 | $ | 839,556 | $ | 741,941 | $ | 2,109,158 | |||||
| Revolving credit facility borrowings (2) | 160,360 | — | — | 160,360 | — | ||||||||||
| Interest related to long-term debt - Real Estate (3) | 1,066,558 | 167,382 | 290,105 | 205,471 | 403,600 | ||||||||||
| Office space lease obligations | 22,874 | 2,237 | 5,540 | 4,453 | 10,644 | ||||||||||
| Ground lease obligations (4) | 434,056 | 2,114 | 4,789 | 4,984 | 422,169 | ||||||||||
| Construction obligations (5) | 206,957 | 164,549 | 42,408 | — | — | ||||||||||
| Total | $ | 5,827,805 | $ | 582,627 | $ | 1,182,398 | $ | 1,117,209 | $ | 2,945,571 | |||||
(1) | |
Includes scheduled principal amortization and maturity |
(2) | |
Includes outstanding borrowings on our revolving credit facility assuming repayment at the contractual maturity date. Our revolving credit facility is subject to an annual commitment fee (0.25% of aggregate commitments), which is not included in the amounts above. |
(3) | |
Includes interest related to both fixed-rate and variable-rate non-recourse property debt, and our variable-rate revolving credit facility borrowings. Interest related to variable-rate debt is estimated based on the rate effective |
(4) | |
Operating lease obligations include both ground and office leases. Our ground leases expire in years ranging from 2070 to 2117. |
(5) | |
Represents estimated obligations pursuant to construction contracts related to our redevelopment, development and other capital spending. |
In addition to the amounts presented in the table above, atas of December 31, 2018,2019, we had $125.0 million (liquidation value) of Aimco’s perpetual preferred stock outstanding with an annual dividend yield of 6.9%, which we expect to, but are not obligated to, redeem during 2019, and $101.3$97.1 million (liquidation value) of redeemable preferred OP Units of the Aimco Operating Partnership outstanding with annual distribution yields ranging from 1.92% to 8.8%8.75%. The dividends and distributions that accrue on the perpetual preferred stock and redeemable preferred OP Units are cumulative and are paid quarterly.
Additionally, we may enter into commitments to purchase goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
Future Capital Needs
In addition to the items set forth in “Contractual Obligations” above, we expect to fund any future acquisitions, redevelopment, development, and other capital spending principally with proceeds from apartment community sales, short-term borrowings, debt and equity financing, and operating cash flows. Our near-term business plan does not contemplate the issuance of equity.
Critical Accounting Policies and 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.
Capitalized Costs
We capitalize costs, including certain indirect costs, incurred in connection with our capital additions activities, including redevelopments and developments, other tangible apartment community improvements, and replacements of existing community components. Included in these capitalized costs are payroll costs associated with time spent by employees in connection with the planning, execution, and control of all capital addition activities at the community level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the area operations and corporate levels that clearly relate to capital addition activities. We also capitalize interest, property taxes, and insurance during periods in which redevelopments and developments are in progress. We commence capitalization of costs, including certain indirect costs, incurred in connection with our capital addition activities, at the point in time when activities necessary to get communities ready for their intended use begin. These activities include when communities or apartment homes are undergoing physical construction, as well as when homes are held vacant in advance of planned construction, provided that other activities such as permitting, planning, and design are in progress. We cease the capitalization of costs when the communities or components thereof are substantially complete and ready for their intended use, which is typically when construction has been completed and homes are available for occupancy. We charge costs including ordinary repairs, maintenance and resident turnover costs to property operating expense, as incurred. Please refer to the Investing Activities subsection to the Liquidity and Capital Resources section for a summary of costs capitalized during the periods presented.
Impairment of Long-Lived Assets
Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of an apartment community may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the community. 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 community.
As part of our portfolio strategy, we seek to sell up to 10% of our portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, occasional developments, and selective acquisitions with projected FCF internal rates of return higher than expected from the communities being sold. As we execute this strategy, we evaluate alternatives to sell or reduce our interest in apartment communities that do not align with our long-term investment strategy, although there is no assurance that we will sell or reduce our investment in such communities during the desired time frame. For any communities that are sold or meet the criteria to be classified as held for sale during the next 12 months, the reduction in the estimated holding period for these communities may result in impairment losses.
ITEM 7A.
Our chief market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing property debt, and re-pricingrepricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We use predominantly long-dated, fixed-rate, amortizing, non-recourse property debt in order to avoid the refunding and repricing risks of short-term borrowings. We use short-term debt financing and working capital primarily to fund short-term uses and generally expect to refinance such borrowings with cash from operating activities, proceeds from apartment community sales, long-term debt, or equity financings. We make limited use of derivative financial instruments and we do not use them for trading or other speculative purposes.
Market Risk Associated with Loans Secured by Our Real Estate Portfolio
As of December 31, 2018,2019, on a consolidated basis, we had approximately $260.1$170.1 million of variable-rate property-level debt outstanding and $160.4$275.0 million of variable-rate borrowings under our revolving credit facility. We estimate that a change in 30-day LIBOR of 100 basis points with constant credit risk spreads would reduce or increase net income attributable to Aimco common stockholders and the Aimco Operating Partnership’s common unitholdersinterest expense by approximately $4.2$4.5 million on an annual basis.
As of December 31, 2018,2019, we had approximately $72.6$177.7 million in cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may offset somewhat a change in rates on our variable-rate debt discussed above.
41
We estimate the fair value of debt instruments as described in
NoteIf market rates for consolidated fixed-rate debt in our Real Estate segmentportfolio were higher by 100 basis points with constant credit risk spreads, the estimated fair value of consolidated debt discussed above would decrease from $4.1$4.6 billion in the aggregate to $4.0$4.4 billion. If market rates for consolidated debt discussed above were lower by 100 basis points with constant credit risk spreads, the estimated fair value of consolidated fixed-rate debt would increase from $4.1$4.6 billion in the aggregate to $4.2$4.8 billion.
ITEM 8.
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.
None.
ITEM 9A.
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
Aimco’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, our principal executive and principal financial officers and effected by our Board of Directors, 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’s internal control over financial reporting as of December 31, 2018.2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Based on their assessment, management concluded that, as of December 31, 2018,2019, 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.
There has been no change in Aimco’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 20182019 that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.
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, 2018,2019, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission “2013 framework,”(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, 2018,2019, 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, 20182019 and 2017, and2018, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 20182019, and the related notes and financial statement schedule listed in the accompanying Index to Financial Statements of the Companyindex at Item 15(a) and our report dated February 19, 201924, 2020 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 19, 2019
Disclosure Controls and Procedures
The Aimco Operating Partnership’s management, with the participation of the chief executive officer and chief financial officer of Aimco, who are the equivalent of the Aimco Operating Partnership’s chief executive officer and chief financial officer, respectively, has evaluated the effectiveness of the Aimco Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the chief executive officer and chief financial officer of Aimco have concluded that, as of the end of such period, the Aimco Operating Partnership’s disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting
Management of the Aimco Operating Partnership 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 our Board of Directors, 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 the Aimco Operating Partnership’s internal control over financial reporting as of December 31, 2018.2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Based on their assessment, management concluded that, as of December 31, 2018,2019, the Aimco Operating Partnership’s internal control over financial reporting is effective.
The Aimco Operating Partnership’s independent registered public accounting firm has issued an attestation report on the Aimco Operating Partnership’s internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There has been no change in the Aimco Operating Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 20182019 that has materially affected, or is reasonably likely to materially affect, the Aimco Operating Partnership’s internal control over financial reporting.
To the Partners and the Board of Directors of
AIMCO Properties, L.P.
Opinion on Internal Control over Financial Reporting
We have audited AIMCO Properties, L.P.’s internal control over financial reporting as of December 31, 2018,2019, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission “2013 framework,”(2013 framework), (the COSO criteria). In our opinion, AIMCO Properties, L.P. (the Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2019, 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, 20182019 and 2017, and2018, the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, 20182019, and the related notes and financial statement schedule listed in the accompanying Index to Financial Statements of the Partnershipindex at Item 15(a) and our report dated February 19, 201924, 2020 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 19, 2019
Reclassification of Unissued Preferred Stock
On February 24, 2020, pursuant to Maryland law and our Charter, our Board of Directors reclassified into Common Stock, all of the authorized and unissued shares of each of the following classes of preferred stock: Class Z Cumulative Preferred Stock, Class A Cumulative Preferred Stock, and Series A Community Reinvestment Act Preferred Stock. The reclassification increases the number of authorized shares classified as Common Stock by 9,800,240 shares, from 500,787,260 shares immediately prior to the reclassification to 510,587,500 shares immediately after the reclassification. The reclassification does not impact any of our issued and outstanding shares of preferred stock.
Restatement of Charter
On February 24, 2020, pursuant to Maryland law and our Charter, we restated our Charter to reflect the reclassification of the preferred stock and the currently operative provisions of the Charter. A copy of the Charter as restated is attached to this Annual Report on Form 10-K as Exhibit 3.1.
47
PART III
ITEM 10.
Each member of the boardBoard of directorsDirectors of Aimco also is a director of the general partner of the Aimco Operating Partnership. The officers of Aimco are also the officers of the general partner of the Aimco Operating Partnership and hold the same titles. The information required by this item for both Aimco and the Aimco Operating Partnership is presented jointly under the captions “Board of Directors and Executive Officers,” “Corporate Governance Matters - Code of Ethics,” “Other Matters - Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance Matters - Meetings and Committees: Nominating and Corporate Governance Committee,” “Corporate Governance Matters - Meetings and Committees: Audit Committee” and “Corporate Governance Matters - Meetings and Committees: Audit Committee Financial Expert” in the proxy statement for Aimco’s 20192020 annual meeting of stockholders and is incorporated herein by reference.
ITEM 11.
The information required by this item is presented under the captions “Compensation Discussion & Analysis,” “Compensation and Human Resources Committee Report to Stockholders,” “Summary Compensation Table,” “Grants of Plan-Based Awards in 2018,2019,” “Outstanding Equity Awards at Fiscal Year-End 2018,2019,” “Option Exercises and Stock Vested in 2018,2019,” “Potential Payments Upon Termination or Change in Control” and “Corporate Governance Matters - Director Compensation” in the proxy statement for Aimco’s 20192020 annual meeting of stockholders and is incorporated herein by reference.
ITEM 12.
The information required by this item, for both Aimco and the Aimco Operating Partnership, is presented under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the proxy statement for Aimco’s 20192020 annual meeting of stockholders and is incorporated herein by reference. In addition, as of February 15, 2019,21, 2020, Aimco, through its consolidated subsidiaries, held 93.9%93.4% of the Aimco Operating Partnership’s common partnership units outstanding.
ITEM 13.
The information required by this item is presented under the caption “Certain Relationships and Related Transactions” and “Corporate Governance Matters - Independence of Directors” in the proxy statement for Aimco’s 20192020 annual meeting of stockholders and is incorporated herein by reference.
ITEM 14.
The information required by this item is presented under the caption “Principal Accountant Fees and Services” in the proxy statement for Aimco’s 20192020 annual meeting of stockholders and is incorporated herein by reference.
PART IV
ITEM 15.
(a)(1) | The financial statements listed in the Index to Financial Statements on Page F-1 of this report are filed as part of this report and incorporated herein by reference. |
(a)(2) | The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this report is filed as part of this report and incorporated herein by reference. |
(a)(3) | The Exhibit Index is incorporated herein by reference. |
EXHIBIT NO. | DESCRIPTION |
Charter | |
Amended and Restated Bylaws (Exhibit 3.1 to Aimco’s Current Report on Form 8-K dated January 26, 2016, is incorporated herein by this reference) | |
Description of Aimco’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. | |
Fifth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of July 29, 1994, as amended and restated as of | |
Second Amended and Restated Senior Secured Credit Agreement, dated as of June 30, 2017, among Aimco, the Aimco Operating Partnership, AIMCO/Bethesda Holdings, Inc., the lenders party thereto, KeyBank N.A., as administrative agent, swing line lender and a letter of credit issuer (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated June 30, 2017, is incorporated herein by this reference) | |
Master Indemnification Agreement, dated December 3, 2001, by and among Aimco, the Aimco Operating Partnership., XYZ Holdings LLC, and the other parties signatory thereto (Exhibit 10.2 to Aimco’s Current Report on Form 8-K, dated December 6, 2001, is incorporated herein by this reference) | |
Tax Indemnification and Contest Agreement, dated December 3, 2001, by and among Aimco, National Partnership Investments, Corp., and XYZ Holdings LLC and the other parties signatory thereto (Exhibit 10.3 to Aimco’s Current Report on Form 8-K, dated December 6, 2001, is incorporated herein by this reference) | |
Employment Contract | |
Aimco Severance Policy (Exhibit | |
2007 Stock Award and Incentive Plan (Appendix A to Aimco’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 20, 2007 is incorporated herein by this reference)* | |
Form of Restricted Stock Agreement (2007 Stock Award and Incentive Plan) (Exhibit 10.2 to Aimco’s Current Report on Form 8-K, dated April 30, 2007, is incorporated herein by this reference)* | |
Form of Non-Qualified Stock Option Agreement (2007 Stock Award and Incentive Plan) (Exhibit 10.3 to Aimco’s Current Report on Form 8-K, dated April 30, 2007, is incorporated herein by this reference)* | |
2007 Employee Stock Purchase Plan (Appendix B to Aimco’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 20, 2007, is incorporated herein by this reference)* | |
Aimco 2015 Stock Award and Incentive Plan (as amended and restated January 31, 2017) (Exhibit 10.2 to Aimco’s Current Report on Form 8-K, dated January 31, 2017, is incorporated herein by this reference)* | |
Aimco Second Amended and Restated 2015 Stock Award and Incentive Plan (as amended and restated effective February 22, 2018) (Exhibit A to Aimco’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 8, 2018, is incorporated herein by reference)* | |
Form of Performance Restricted Stock Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.24 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2015, is incorporated herein by this reference)* | |
Form of Restricted Stock Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.25 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2015, is incorporated herein by this reference)* | |
Form of Non-Qualified Stock Option Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.26 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2015, is incorporated herein by this reference)* | |
Form of LTIP Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.3 to Aimco’s Current Report on Form 8-K, dated January 31, 2017, is incorporated herein by this reference)* | |
50
Form of Performance Vesting LTIP Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.4 to Aimco’s Current Report on Form 8-K, dated January 31, 2017, is incorporated herein by this reference)* | |
Form of Non-Qualified Stock Option Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.26 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2016, is incorporated herein by this reference)* | |
Form of Performance Vesting LTIP II Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.15 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, is incorporated herein by this reference)* | |
List of Subsidiaries | |
Consent of Independent Registered Public Accounting Firm - Aimco | |
Consent of Independent Registered Public Accounting Firm - Aimco Operating Partnership | |
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Aimco | |
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Aimco | |
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Aimco Operating Partnership | |
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Aimco Operating Partnership | |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Aimco Operating Partnership | |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Aimco Operating Partnership | |
Agreement regarding disclosure of long-term debt instruments - Aimco | |
Agreement regarding disclosure of long-term debt instruments - Aimco Operating Partnership | |
101 | The following materials from Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
(1) | Schedule and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request. |
(2) | The Commission file numbers for exhibits is 001-13232 (Aimco) and 0-24497 (the Aimco Operating Partnership), and all such exhibits remain available pursuant to the Records Control Schedule of the Securities and Exchange Commission. |
(3) | As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
* | |
Management contract or compensatory plan or arrangement |
ITEM 16.
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
APARTMENT INVESTMENT AND | |||
MANAGEMENT COMPANY | |||
By: | /s/ TERRY CONSIDINE | ||
Terry Considine | |||
Chairman of the Board and | |||
Date: | February | ||
AIMCO PROPERTIES, L.P. | |||
By: | AIMCO-GP, Inc., its General Partner | ||
By: | /s/ TERRY CONSIDINE | ||
Terry Considine | |||
Chairman of the Board and | |||
Date: | February | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each registrant and in the capacities and on the dates indicated.
Signature | Title | Date | |||
APARTMENT INVESTMENT AND MANAGEMENT COMPANY | |||||
AIMCO PROPERTIES, L.P. | |||||
By: AIMCO-GP, Inc., its General Partner | |||||
/s/ TERRY CONSIDINE | Chairman of the Board and | February | |||
Terry Considine | Chief Executive Officer (principal executive officer) | ||||
/s/ PAUL BELDIN | Executive Vice President and | February | |||
Paul Beldin | Chief Financial Officer (principal financial officer) | ||||
/s/ THOMAS L. KELTNER | Director | February | |||
Thomas L. Keltner | |||||
/s/ J. LANDIS MARTIN | Director | February | |||
J. Landis Martin | |||||
/s/ ROBERT A. MILLER | Director | February | |||
Robert A. Miller | |||||
/s/ KATHLEEN M. NELSON | Director | February | |||
Kathleen M. Nelson | |||||
/s/ ANN SPERLING | Director | February | |||
Ann Sperling | |||||
/s/ MICHAEL A. STEIN | Director | February | |||
Michael A. Stein | |||||
/s/ NINA A. TRAN | Director | February | |||
Nina A. Tran | |||||
AIMCO PROPERTIES, L.P.
INDEX TO FINANCIAL STATEMENTS
Page | |
Financial Statements: | |
F-4 | |
F-5 | |
F-6 | |
F-7 | |
F-8 | |
F-10 | |
F-11 | |
F-12 | |
F-13 | |
F-14 | |
F-15 | |
F-17 | |
Financial Statement Schedule: | |
F-39 | |
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors
Apartment Investment and Management Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Apartment Investment and Management Company (the Company) as of December 31, 20182019 and 2017,2018, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2018,2019, and the related notes and the financial statement schedule listed in the accompanying Index to Financial Statementsindex at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20182019 and 2017,2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018,2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 201924, 2020 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 910 to the consolidated financial statements, the Company changed its accounting for the income tax consequences of intercompany transfers of assets effective January 1, 2017.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for Acquisitions of Real Estate | ||
Description of the Matter | During 2019 the Company acquired real estate for total consideration of $242 million, (including assumption of liabilities). As more fully described in Note 2 and summarized in Note 3 to the consolidated financial statements, the total consideration for these asset acquisitions was allocated to land, buildings and improvements, intangible assets, and intangible liabilities, based upon their relative fair values. Auditing management’s accounting for acquisitions involves a higher degree of judgment due to the subjective nature of the assumptions that are inherent in the determination of the relative fair values of the assets acquired and liabilities assumed. The significant assumptions used to estimate the fair value of these acquired tangible and intangible assets includes market comparable prices for similar land parcels, estimated replacement costs for buildings and improvements, market rental rates, and assumptions regarding the time it would take to lease commercial space assuming it were vacant at acquisition. |
F-2
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for acquisitions of real estate and the allocation of consideration on a relative fair value basis. This included testing controls over management’s identification of the assets acquired and liabilities assumed and evaluating the methods and significant assumptions used by the Company and its valuation specialists, where applicable, to develop such estimates. To test the significant assumptions discussed above, our audit procedures included, among others, comparing the significant assumptions to observable market data and published industry resources. For example, we compared management’s land value assumptions and estimated building replacement costs to observable market transactions for similar properties. For lease intangibles we compared management’s assumptions regarding market rental rates and the amount of time if would take to lease a commercial space if the building were vacant at acquisition to published market data for comparable leases. Our internal valuation specialists assisted with the identification of observable market data used in evaluating the aforementioned assumptions. |
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1994.
Denver, Colorado
February 19, 2019
CONSOLIDATED BALANCE SHEETS
As of December 31, 20182019 and 2017
(In thousands, except share data)
|
| 2019 |
|
| 2018 |
| ||
ASSETS |
|
|
|
|
|
|
|
|
Buildings and improvements |
| $ | 6,868,543 |
|
| $ | 6,552,065 |
|
Land |
|
| 1,869,048 |
|
|
| 1,756,525 |
|
Total real estate |
|
| 8,737,591 |
|
|
| 8,308,590 |
|
Accumulated depreciation |
|
| (2,718,284 | ) |
|
| (2,585,115 | ) |
Net real estate |
|
| 6,019,307 |
|
|
| 5,723,475 |
|
Cash and cash equivalents |
|
| 142,902 |
|
|
| 36,858 |
|
Restricted cash |
|
| 34,800 |
|
|
| 35,737 |
|
Mezzanine investment |
|
| 280,258 |
|
|
| — |
|
Other assets |
|
| 351,472 |
|
|
| 351,541 |
|
Assets held for sale |
|
| — |
|
|
| 42,393 |
|
Total assets |
| $ | 6,828,739 |
|
| $ | 6,190,004 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Non-recourse property debt, net |
| $ | 4,230,590 |
|
| $ | 3,915,305 |
|
Revolving credit facility borrowings |
|
| 275,000 |
|
|
| 160,360 |
|
Total indebtedness |
|
| 4,505,590 |
|
|
| 4,075,665 |
|
Accrued liabilities and other |
|
| 360,574 | �� |
|
| 226,230 |
|
Liabilities related to assets held for sale |
|
| — |
|
|
| 23,177 |
|
Total liabilities |
|
| 4,866,164 |
|
|
| 4,325,072 |
|
Preferred noncontrolling interests in Aimco Operating Partnership (Note 8) |
|
| 97,064 |
|
|
| 101,291 |
|
Redeemable noncontrolling interests in consolidated real estate partnership |
|
| 4,716 |
|
|
| — |
|
Commitments and contingencies (Note 6) |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Perpetual preferred stock (Note 7) |
|
| — |
|
|
| 125,000 |
|
Common Stock, $0.01 par value, 500,787,260 shares authorized, 148,885,197 and 144,623,034 shares issued/outstanding at December 31, 2019 and 2018, respectively |
|
| 1,489 |
|
|
| 1,446 |
|
Additional paid-in capital |
|
| 3,497,367 |
|
|
| 3,515,686 |
|
Accumulated other comprehensive income |
|
| 4,195 |
|
|
| 4,794 |
|
Distributions in excess of earnings |
|
| (1,722,402 | ) |
|
| (1,947,507 | ) |
Total Aimco equity |
|
| 1,780,649 |
|
|
| 1,699,419 |
|
Noncontrolling interests in consolidated real estate partnerships |
|
| (3,296 | ) |
|
| (2,967 | ) |
Common noncontrolling interests in Aimco Operating Partnership |
|
| 83,442 |
|
|
| 67,189 |
|
Total equity |
|
| 1,860,795 |
|
|
| 1,763,641 |
|
Total liabilities and equity |
| $ | 6,828,739 |
|
| $ | 6,190,004 |
|
| 2018 | 2017 | ||||||
| ASSETS | |||||||
| Buildings and improvements | $ | 6,552,065 | $ | 6,174,149 | |||
| Land | 1,756,525 | 1,753,604 | |||||
| Total real estate | 8,308,590 | 7,927,753 | |||||
| Accumulated depreciation | (2,585,115 | ) | (2,522,358 | ) | |||
| Net real estate | 5,723,475 | 5,405,395 | |||||
| Cash and cash equivalents | 36,858 | 60,498 | |||||
| Restricted cash | 35,737 | 34,827 | |||||
| Other assets | 351,541 | 272,739 | |||||
| Assets held for sale | 42,393 | 17,959 | |||||
| Assets of partnerships served by Asset Management business: | |||||||
| Real estate, net | — | 224,873 | |||||
| Cash and cash equivalents | — | 16,288 | |||||
| Restricted cash | — | 30,928 | |||||
| Other assets | — | 15,533 | |||||
| Total assets | $ | 6,190,004 | $ | 6,079,040 | |||
| LIABILITIES AND EQUITY | |||||||
| Non-recourse property debt secured by Real Estate communities, net | $ | 3,915,305 | $ | 3,545,109 | |||
| Term loan, net | — | 249,501 | |||||
| Revolving credit facility borrowings | 160,360 | 67,160 | |||||
| Total indebtedness associated with Real Estate portfolio | 4,075,665 | 3,861,770 | |||||
| Accrued liabilities and other | 226,230 | 213,027 | |||||
| Liabilities related to assets held for sale | 23,177 | — | |||||
| Liabilities of partnerships served by Asset Management business: | |||||||
| Non-recourse property debt, net | — | 227,141 | |||||
| Accrued liabilities and other | — | 19,812 | |||||
| Total liabilities | 4,325,072 | 4,321,750 | |||||
| Preferred noncontrolling interests in Aimco Operating Partnership (Note 7) | 101,291 | 101,537 | |||||
| Commitments and contingencies (Note 5) | |||||||
| Equity: | |||||||
| Perpetual Preferred Stock (Note 6) | 125,000 | 125,000 | |||||
| Common Stock, $0.01 par value, 500,787,260 shares authorized, 149,133,826 and 157,189,447 shares issued/outstanding at December 31, 2018 and 2017, respectively | 1,491 | 1,572 | |||||
| Additional paid-in capital | 3,515,641 | 3,900,042 | |||||
| Accumulated other comprehensive income | 4,794 | 3,603 | |||||
| Distributions in excess of earnings | (1,947,507 | ) | (2,367,073 | ) | |||
| Total Aimco equity | 1,699,419 | 1,663,144 | |||||
| Noncontrolling interests in consolidated real estate partnerships | (2,967 | ) | (1,716 | ) | |||
| Common noncontrolling interests in Aimco Operating Partnership | 67,189 | (5,675 | ) | ||||
| Total equity | 1,763,641 | 1,655,753 | |||||
| Total liabilities and equity | $ | 6,190,004 | $ | 6,079,040 | |||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands, except per share data)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenues attributable to real estate |
| $ | 914,294 |
|
| $ | 922,593 |
|
| $ | 918,148 |
|
Asset Management business rental and tax credit revenues |
|
| — |
|
|
| 49,817 |
|
|
| 87,289 |
|
Total revenues |
|
| 914,294 |
|
|
| 972,410 |
|
|
| 1,005,437 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses attributable to real estate |
|
| 311,221 |
|
|
| 307,901 |
|
|
| 319,126 |
|
Property operating expenses of partnerships served by Asset Management business |
|
| — |
|
|
| 20,921 |
|
|
| 35,458 |
|
Depreciation and amortization |
|
| 380,171 |
|
|
| 377,786 |
|
|
| 366,184 |
|
General and administrative expenses |
|
| 47,037 |
|
|
| 46,268 |
|
|
| 43,657 |
|
Other expenses, net |
|
| 19,092 |
|
|
| 3,778 |
|
|
| 11,148 |
|
Provision for real estate impairment loss |
|
| — |
|
|
| — |
|
| �� | 35,881 |
|
Total operating expenses |
|
| 757,521 |
|
|
| 756,654 |
|
|
| 811,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 11,424 |
|
|
| 10,914 |
|
|
| 8,332 |
|
Interest expense |
|
| (168,807 | ) |
|
| (200,634 | ) |
|
| (194,615 | ) |
Gain on dispositions of real estate and the Asset Management business |
|
| 503,168 |
|
|
| 677,463 |
|
|
| 300,849 |
|
Mezzanine investment income, net |
|
| 1,531 |
|
|
| — |
|
|
| — |
|
Income from unconsolidated real estate partnerships |
|
| 803 |
|
|
| 77 |
|
|
| 7,694 |
|
Income before income tax benefit |
|
| 504,892 |
|
|
| 703,576 |
|
|
| 316,243 |
|
Income tax benefit (Note 10) |
|
| 3,135 |
|
|
| 13,027 |
|
|
| 30,836 |
|
Net income |
|
| 508,027 |
|
|
| 716,603 |
|
|
| 347,079 |
|
Noncontrolling interests: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests in consolidated real estate partnerships |
|
| (187 | ) |
|
| (8,220 | ) |
|
| (9,084 | ) |
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership |
|
| (7,708 | ) |
|
| (7,739 | ) |
|
| (7,764 | ) |
Net income attributable to common noncontrolling interests in Aimco Operating Partnership |
|
| (26,049 | ) |
|
| (34,417 | ) |
|
| (14,457 | ) |
Net income attributable to noncontrolling interests |
|
| (33,944 | ) |
|
| (50,376 | ) |
|
| (31,305 | ) |
Net income attributable to Aimco |
|
| 474,083 |
|
|
| 666,227 |
|
|
| 315,774 |
|
Net income attributable to Aimco preferred stockholders |
|
| (7,335 | ) |
|
| (8,593 | ) |
|
| (8,594 | ) |
Net income attributable to participating securities |
|
| (604 | ) |
|
| (1,037 | ) |
|
| (319 | ) |
Net income attributable to Aimco common stockholders |
| $ | 466,144 |
|
| $ | 656,597 |
|
| $ | 306,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Aimco per common share – basic |
| $ | 3.16 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
Net income attributable to Aimco per common share – diluted |
| $ | 3.15 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic |
|
| 147,718 |
|
|
| 151,152 |
|
|
| 151,595 |
|
Weighted-average common shares outstanding – diluted |
|
| 147,944 |
|
|
| 151,334 |
|
|
| 152,060 |
|
| 2018 | 2017 | 2016 | |||||||||
| REVENUES: | |||||||||||
| Rental and other property revenues attributable to Real Estate | $ | 922,593 | $ | 918,148 | $ | 899,891 | |||||
| Rental and other property revenues of partnerships served by Asset Management business | 42,830 | 74,046 | 74,640 | ||||||||
| Tax credit and transaction revenues | 6,987 | 13,243 | 21,323 | ||||||||
| Total revenues | 972,410 | 1,005,437 | 995,854 | ||||||||
| OPERATING EXPENSES: | |||||||||||
| Property operating expenses attributable to Real Estate | 307,901 | 319,126 | 317,957 | ||||||||
| Property operating expenses of partnerships served by Asset Management business | 20,921 | 35,458 | 36,956 | ||||||||
| Depreciation and amortization | 377,786 | 366,184 | 333,066 | ||||||||
| General and administrative expenses | 46,268 | 43,657 | 46,784 | ||||||||
| Other expenses, net | 3,778 | 11,148 | 14,295 | ||||||||
| Provision for real estate impairment loss | — | 35,881 | — | ||||||||
| Total operating expenses | 756,654 | 811,454 | 749,058 | ||||||||
| Interest income | 10,914 | 8,332 | 7,797 | ||||||||
| Interest expense | (200,634 | ) | (194,615 | ) | (196,389 | ) | |||||
| Gain on dispositions of real estate and the Asset Management Business | 677,463 | 300,849 | 400,156 | ||||||||
| Other, net | 77 | 7,694 | 6,071 | ||||||||
| Income before income tax benefit | 703,576 | 316,243 | 464,431 | ||||||||
| Income tax benefit (Note 9) | 13,027 | 30,836 | 18,842 | ||||||||
| Net income | 716,603 | 347,079 | 483,273 | ||||||||
| Noncontrolling interests: | |||||||||||
| Net income attributable to noncontrolling interests in consolidated real estate partnerships | (8,220 | ) | (9,084 | ) | (25,256 | ) | |||||
| Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership | (7,739 | ) | (7,764 | ) | (7,239 | ) | |||||
| Net income attributable to common noncontrolling interests in Aimco Operating Partnership | (34,417 | ) | (14,457 | ) | (20,368 | ) | |||||
| Net income attributable to noncontrolling interests | (50,376 | ) | (31,305 | ) | (52,863 | ) | |||||
| Net income attributable to Aimco | 666,227 | 315,774 | 430,410 | ||||||||
| Net income attributable to Aimco preferred stockholders | (8,593 | ) | (8,594 | ) | (11,994 | ) | |||||
| Net income attributable to participating securities | (1,037 | ) | (319 | ) | (635 | ) | |||||
| Net income attributable to Aimco common stockholders | $ | 656,597 | $ | 306,861 | $ | 417,781 | |||||
| Net income attributable to Aimco per common share – basic | $ | 4.21 | $ | 1.96 | $ | 2.68 | |||||
| Net income attributable to Aimco per common share – diluted | $ | 4.21 | $ | 1.96 | $ | 2.67 | |||||
| Weighted average common shares outstanding – basic | 155,866 | 156,323 | 156,001 | ||||||||
| Weighted average common shares outstanding – diluted | 156,053 | 156,796 | 156,391 | ||||||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Net income |
| $ | 508,027 |
|
| $ | 716,603 |
|
| $ | 347,079 |
|
Other comprehensive (loss) gain: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains on available for sale debt securities |
|
| (637 | ) |
|
| (131 | ) |
|
| 1,507 |
|
Realized and unrealized losses on interest rate swaps |
|
| — |
|
|
| — |
|
|
| (173 | ) |
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss |
|
| — |
|
|
| 1,391 |
|
|
| 1,480 |
|
Other comprehensive (loss) gain |
|
| (637 | ) |
|
| 1,260 |
|
|
| 2,814 |
|
Comprehensive income |
|
| 507,390 |
|
|
| 717,863 |
|
|
| 349,893 |
|
Comprehensive income attributable to noncontrolling interests |
|
| (33,906 | ) |
|
| (50,445 | ) |
|
| (31,527 | ) |
Comprehensive income attributable to Aimco |
| $ | 473,484 |
|
| $ | 667,418 |
|
| $ | 318,366 |
|
| 2018 | 2017 | 2016 | |||||||||
| Net income | $ | 716,603 | $ | 347,079 | $ | 483,273 | |||||
| Other comprehensive gain: | |||||||||||
| Realized and unrealized (losses) gains on interest rate swaps | — | (173 | ) | 221 | |||||||
| Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss | 1,391 | 1,480 | 1,586 | ||||||||
| Unrealized (losses) gains on available for sale debt securities | (131 | ) | 1,507 | 5,855 | |||||||
| Other comprehensive gain | 1,260 | 2,814 | 7,662 | ||||||||
| Comprehensive income | 717,863 | 349,893 | 490,935 | ||||||||
| Comprehensive income attributable to noncontrolling interests | (50,445 | ) | (31,527 | ) | (53,474 | ) | |||||
| Comprehensive income attributable to Aimco | $ | 667,418 | $ | 318,366 | $ | 437,461 | |||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF EQUITY
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
|
| Preferred Stock |
|
| Common Stock |
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
|
| Noncontrolling Interests in |
|
| Common Noncontrolling Interests in |
|
|
|
|
| |||||||||||||
|
| Shares Issued |
|
| Amount |
|
| Shares Issued |
|
| Amount |
|
| Additional Paid- in Capital |
|
| Other Comprehensive Income (Loss) |
|
| Distributions in Excess of Earnings |
|
| Total Aimco Equity |
|
| Consolidated Real Estate Partnerships |
|
| Aimco Operating Partnerships |
|
| Total Equity |
| |||||||||||
Balances at December 31, 2016 |
|
| 5,000 |
|
| $ | 125,000 |
|
|
| 152,143 |
|
| $ | 1,521 |
|
| $ | 4,051,770 |
|
| $ | 1,011 |
|
| $ | (2,385,399 | ) |
| $ | 1,793,903 |
|
| $ | 151,121 |
|
| $ | (58 | ) |
| $ | 1,944,966 |
|
Redemption of Aimco Operating Partnership units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (11,882 | ) |
|
| (11,882 | ) |
Amortization of share-based compensation cost |
|
| — |
|
|
| — |
|
|
| 17 |
|
|
| — |
|
|
| 8,638 |
|
|
| — |
|
|
| — |
|
|
| 8,638 |
|
|
| — |
|
|
| 613 |
|
|
| 9,251 |
|
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,401 |
|
|
| — |
|
|
| 3,401 |
|
Effect of changes in ownership for consolidated entities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (160,586 | ) |
|
| — |
|
|
| — |
|
|
| (160,586 | ) |
|
| (157,056 | ) |
|
| 4,867 |
|
|
| (312,775 | ) |
Cumulative effect of a change in accounting principle |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (62,682 | ) |
|
| (62,682 | ) |
|
| — |
|
|
| (3,028 | ) |
|
| (65,710 | ) |
Change in accumulated other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,592 |
|
|
| — |
|
|
| 2,592 |
|
|
| 101 |
|
|
| 121 |
|
|
| 2,814 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 315,774 |
|
|
| 315,774 |
|
|
| 9,084 |
|
|
| 14,457 |
|
|
| 339,315 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,367 | ) |
|
| (10,765 | ) |
|
| (19,132 | ) |
Common Stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (226,172 | ) |
|
| (226,172 | ) |
|
| — |
|
|
| — |
|
|
| (226,172 | ) |
Preferred Stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,594 | ) |
|
| (8,594 | ) |
|
| — |
|
|
| — |
|
|
| (8,594 | ) |
Other, net |
|
| — |
|
|
| — |
|
|
| 275 |
|
|
| 3 |
|
|
| 268 |
|
|
| — |
|
|
| — |
|
|
| 271 |
|
|
| — |
|
|
| — |
|
|
| 271 |
|
Balances at December 31, 2017 |
|
| 5,000 |
|
|
| 125,000 |
|
|
| 152,435 |
|
|
| 1,524 |
|
|
| 3,900,090 |
|
|
| 3,603 |
|
|
| (2,367,073 | ) |
|
| 1,663,144 |
|
|
| (1,716 | ) |
|
| (5,675 | ) |
|
| 1,655,753 |
|
Repurchases of Common Stock |
|
| — |
|
|
| — |
|
|
| (7,970 | ) |
|
| (80 | ) |
|
| (373,513 | ) |
|
| — |
|
|
| — |
|
|
| (373,593 | ) |
|
| — |
|
|
| — |
|
|
| (373,593 | ) |
Issuance of Aimco Operating Partnership units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 50,151 |
|
|
| 50,151 |
|
Redemption of Aimco Operating Partnership units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,639 | ) |
|
| (9,639 | ) |
Amortization of share-based compensation cost |
|
| — |
|
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| 8,074 |
|
|
| — |
|
|
| — |
|
|
| 8,074 |
|
|
| — |
|
|
| 1,691 |
|
|
| 9,765 |
|
Effect of changes in ownership for consolidated entities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (19,115 | ) |
|
| — |
|
|
| — |
|
|
| (19,115 | ) |
|
| — |
|
|
| 9,014 |
|
|
| (10,101 | ) |
Change in accumulated other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,191 |
|
|
| — |
|
|
| 1,191 |
|
|
| — |
|
|
| 69 |
|
|
| 1,260 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 666,227 |
|
|
| 666,227 |
|
|
| 8,220 |
|
|
| 34,417 |
|
|
| 708,864 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,471 | ) |
|
| (12,839 | ) |
|
| (22,310 | ) |
Common Stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (238,067 | ) |
|
| (238,067 | ) |
|
| — |
|
|
| — |
|
|
| (238,067 | ) |
Preferred Stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,594 | ) |
|
| (8,594 | ) |
|
| — |
|
|
| — |
|
|
| (8,594 | ) |
Other, net |
|
| — |
|
|
| — |
|
|
| 137 |
|
|
| 2 |
|
|
| 150 |
|
|
| — |
|
|
| — |
|
|
| 152 |
|
|
| — |
|
|
| — |
|
|
| 152 |
|
Balances at December 31, 2018 |
|
| 5,000 |
|
|
| 125,000 |
|
|
| 144,623 |
|
|
| 1,446 |
|
|
| 3,515,686 |
|
|
| 4,794 |
|
|
| (1,947,507 | ) |
|
| 1,699,419 |
|
|
| (2,967 | ) |
|
| 67,189 |
|
|
| 1,763,641 |
|
Repurchases of Common Stock |
|
| — |
|
|
| — |
|
|
| (461 | ) |
|
| (5 | ) |
|
| (20,677 | ) |
|
| — |
|
|
| — |
|
|
| (20,682 | ) |
|
| — |
|
|
| — |
|
|
| (20,682 | ) |
Redemption of Preferred Stock |
|
| (5,000 | ) |
|
| (125,000 | ) |
|
| — |
|
|
| — |
|
|
| 4,089 |
|
|
| — |
|
|
| (4,089 | ) |
|
| (125,000 | ) |
|
| — |
|
|
| — |
|
|
| (125,000 | ) |
Issuance of Aimco Operating Partnership units |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,034 |
|
|
| 3,034 |
|
Redemption of Aimco Operating Partnership units |
|
| — |
|
|
| — |
|
|
| 127 |
|
|
| 2 |
|
|
| 6,242 |
|
|
| — |
|
|
| — |
|
|
| 6,244 |
|
|
| — |
|
|
| (12,710 | ) |
|
| (6,466 | ) |
Amortization of share-based compensation cost |
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| 5,924 |
|
|
| — |
|
|
| — |
|
|
| 5,924 |
|
|
| — |
|
|
| 3,184 |
|
|
| 9,108 |
|
Effect of changes in ownership of consolidated entities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (13,243 | ) |
|
| — |
|
|
| — |
|
|
| (13,243 | ) |
|
| 3,422 |
|
|
| 9,821 |
|
|
| — |
|
Purchase of noncontrolling interest in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,844 | ) |
|
| — |
|
|
| (3,844 | ) |
Change in accumulated other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (599 | ) |
|
| — |
|
|
| (599 | ) |
|
| — |
|
|
| (38 | ) |
|
| (637 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 474,083 |
|
|
| 474,083 |
|
|
| 382 |
|
|
| 26,049 |
|
|
| 500,514 |
|
Common Stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (241,643 | ) |
|
| (241,643 | ) |
|
| — |
|
|
| — |
|
|
| (241,643 | ) |
Common Stock issued to Common Stockholders in special dividend |
|
| — |
|
|
| — |
|
|
| 4,492 |
|
|
| 45 |
|
|
| (786 | ) |
|
| — |
|
|
| — |
|
|
| (741 | ) |
|
| — |
|
|
| — |
|
|
| (741 | ) |
Preferred Stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,246 | ) |
|
| (3,246 | ) |
|
| — |
|
|
| — |
|
|
| (3,246 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (308 | ) |
|
| (13,087 | ) |
|
| (13,395 | ) |
Other, net |
|
| — |
|
|
| — |
|
|
| 82 |
|
|
| 1 |
|
|
| 132 |
|
|
| — |
|
|
| — |
|
|
| 133 |
|
|
| 19 |
|
|
| — |
|
|
| 152 |
|
Balances at December 31, 2019 |
|
| — |
|
| $ | — |
|
|
| 148,885 |
|
| $ | 1,489 |
|
| $ | 3,497,367 |
|
| $ | 4,195 |
|
| $ | (1,722,402 | ) |
| $ | 1,780,649 |
|
| $ | (3,296 | ) |
| $ | 83,442 |
|
| $ | 1,860,795 |
|
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||
| Shares Issued | Amount | Shares Issued | Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Distributions in Excess of Earnings | Total Aimco Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||
| Balances at December 31, 2015 | 6,391 | $ | 159,126 | 156,326 | $ | 1,563 | $ | 4,064,659 | $ | (6,040 | ) | $ | (2,596,917 | ) | $ | 1,622,391 | $ | 141,514 | $ | 1,763,905 | |||||||||||||||||
| Redemption of Preferred Stock | (1,391 | ) | (34,126 | ) | — | — | 1,307 | — | (1,980 | ) | (34,799 | ) | — | (34,799 | ) | ||||||||||||||||||||||
| Redemption of Aimco Operating Partnership units | — | — | — | — | — | — | — | — | (10,819 | ) | (10,819 | ) | |||||||||||||||||||||||||
| Amortization of share-based compensation cost | — | — | 31 | — | 8,610 | — | — | 8,610 | — | 8,610 | |||||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (26,171 | ) | — | — | (26,171 | ) | 10,107 | (16,064 | ) | ||||||||||||||||||||||||
| Change in accumulated other comprehensive income | — | — | — | — | — | 7,051 | — | 7,051 | 611 | 7,662 | |||||||||||||||||||||||||||
| Other, net | — | — | 531 | 6 | 3,317 | — | — | 3,323 | — | 3,323 | |||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 430,410 | 430,410 | 45,624 | 476,034 | |||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | (35,974 | ) | (35,974 | ) | |||||||||||||||||||||||||
| Common Stock dividends | — | — | — | — | — | — | (206,898 | ) | (206,898 | ) | — | (206,898 | ) | ||||||||||||||||||||||||
| Preferred Stock dividends | — | — | — | — | — | — | (10,014 | ) | (10,014 | ) | — | (10,014 | ) | ||||||||||||||||||||||||
| Balances at December 31, 2016 | 5,000 | 125,000 | 156,888 | 1,569 | 4,051,722 | 1,011 | (2,385,399 | ) | 1,793,903 | 151,063 | 1,944,966 | ||||||||||||||||||||||||||
| Redemption of Aimco Operating Partnership units | — | — | — | — | — | — | — | — | (11,882 | ) | (11,882 | ) | |||||||||||||||||||||||||
| Amortization of share-based compensation cost | — | — | 18 | — | 8,638 | — | — | 8,638 | 613 | 9,251 | |||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | — | — | 3,401 | 3,401 | |||||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (160,586 | ) | — | — | (160,586 | ) | (152,189 | ) | (312,775 | ) | |||||||||||||||||||||||
| Cumulative effect of a change in accounting principle | — | — | — | — | — | — | (62,682 | ) | (62,682 | ) | (3,028 | ) | (65,710 | ) | |||||||||||||||||||||||
| Change in accumulated other comprehensive income | — | — | — | — | — | 2,592 | — | 2,592 | 222 | 2,814 | |||||||||||||||||||||||||||
| Other, net | — | — | 283 | 3 | 268 | — | — | 271 | — | 271 | |||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 315,774 | 315,774 | 23,541 | 339,315 | |||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | (19,132 | ) | (19,132 | ) | |||||||||||||||||||||||||
| Common Stock dividends | — | — | — | — | — | — | (226,172 | ) | (226,172 | ) | — | (226,172 | ) | ||||||||||||||||||||||||
| Preferred Stock dividends | — | — | — | — | — | — | (8,594 | ) | (8,594 | ) | — | (8,594 | ) | ||||||||||||||||||||||||
| Balances at December 31, 2017 | 5,000 | 125,000 | 157,189 | 1,572 | 3,900,042 | 3,603 | (2,367,073 | ) | 1,663,144 | (7,391 | ) | 1,655,753 | |||||||||||||||||||||||||
| Repurchases of Common Stock | — | — | (8,219 | ) | (82 | ) | (373,511 | ) | — | — | (373,593 | ) | — | (373,593 | ) | ||||||||||||||||||||||
| Issuance of Aimco Operating Partnership units | — | — | — | — | — | — | — | — | 50,151 | 50,151 | |||||||||||||||||||||||||||
| Redemption of Aimco Operating Partnership units | — | — | — | — | — | — | — | — | (9,639 | ) | (9,639 | ) | |||||||||||||||||||||||||
| Amortization of share-based compensation cost | — | — | 22 | — | 8,074 | — | — | 8,074 | 1,691 | 9,765 | |||||||||||||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | — | — | — | (19,115 | ) | — | — | (19,115 | ) | 9,014 | (10,101 | ) | ||||||||||||||||||||||||
| Change in accumulated other comprehensive income | — | — | — | — | — | 1,191 | — | 1,191 | 69 | 1,260 | |||||||||||||||||||||||||||
| Other, net | — | — | 142 | 1 | 151 | — | — | 152 | — | 152 | |||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 666,227 | 666,227 | 42,637 | 708,864 | |||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | (22,310 | ) | (22,310 | ) | |||||||||||||||||||||||||
| Common Stock dividends | — | — | — | — | — | — | (238,067 | ) | (238,067 | ) | — | (238,067 | ) | ||||||||||||||||||||||||
| Preferred Stock dividends | — | — | — | — | — | — | (8,594 | ) | (8,594 | ) | — | (8,594 | ) | ||||||||||||||||||||||||
| Balances at December 31, 2018 | 5,000 | $ | 125,000 | 149,134 | $ | 1,491 | $ | 3,515,641 | $ | 4,794 | $ | (1,947,507 | ) | $ | 1,699,419 | $ | 64,222 | $ | 1,763,641 | ||||||||||||||||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
| 2019 |
| 2018 |
| 2017 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net income | $ | 508,027 |
| $ | 716,603 |
| $ | 347,079 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 380,171 |
|
| 377,786 |
|
| 366,184 |
|
Provision for real estate impairment loss |
| — |
|
| — |
|
| 35,881 |
|
Gain on dispositions of real estate and the Asset Management business |
| (503,168 | ) |
| (677,463 | ) |
| (300,849 | ) |
Income tax benefit |
| (3,135 | ) |
| (13,027 | ) |
| (30,836 | ) |
Share-based compensation expense |
| 8,146 |
|
| 8,550 |
|
| 7,877 |
|
Amortization of debt issuance costs and other |
| 7,629 |
|
| 9,023 |
|
| 5,666 |
|
Other, net |
| 25 |
|
| 1,065 |
|
| (7,694 | ) |
Changes in operating assets and operating liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets |
| (26,021 | ) |
| (27,830 | ) |
| (15,841 | ) |
Accounts payable, accrued liabilities and other |
| 2,798 |
|
| 1,681 |
|
| (15,395 | ) |
Total adjustments |
| (133,555 | ) |
| (320,215 | ) |
| 44,993 |
|
Net cash provided by operating activities |
| 374,472 |
|
| 396,388 |
|
| 392,072 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchases of real estate and deposits related to purchases of real estate |
| (138,311 | ) |
| (242,297 | ) |
| (20,372 | ) |
Capital expenditures |
| (393,461 | ) |
| (340,489 | ) |
| (358,104 | ) |
Proceeds from dispositions of real estate and the Asset Management Business |
| 628,771 |
|
| 708,848 |
|
| 401,983 |
|
Payment for mezzanine investment and related transaction costs |
| (277,627 | ) |
| — |
|
| — |
|
Purchases of corporate assets |
| (17,584 | ) |
| (7,718 | ) |
| (8,899 | ) |
Proceeds from repayments on notes receivable |
| 147 |
|
| 5,010 |
|
| 430 |
|
Other investing activities |
| (7,348 | ) |
| (1,508 | ) |
| (2,019 | ) |
Net cash (used in) provided by investing activities |
| (205,413 | ) |
| 121,846 |
|
| 13,019 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from non-recourse property debt |
| 774,623 |
|
| 1,228,027 |
|
| 312,434 |
|
Principal repayments on non-recourse property debt |
| (520,027 | ) |
| (976,087 | ) |
| (409,167 | ) |
(Repayment of) proceeds from term loan |
| — |
|
| (250,000 | ) |
| 250,000 |
|
Net borrowings on revolving credit facility |
| 114,640 |
|
| 93,200 |
|
| 49,230 |
|
Payment of debt issuance costs |
| (4,861 | ) |
| (11,961 | ) |
| (4,751 | ) |
Payment of debt extinguishment costs |
| (4,491 | ) |
| (14,241 | ) |
| (399 | ) |
Repurchases of Common Stock |
| (20,682 | ) |
| (373,593 | ) |
| — |
|
Repurchases of Preferred Stock |
| (125,000 | ) |
| — |
|
| — |
|
Payment of dividends to holders of Preferred Stock |
| (3,246 | ) |
| (8,594 | ) |
| (8,594 | ) |
Payment of dividends to holders of Common Stock |
| (241,288 | ) |
| (237,504 | ) |
| (225,377 | ) |
Payment of distributions to noncontrolling interests |
| (21,620 | ) |
| (29,196 | ) |
| (26,799 | ) |
Redemptions of noncontrolling interests in the Aimco Operating Partnership |
| (10,694 | ) |
| (9,885 | ) |
| (13,546 | ) |
Contribution from noncontrolling interests in consolidated real estate partnerships |
| 4,911 |
|
| — |
|
| — |
|
Purchases of noncontrolling interests in consolidated real estate partnerships |
| (3,780 | ) |
| (3,579 | ) |
| (314,269 | ) |
Other financing activities |
| (2,437 | ) |
| 5,233 |
|
| (2,462 | ) |
Net cash used in financing activities |
| (63,952 | ) |
| (588,180 | ) |
| (393,700 | ) |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
| 105,107 |
|
| (69,946 | ) |
| 11,391 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD |
| 72,595 |
|
| 142,541 |
|
| 131,150 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 177,702 |
| $ | 72,595 |
| $ | 142,541 |
|
| 2018 | 2017 | 2016 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 716,603 | $ | 347,079 | $ | 483,273 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 377,786 | 366,184 | 333,066 | ||||||||
| Provision for real estate impairment loss | — | 35,881 | — | ||||||||
| Gain on dispositions of real estate and the Asset Management business | (677,463 | ) | (300,849 | ) | (400,156 | ) | |||||
| Income tax benefit | (13,027 | ) | (30,836 | ) | (18,842 | ) | |||||
| Share-based compensation expense | 8,550 | 7,877 | 7,629 | ||||||||
| Amortization of debt issue costs and other | 9,023 | 5,666 | 5,060 | ||||||||
| Other, net | 1,065 | (7,694 | ) | (6,071 | ) | ||||||
| Changes in operating assets and operating liabilities: | |||||||||||
| Accounts receivable and other assets | (27,830 | ) | (15,841 | ) | (22,294 | ) | |||||
| Accounts payable, accrued liabilities and other | 1,681 | (15,395 | ) | (5,164 | ) | ||||||
| Total adjustments | (320,215 | ) | 44,993 | (106,772 | ) | ||||||
| Net cash provided by operating activities | 396,388 | 392,072 | 376,501 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of real estate and deposits related to purchases of real estate | (242,297 | ) | (20,372 | ) | (290,729 | ) | |||||
| Capital expenditures | (340,489 | ) | (358,104 | ) | (346,645 | ) | |||||
| Proceeds from dispositions of real estate | 708,848 | 401,983 | 535,513 | ||||||||
| Purchases of corporate assets | (7,718 | ) | (8,899 | ) | (7,540 | ) | |||||
| Proceeds from repayments on notes receivable | 5,010 | 430 | 412 | ||||||||
| Other investing activities | (1,508 | ) | (2,019 | ) | 9,842 | ||||||
| Net cash provided by (used in) investing activities | 121,846 | 13,019 | (99,147 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from non-recourse property debt | 1,228,027 | 312,434 | 417,714 | ||||||||
| Principal repayments on non-recourse property debt | (976,087 | ) | (409,167 | ) | (371,947 | ) | |||||
| (Repayment of) proceeds from term loan | (250,000 | ) | 250,000 | — | |||||||
| Net borrowings on (repayments of) revolving credit facility | 93,200 | 49,230 | (9,070 | ) | |||||||
| Payment of debt issue costs | (11,961 | ) | (4,751 | ) | (7,816 | ) | |||||
| Payment of debt extinguishment costs | (14,241 | ) | (399 | ) | (391 | ) | |||||
| Repurchases of Common Stock | (373,593 | ) | — | — | |||||||
| Redemptions of Preferred Stock | — | — | (34,799 | ) | |||||||
| Payment of dividends to holders of Preferred Stock | (8,594 | ) | (8,594 | ) | (10,014 | ) | |||||
| Payment of dividends to holders of Common Stock | (237,504 | ) | (225,377 | ) | (206,279 | ) | |||||
| Payment of distributions to noncontrolling interests | (29,196 | ) | (26,799 | ) | (35,706 | ) | |||||
| Redemptions of noncontrolling interests in the Aimco Operating Partnership | (9,885 | ) | (13,546 | ) | (12,544 | ) | |||||
| Purchases of noncontrolling interests in consolidated real estate partnerships | (3,579 | ) | (314,269 | ) | (13,941 | ) | |||||
| Other financing activities | 5,233 | (2,462 | ) | 844 | |||||||
| Net cash used in financing activities | (588,180 | ) | (393,700 | ) | (283,949 | ) | |||||
| NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (69,946 | ) | 11,391 | (6,595 | ) | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 142,541 | 131,150 | 137,745 | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 72,595 | $ | 142,541 | $ | 131,150 | |||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
| $ | 160,961 |
|
| $ | 199,996 |
|
| $ | 196,438 |
|
Cash paid for income taxes |
|
| 12,238 |
|
|
| 11,522 |
|
|
| 7,401 |
|
Non-cash transactions associated with the acquisition or disposition of real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse property debt assumed in connection with the acquisition of real estate |
|
| 97,565 |
|
|
| 208,885 |
|
|
| — |
|
Deferred tax liability assumed in connection with the acquisition of real estate |
|
| 148,809 |
|
|
| — |
|
|
| — |
|
Issuance of common OP Units in connection with acquisition of real estate |
|
| 3,034 |
|
|
| 50,151 |
|
|
| — |
|
Non-recourse property debt assumed by buyer in connection with the disposition of the Asset Management business |
|
| — |
|
|
| 227,708 |
|
|
| — |
|
Other non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of right of use lease assets |
|
| 54,626 |
|
|
| — |
|
|
| — |
|
Recognition of lease liabilities |
|
| 59,251 |
|
|
| — |
|
|
| — |
|
Accrued capital expenditures (at end of period) |
|
| 54,358 |
|
|
| 40,185 |
|
|
| 31,719 |
|
Accrued dividends on TSR restricted stock and LTIP awards (at end of period) (Note 9) |
|
| 1,420 |
|
|
| 1,266 |
|
|
| 1,720 |
|
| 2018 | 2017 | 2016 | |||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
| Interest paid | $ | 199,996 | $ | 196,438 | $ | 200,278 | |||||
| Cash paid for income taxes | 11,522 | 7,401 | 2,152 | ||||||||
| Non-cash transactions associated with the acquisition or disposition of real estate: | |||||||||||
| Non-recourse property debt assumed by buyer in connection with the disposition of the Asset Management business | 227,708 | — | — | ||||||||
| Non-recourse property debt assumed in connection with the acquisition of real estate | 208,885 | — | — | ||||||||
| Issuance of preferred OP Units in connection with acquisition of real estate | — | — | 17,000 | ||||||||
| Issuance of common OP Units in connection with acquisition of real estate | 50,151 | — | — | ||||||||
| Other non-cash investing and financing transactions: | |||||||||||
| Accrued capital expenditures (at end of period) | 40,185 | 31,719 | 35,594 | ||||||||
| Accrued dividends on TSR restricted stock and LTIP awards (at end of period) (Note 8) | 1,266 | 1,720 | 927 | ||||||||
See notes to the consolidated financial statements.
Report of Independent Registered Public Accounting Firm
To the Partners and the Board of Directors
AIMCO Properties, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AIMCO Properties, L.P. (the “Partnership”)Partnership) as of December 31, 20182019 and 2017,2018, the related consolidated statements of operations, comprehensive income, partners’ capital,equity, and cash flows for each of the three years in the period ended December 31, 2018,2019, and the related notes and the financial statement schedule listed in the accompanying Index to Financial Statementsindex at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 20182019 and 2017,2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2018,2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 201924, 2020 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 910 to the consolidated financial statements, the Partnership changed its accounting for the income tax consequences of intercompany transfers of assets effective January 1, 2017.
Basis for Opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ ERNST & YOUNG LLP |
We have served as the Partnership’s auditor since 1994.
Denver, Colorado
February 19, 2019
CONSOLIDATED BALANCE SHEETS
As of December 31, 20182019 and 2017
(In thousands)
|
| 2019 |
|
| 2018 |
| ||
ASSETS |
|
|
|
|
|
|
|
|
Buildings and improvements |
| $ | 6,868,543 |
|
| $ | 6,552,065 |
|
Land |
|
| 1,869,048 |
|
|
| 1,756,525 |
|
Total real estate |
|
| 8,737,591 |
|
|
| 8,308,590 |
|
Accumulated depreciation |
|
| (2,718,284 | ) |
|
| (2,585,115 | ) |
Net real estate |
|
| 6,019,307 |
|
|
| 5,723,475 |
|
Cash and cash equivalents |
|
| 142,902 |
|
|
| 36,858 |
|
Restricted cash |
|
| 34,800 |
|
|
| 35,737 |
|
Mezzanine investment |
|
| 280,258 |
|
|
| — |
|
Other assets |
|
| 351,472 |
|
|
| 351,541 |
|
Assets held for sale |
|
| — |
|
|
| 42,393 |
|
Total assets |
| $ | 6,828,739 |
|
| $ | 6,190,004 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Non-recourse property debt, net |
| $ | 4,230,590 |
|
| $ | 3,915,305 |
|
Revolving credit facility borrowings |
|
| 275,000 |
|
|
| 160,360 |
|
Total indebtedness |
|
| 4,505,590 |
|
|
| 4,075,665 |
|
Accrued liabilities and other |
|
| 360,574 |
|
|
| 226,230 |
|
Liabilities related to assets held for sale |
|
| — |
|
|
| 23,177 |
|
Total liabilities |
|
| 4,866,164 |
|
|
| 4,325,072 |
|
Redeemable preferred units (Note 8) |
|
| 97,064 |
|
|
| 101,291 |
|
Redeemable noncontrolling interests in consolidated real estate partnership |
|
| 4,716 |
|
|
| — |
|
Commitments and contingencies (Note 6) |
|
|
|
|
|
|
|
|
Partners’ capital: |
|
|
|
|
|
|
|
|
Preferred units (Note 7) |
|
| — |
|
|
| 125,000 |
|
General Partner and Special Limited Partner |
|
| 1,780,649 |
|
|
| 1,574,419 |
|
Limited Partners |
|
| 83,442 |
|
|
| 67,189 |
|
Partners’ capital attributable to the Aimco Operating Partnership |
|
| 1,864,091 |
|
|
| 1,766,608 |
|
Noncontrolling interests in consolidated real estate partnerships |
|
| (3,296 | ) |
|
| (2,967 | ) |
Total partners’ capital |
|
| 1,860,795 |
|
|
| 1,763,641 |
|
Total liabilities and partners’ capital |
| $ | 6,828,739 |
|
| $ | 6,190,004 |
|
| 2018 | 2017 | ||||||
| ASSETS | |||||||
| Buildings and improvements | $ | 6,552,065 | $ | 6,174,149 | |||
| Land | 1,756,525 | 1,753,604 | |||||
| Total real estate | 8,308,590 | 7,927,753 | |||||
| Accumulated depreciation | (2,585,115 | ) | (2,522,358 | ) | |||
| Net real estate | 5,723,475 | 5,405,395 | |||||
| Cash and cash equivalents | 36,858 | 60,498 | |||||
| Restricted cash | 35,737 | 34,827 | |||||
| Other assets | 351,541 | 272,739 | |||||
| Assets held for sale | 42,393 | 17,959 | |||||
| Assets of partnerships served by Asset Management business: | |||||||
| Real estate, net | — | 224,873 | |||||
| Cash and cash equivalents | — | 16,288 | |||||
| Restricted cash | — | 30,928 | |||||
| Other assets | — | 15,533 | |||||
| Total assets | $ | 6,190,004 | $ | 6,079,040 | |||
| LIABILITIES AND PARTNERS’ CAPITAL | |||||||
| Non-recourse property debt secured by Real Estate communities, net | $ | 3,915,305 | $ | 3,545,109 | |||
| Term loan, net | — | 249,501 | |||||
| Revolving credit facility borrowings | 160,360 | 67,160 | |||||
| Total indebtedness associated with Real Estate portfolio | 4,075,665 | 3,861,770 | |||||
| Accrued liabilities and other | 226,230 | 213,027 | |||||
| Liabilities related to assets held for sale | 23,177 | — | |||||
| Liabilities of partnerships served by Asset Management business: | |||||||
| Non-recourse property debt, net | — | 227,141 | |||||
| Accrued liabilities and other | — | 19,812 | |||||
| Total liabilities | 4,325,072 | 4,321,750 | |||||
| Redeemable preferred units (Note 7) | 101,291 | 101,537 | |||||
| Commitments and contingencies (Note 5) | |||||||
| Partners’ Capital: | |||||||
| Preferred units (Note 7) | 125,000 | 125,000 | |||||
| General Partner and Special Limited Partner | 1,574,419 | 1,538,144 | |||||
| Limited Partners | 67,189 | (5,675 | ) | ||||
| Partners’ capital attributable to the Aimco Operating Partnership | 1,766,608 | 1,657,469 | |||||
| Noncontrolling interests in consolidated real estate partnerships | (2,967 | ) | (1,716 | ) | |||
| Total partners’ capital | 1,763,641 | 1,655,753 | |||||
| Total liabilities and partners’ capital | $ | 6,190,004 | $ | 6,079,040 | |||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands, except per unit data)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenues attributable to real estate |
| $ | 914,294 |
|
| $ | 922,593 |
|
| $ | 918,148 |
|
Asset Management business rental and tax credit revenues |
|
| — |
|
|
| 49,817 |
|
|
| 87,289 |
|
Total revenues |
|
| 914,294 |
|
|
| 972,410 |
|
|
| 1,005,437 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses attributable to real estate |
|
| 311,221 |
|
|
| 307,901 |
|
|
| 319,126 |
|
Property operating expenses of partnerships served by Asset Management business |
|
| — |
|
|
| 20,921 |
|
|
| 35,458 |
|
Depreciation and amortization |
|
| 380,171 |
|
|
| 377,786 |
|
|
| 366,184 |
|
General and administrative expenses |
|
| 47,037 |
|
|
| 46,268 |
|
|
| 43,657 |
|
Other expenses, net |
|
| 19,092 |
|
|
| 3,778 |
|
|
| 11,148 |
|
Provision for real estate impairment loss |
|
| — |
|
|
| — |
|
|
| 35,881 |
|
Total operating expenses |
|
| 757,521 |
|
|
| 756,654 |
|
|
| 811,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 11,424 |
|
|
| 10,914 |
|
|
| 8,332 |
|
Interest expense |
|
| (168,807 | ) |
|
| (200,634 | ) |
|
| (194,615 | ) |
Gain on dispositions of real estate and the Asset Management business |
|
| 503,168 |
|
|
| 677,463 |
|
|
| 300,849 |
|
Mezzanine investment income, net |
|
| 1,531 |
|
|
| — |
|
|
| — |
|
Income from unconsolidated real estate partnerships |
|
| 803 |
|
|
| 77 |
|
|
| 7,694 |
|
Income before income tax benefit |
|
| 504,892 |
|
|
| 703,576 |
|
|
| 316,243 |
|
Income tax benefit (Note 10) |
|
| 3,135 |
|
|
| 13,027 |
|
|
| 30,836 |
|
Net income |
|
| 508,027 |
|
|
| 716,603 |
|
|
| 347,079 |
|
Net income attributable to noncontrolling interests in consolidated real estate partnerships |
|
| (187 | ) |
|
| (8,220 | ) |
|
| (9,084 | ) |
Net income attributable to the Aimco Operating Partnership |
|
| 507,840 |
|
|
| 708,383 |
|
|
| 337,995 |
|
Net income attributable to the Aimco Operating Partnership’s preferred unitholders |
|
| (15,043 | ) |
|
| (16,332 | ) |
|
| (16,358 | ) |
Net income attributable to participating securities |
|
| (620 | ) |
|
| (1,177 | ) |
|
| (337 | ) |
Net income attributable to the Aimco Operating Partnership’s common unitholders |
| $ | 492,177 |
|
| $ | 690,874 |
|
| $ | 321,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to the Aimco Operating Partnership per common unit – basic |
| $ | 3.16 |
|
| $ | 4.35 |
|
| $ | 2.02 |
|
Net income attributable to the Aimco Operating Partnership per common unit – diluted |
| $ | 3.15 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common units outstanding – basic |
|
| 155,882 |
|
|
| 158,890 |
|
|
| 158,793 |
|
Weighted-average common units outstanding – diluted |
|
| 156,217 |
|
|
| 159,073 |
|
|
| 159,257 |
|
| 2018 | 2017 | 2016 | |||||||||
| REVENUES: | |||||||||||
| Rental and other property revenues attributable to Real Estate | $ | 922,593 | $ | 918,148 | $ | 899,891 | |||||
| Rental and other property revenues of partnerships served by Asset Management business | 42,830 | 74,046 | 74,640 | ||||||||
| Tax credit and transaction revenues | 6,987 | 13,243 | 21,323 | ||||||||
| Total revenues | 972,410 | 1,005,437 | 995,854 | ||||||||
| OPERATING EXPENSES: | |||||||||||
| Property operating expenses attributable to Real Estate | 307,901 | 319,126 | 317,957 | ||||||||
| Property operating expenses of partnerships served by Asset Management business | 20,921 | 35,458 | 36,956 | ||||||||
| Depreciation and amortization | 377,786 | 366,184 | 333,066 | ||||||||
| General and administrative expenses | 46,268 | 43,657 | 46,784 | ||||||||
| Other expenses, net | 3,778 | 11,148 | 14,295 | ||||||||
| Provision for real estate impairment loss | — | 35,881 | — | ||||||||
| Total operating expenses | 756,654 | 811,454 | 749,058 | ||||||||
| Interest income | 10,914 | 8,332 | 7,797 | ||||||||
| Interest expense | (200,634 | ) | (194,615 | ) | (196,389 | ) | |||||
| Gain on dispositions of real estate and the Asset Management Business | 677,463 | 300,849 | 400,156 | ||||||||
| Other, net | 77 | 7,694 | 6,071 | ||||||||
| Income before income tax benefit | 703,576 | 316,243 | 464,431 | ||||||||
| Income tax benefit (Note 9) | 13,027 | 30,836 | 18,842 | ||||||||
| Net income | 716,603 | 347,079 | 483,273 | ||||||||
| Net income attributable to noncontrolling interests in consolidated real estate partnerships | (8,220 | ) | (9,084 | ) | (25,256 | ) | |||||
| Net income attributable to the Aimco Operating Partnership | 708,383 | 337,995 | 458,017 | ||||||||
| Net income attributable to the Aimco Operating Partnership’s preferred unitholders | (16,332 | ) | (16,358 | ) | (19,233 | ) | |||||
| Net income attributable to participating securities | (1,177 | ) | (337 | ) | (635 | ) | |||||
| Net income attributable to the Aimco Operating Partnership’s common unitholders | $ | 690,874 | $ | 321,300 | $ | 438,149 | |||||
| Net income attributable to the Aimco Operating Partnership per common unit – basic | $ | 4.22 | $ | 1.96 | $ | 2.68 | |||||
| Net income attributable to the Aimco Operating Partnership per common unit – diluted | $ | 4.21 | $ | 1.96 | $ | 2.67 | |||||
| Weighted average common units outstanding – basic | 163,846 | 163,746 | 163,761 | ||||||||
| Weighted average common units outstanding – diluted | 164,033 | 164,218 | 164,151 | ||||||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Net income |
| $ | 508,027 |
|
| $ | 716,603 |
|
| $ | 347,079 |
|
Other comprehensive (loss) gain: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains on available for sale debt securities |
|
| (637 | ) |
|
| (131 | ) |
|
| 1,507 |
|
Realized and unrealized losses on interest rate swaps |
|
| — |
|
|
| — |
|
|
| (173 | ) |
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss |
|
| — |
|
|
| 1,391 |
|
|
| 1,480 |
|
Other comprehensive (loss) gain |
|
| (637 | ) |
|
| 1,260 |
|
|
| 2,814 |
|
Comprehensive income |
|
| 507,390 |
|
|
| 717,863 |
|
|
| 349,893 |
|
Comprehensive income attributable to noncontrolling interests |
|
| (187 | ) |
|
| (8,220 | ) |
|
| (9,185 | ) |
Comprehensive income attributable to the Aimco Operating Partnership |
| $ | 507,203 |
|
| $ | 709,643 |
|
| $ | 340,708 |
|
| 2018 | 2017 | 2016 | |||||||||
| Net income | $ | 716,603 | $ | 347,079 | $ | 483,273 | |||||
| Other comprehensive gain: | |||||||||||
| Realized and unrealized (losses) gains on interest rate swaps | — | (173 | ) | 221 | |||||||
| Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss | 1,391 | 1,480 | 1,586 | ||||||||
| Unrealized (losses) gains on available for sale debt securities | (131 | ) | 1,507 | 5,855 | |||||||
| Other comprehensive gain | 1,260 | 2,814 | 7,662 | ||||||||
| Comprehensive income | 717,863 | 349,893 | 490,935 | ||||||||
| Comprehensive income attributable to noncontrolling interests | (8,220 | ) | (9,185 | ) | (25,516 | ) | |||||
| Comprehensive income attributable to the Aimco Operating Partnership | $ | 709,643 | $ | 340,708 | $ | 465,419 | |||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
|
| Preferred Units |
|
| General Partner and Special Limited Partner |
|
| Limited Partners |
|
| Partners’ Capital Attributable to the Aimco Operating Partnership |
|
| Noncontrolling Interests in Consolidated Real Estate Partnerships |
|
| Total Partners’ Capital |
| ||||||
Balances at December 31, 2016 |
| $ | 125,000 |
|
| $ | 1,668,903 |
|
| $ | (58 | ) |
| $ | 1,793,845 |
|
| $ | 151,121 |
|
| $ | 1,944,966 |
|
Redemption of partnership units held by non-Aimco partners |
|
| — |
|
|
| — |
|
|
| (11,882 | ) |
|
| (11,882 | ) |
|
| — |
|
|
| (11,882 | ) |
Amortization of Aimco share-based compensation cost |
|
| — |
|
|
| 8,638 |
|
|
| 613 |
|
|
| 9,251 |
|
|
| — |
|
|
| 9,251 |
|
Contributions from noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,401 |
|
|
| 3,401 |
|
Effect of changes in ownership for consolidated entities |
|
| — |
|
|
| (160,586 | ) |
|
| 4,867 |
|
|
| (155,719 | ) |
|
| (157,056 | ) |
|
| (312,775 | ) |
Cumulative effect of a change in accounting principle |
|
| — |
|
|
| (62,682 | ) |
|
| (3,028 | ) |
|
| (65,710 | ) |
|
| — |
|
|
| (65,710 | ) |
Change in accumulated other comprehensive income |
|
| — |
|
|
| 2,592 |
|
|
| 121 |
|
|
| 2,713 |
|
|
| 101 |
|
|
| 2,814 |
|
Net income |
|
| — |
|
|
| 315,774 |
|
|
| 14,457 |
|
|
| 330,231 |
|
|
| 9,084 |
|
|
| 339,315 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,367 | ) |
|
| (8,367 | ) |
Distributions to common unitholders |
|
| — |
|
|
| (226,172 | ) |
|
| (10,765 | ) |
|
| (236,937 | ) |
|
| — |
|
|
| (236,937 | ) |
Distributions to preferred unitholders |
|
| — |
|
|
| (8,594 | ) |
|
| — |
|
|
| (8,594 | ) |
|
| — |
|
|
| (8,594 | ) |
Other, net |
|
| — |
|
|
| 271 |
|
|
| — |
|
|
| 271 |
|
|
| — |
|
|
| 271 |
|
Balances at December 31, 2017 |
|
| 125,000 |
|
|
| 1,538,144 |
|
|
| (5,675 | ) |
|
| 1,657,469 |
|
|
| (1,716 | ) |
|
| 1,655,753 |
|
Repurchases of common partnership units |
|
| — |
|
|
| (373,593 | ) |
|
| — |
|
|
| (373,593 | ) |
|
| — |
|
|
| (373,593 | ) |
Issuance of common partnership units |
|
| — |
|
|
| — |
|
|
| 50,151 |
|
|
| 50,151 |
|
|
| — |
|
|
| 50,151 |
|
Redemption of partnership units held by non-Aimco partners |
|
| — |
|
|
| — |
|
|
| (9,639 | ) |
|
| (9,639 | ) |
|
| — |
|
|
| (9,639 | ) |
Amortization of Aimco share-based compensation cost |
|
| — |
|
|
| 8,074 |
|
|
| 1,691 |
|
|
| 9,765 |
|
|
| — |
|
|
| 9,765 |
|
Effect of changes in ownership for consolidated entities |
|
| — |
|
|
| (19,115 | ) |
|
| 9,014 |
|
|
| (10,101 | ) |
|
| — |
|
|
| (10,101 | ) |
Change in accumulated other comprehensive income |
|
| — |
|
|
| 1,191 |
|
|
| 69 |
|
|
| 1,260 |
|
|
| — |
|
|
| 1,260 |
|
Net income |
|
| — |
|
|
| 666,227 |
|
|
| 34,417 |
|
|
| 700,644 |
|
|
| 8,220 |
|
|
| 708,864 |
|
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (12,839 | ) |
|
| (12,839 | ) |
|
| (9,471 | ) |
|
| (22,310 | ) |
Distributions to common unitholders |
|
| — |
|
|
| (238,067 | ) |
|
| — |
|
|
| (238,067 | ) |
|
| — |
|
|
| (238,067 | ) |
Distributions to preferred unitholders |
|
| — |
|
|
| (8,594 | ) |
|
| — |
|
|
| (8,594 | ) |
|
| — |
|
|
| (8,594 | ) |
Other, net |
|
| — |
|
|
| 152 |
|
|
| — |
|
|
| 152 |
|
|
| — |
|
|
| 152 |
|
Balances at December 31, 2018 |
|
| 125,000 |
|
|
| 1,574,419 |
|
|
| 67,189 |
|
|
| 1,766,608 |
|
|
| (2,967 | ) |
|
| 1,763,641 |
|
Repurchases of common partnership units held by Aimco |
|
| — |
|
|
| (20,682 | ) |
|
| — |
|
|
| (20,682 | ) |
|
| — |
|
|
| (20,682 | ) |
Redemption of preferred units held by Aimco |
|
| (125,000 | ) |
|
| — |
|
|
| — |
|
|
| (125,000 | ) |
|
| — |
|
|
| (125,000 | ) |
Issuance of Aimco Operating Partnership units |
|
| — |
|
|
| — |
|
|
| 3,034 |
|
|
| 3,034 |
|
|
| — |
|
|
| 3,034 |
|
Redemption of Aimco Operating Partnership Units |
|
| — |
|
|
| 6,244 |
|
|
| (12,710 | ) |
|
| (6,466 | ) |
|
| — |
|
|
| (6,466 | ) |
Amortization of share-based compensation cost |
|
| — |
|
|
| 5,924 |
|
|
| 3,184 |
|
|
| 9,108 |
|
|
| — |
|
|
| 9,108 |
|
Effect of changes in ownership of consolidated entities |
|
| — |
|
|
| (13,243 | ) |
|
| 9,821 |
|
|
| (3,422 | ) |
|
| 3,422 |
|
|
| — |
|
Purchase of noncontrolling interest in consolidated real estate partnerships |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,844 | ) |
|
| (3,844 | ) |
Change in accumulated other comprehensive income |
|
| — |
|
|
| (599 | ) |
|
| (38 | ) |
|
| (637 | ) |
|
| — |
|
|
| (637 | ) |
Net income |
|
| — |
|
|
| 474,083 |
|
|
| 26,049 |
|
|
| 500,132 |
|
|
| 382 |
|
|
| 500,514 |
|
Distributions to common unitholders |
|
| — |
|
|
| (241,643 | ) |
|
| — |
|
|
| (241,643 | ) |
|
| — |
|
|
| (241,643 | ) |
Common partnership units issued to common unitholders in special distribution |
|
| — |
|
|
| (741 | ) |
|
| — |
|
|
| (741 | ) |
|
| — |
|
|
| (741 | ) |
Distributions to preferred unitholders |
|
| — |
|
|
| (3,246 | ) |
|
| — |
|
|
| (3,246 | ) |
|
| — |
|
|
| (3,246 | ) |
Distributions to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (13,087 | ) |
|
| (13,087 | ) |
|
| (308 | ) |
|
| (13,395 | ) |
Other, net |
|
| — |
|
|
| 133 |
|
|
| — |
|
|
| 133 |
|
|
| 19 |
|
|
| 152 |
|
Balances at December 31, 2019 |
| $ | — |
|
| $ | 1,780,649 |
|
| $ | 83,442 |
|
| $ | 1,864,091 |
|
| $ | (3,296 | ) |
| $ | 1,860,795 |
|
Preferred Units | General Partner and Special Limited Partner | Limited Partners | Partners’ Capital Attributable to the Partnership | Noncontrolling Interests | Total Partners’ Capital | ||||||||||||||||||
| Balances at December 31, 2015 | $ | 159,126 | $ | 1,463,265 | $ | (9,851 | ) | $ | 1,612,540 | $ | 151,365 | $ | 1,763,905 | ||||||||||
| Redemption of preferred units held by Aimco | (34,126 | ) | (673 | ) | — | (34,799 | ) | — | (34,799 | ) | |||||||||||||
| Redemption of partnership units held by non-Aimco partners | — | — | (10,819 | ) | (10,819 | ) | — | (10,819 | ) | ||||||||||||||
| Amortization of Aimco share-based compensation | — | 8,610 | — | 8,610 | — | 8,610 | |||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | (26,171 | ) | 10,107 | (16,064 | ) | — | (16,064 | ) | ||||||||||||||
| Change in accumulated other comprehensive income | — | 7,051 | 351 | 7,402 | 260 | 7,662 | |||||||||||||||||
| Other, net | — | 3,323 | — | 3,323 | — | 3,323 | |||||||||||||||||
| Net income | — | 430,410 | 20,368 | 450,778 | 25,256 | 476,034 | |||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | (25,760 | ) | (25,760 | ) | |||||||||||||||
| Distributions to common unitholders | — | (206,898 | ) | (10,214 | ) | (217,112 | ) | — | (217,112 | ) | |||||||||||||
| Distributions to preferred unitholders | — | (10,014 | ) | — | (10,014 | ) | — | (10,014 | ) | ||||||||||||||
| Balances at December 31, 2016 | 125,000 | 1,668,903 | (58 | ) | 1,793,845 | 151,121 | 1,944,966 | ||||||||||||||||
| Redemption of partnership units held by non-Aimco partners | — | — | (11,882 | ) | (11,882 | ) | — | (11,882 | ) | ||||||||||||||
| Amortization of Aimco share-based compensation | — | 8,638 | 613 | 9,251 | — | 9,251 | |||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | 3,401 | 3,401 | |||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | (160,586 | ) | 4,867 | (155,719 | ) | (157,056 | ) | (312,775 | ) | |||||||||||||
| Cumulative effect of a change in accounting principle | — | (62,682 | ) | (3,028 | ) | (65,710 | ) | — | (65,710 | ) | |||||||||||||
| Change in accumulated other comprehensive income | — | 2,592 | 121 | 2,713 | 101 | 2,814 | |||||||||||||||||
| Other, net | — | 271 | — | 271 | — | 271 | |||||||||||||||||
| Net income | — | 315,774 | 14,457 | 330,231 | 9,084 | 339,315 | |||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | (8,367 | ) | (8,367 | ) | |||||||||||||||
| Distributions to common unitholders | — | (226,172 | ) | (10,765 | ) | (236,937 | ) | — | (236,937 | ) | |||||||||||||
| Distributions to preferred unitholders | — | (8,594 | ) | — | (8,594 | ) | — | (8,594 | ) | ||||||||||||||
| Balances at December 31, 2017 | 125,000 | 1,538,144 | (5,675 | ) | 1,657,469 | (1,716 | ) | 1,655,753 | |||||||||||||||
| Repurchases of common partnership units | — | (373,593 | ) | — | (373,593 | ) | — | (373,593 | ) | ||||||||||||||
| Issuance of common partnership units | — | — | 50,151 | 50,151 | — | 50,151 | |||||||||||||||||
| Redemption of partnership units held by non-Aimco partners | — | — | (9,639 | ) | (9,639 | ) | — | (9,639 | ) | ||||||||||||||
| Amortization of Aimco share-based compensation | — | 8,074 | 1,691 | 9,765 | — | 9,765 | |||||||||||||||||
| Effect of changes in ownership for consolidated entities | — | (19,115 | ) | 9,014 | (10,101 | ) | — | (10,101 | ) | ||||||||||||||
| Change in accumulated other comprehensive income | — | 1,191 | 69 | 1,260 | — | 1,260 | |||||||||||||||||
| Other, net | — | 152 | — | 152 | — | 152 | |||||||||||||||||
| Net income | — | 666,227 | 34,417 | 700,644 | 8,220 | 708,864 | |||||||||||||||||
| Distributions to noncontrolling interests | — | — | (12,839 | ) | (12,839 | ) | (9,471 | ) | (22,310 | ) | |||||||||||||
| Distributions to common unitholders | — | (238,067 | ) | — | (238,067 | ) | — | (238,067 | ) | ||||||||||||||
| Distributions to preferred unitholders | — | (8,594 | ) | — | (8,594 | ) | — | (8,594 | ) | ||||||||||||||
| Balances at December 31, 2018 | $ | 125,000 | $ | 1,574,419 | $ | 67,189 | $ | 1,766,608 | $ | (2,967 | ) | $ | 1,763,641 | ||||||||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
| 2019 |
| 2018 |
| 2017 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net income | $ | 508,027 |
| $ | 716,603 |
| $ | 347,079 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| 380,171 |
|
| 377,786 |
|
| 366,184 |
|
Provision for real estate impairment loss |
| — |
|
| — |
|
| 35,881 |
|
Gain on dispositions of real estate and the Asset Management business |
| (503,168 | ) |
| (677,463 | ) |
| (300,849 | ) |
Income tax benefit |
| (3,135 | ) |
| (13,027 | ) |
| (30,836 | ) |
Share-based compensation expense |
| 8,146 |
|
| 8,550 |
|
| 7,877 |
|
Amortization of debt issuance costs and other |
| 7,629 |
|
| 9,023 |
|
| 5,666 |
|
Other, net |
| 25 |
|
| 1,065 |
|
| (7,694 | ) |
Changes in operating assets and operating liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets |
| (26,021 | ) |
| (27,830 | ) |
| (15,841 | ) |
Accounts payable, accrued liabilities and other |
| 2,798 |
|
| 1,681 |
|
| (15,395 | ) |
Total adjustments |
| (133,555 | ) |
| (320,215 | ) |
| 44,993 |
|
Net cash provided by operating activities |
| 374,472 |
|
| 396,388 |
|
| 392,072 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchases of real estate and deposits related to purchases of real estate |
| (138,311 | ) |
| (242,297 | ) |
| (20,372 | ) |
Capital expenditures |
| (393,461 | ) |
| (340,489 | ) |
| (358,104 | ) |
Proceeds from dispositions of real estate and the Asset Management Business |
| 628,771 |
|
| 708,848 |
|
| 401,983 |
|
Payment for mezzanine investment and related transaction costs |
| (277,627 | ) |
| — |
|
| — |
|
Purchases of corporate assets |
| (17,584 | ) |
| (7,718 | ) |
| (8,899 | ) |
Proceeds from repayments on notes receivable |
| 147 |
|
| 5,010 |
|
| 430 |
|
Other investing activities |
| (7,348 | ) |
| (1,508 | ) |
| (2,019 | ) |
Net cash (used in) provided by investing activities |
| (205,413 | ) |
| 121,846 |
|
| 13,019 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from non-recourse property debt |
| 774,623 |
|
| 1,228,027 |
|
| 312,434 |
|
Principal repayments on non-recourse property debt |
| (520,027 | ) |
| (976,087 | ) |
| (409,167 | ) |
(Repayment of) proceeds from term loan |
| — |
|
| (250,000 | ) |
| 250,000 |
|
Net borrowings on revolving credit facility |
| 114,640 |
|
| 93,200 |
|
| 49,230 |
|
Payment of debt issuance costs |
| (4,861 | ) |
| (11,961 | ) |
| (4,751 | ) |
Payment of debt extinguishment costs |
| (4,491 | ) |
| (14,241 | ) |
| (399 | ) |
Repurchases of common partnership units held by General Partner and Special Limited Partner |
| (20,682 | ) |
| (373,593 | ) |
| — |
|
Redemption of preferred units from Aimco |
| (125,000 | ) |
| — |
|
| — |
|
Payment of distributions to preferred units |
| (10,954 | ) |
| (16,334 | ) |
| (16,358 | ) |
Payment of distributions General Partner and Special Limited Partner |
| (241,288 | ) |
| (237,504 | ) |
| (225,377 | ) |
Payment of distributions to Limited Partners |
| (13,399 | ) |
| (11,987 | ) |
| (10,668 | ) |
Payment of distributions to noncontrolling interests |
| (513 | ) |
| (9,469 | ) |
| (8,367 | ) |
Redemption of common and preferred units |
| (10,694 | ) |
| (9,885 | ) |
| (13,546 | ) |
Contribution from noncontrolling interests in consolidated real estate partnerships |
| 4,911 |
|
| — |
|
| — |
|
Purchases of noncontrolling interests in consolidated real estate partnerships |
| (3,780 | ) |
| (3,579 | ) |
| (314,269 | ) |
Other financing activities |
| (2,437 | ) |
| 5,233 |
|
| (2,462 | ) |
Net cash used in financing activities |
| (63,952 | ) |
| (588,180 | ) |
| (393,700 | ) |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
| 105,107 |
|
| (69,946 | ) |
| 11,391 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD |
| 72,595 |
|
| 142,541 |
|
| 131,150 |
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 177,702 |
| $ | 72,595 |
| $ | 142,541 |
|
| 2018 | 2017 | 2016 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 716,603 | $ | 347,079 | $ | 483,273 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 377,786 | 366,184 | 333,066 | ||||||||
| Provision for real estate impairment loss | — | 35,881 | — | ||||||||
| Gain on dispositions of real estate and the Asset Management business | (677,463 | ) | (300,849 | ) | (400,156 | ) | |||||
| Income tax benefit | (13,027 | ) | (30,836 | ) | (18,842 | ) | |||||
| Share-based compensation expense | 8,550 | 7,877 | 7,629 | ||||||||
| Amortization of debt issue costs and other | 9,023 | 5,666 | 5,060 | ||||||||
| Other, net | 1,065 | (7,694 | ) | (6,071 | ) | ||||||
| Changes in operating assets and operating liabilities: | |||||||||||
| Accounts receivable and other assets | (27,830 | ) | (15,841 | ) | (22,294 | ) | |||||
| Accounts payable, accrued liabilities and other | 1,681 | (15,395 | ) | (5,164 | ) | ||||||
| Total adjustments | (320,215 | ) | 44,993 | (106,772 | ) | ||||||
| Net cash provided by operating activities | 396,388 | 392,072 | 376,501 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of real estate and deposits related to purchases of real estate | (242,297 | ) | (20,372 | ) | (290,729 | ) | |||||
| Capital expenditures | (340,489 | ) | (358,104 | ) | (346,645 | ) | |||||
| Proceeds from dispositions of real estate | 708,848 | 401,983 | 535,513 | ||||||||
| Purchases of corporate assets | (7,718 | ) | (8,899 | ) | (7,540 | ) | |||||
| Proceeds from repayments on notes receivable | 5,010 | 430 | 412 | ||||||||
| Other investing activities | (1,508 | ) | (2,019 | ) | 9,842 | ||||||
| Net cash provided by (used in) investing activities | 121,846 | 13,019 | (99,147 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from non-recourse property debt | 1,228,027 | 312,434 | 417,714 | ||||||||
| Principal repayments on non-recourse property debt | (976,087 | ) | (409,167 | ) | (371,947 | ) | |||||
| (Repayment of) proceeds from term loan | (250,000 | ) | 250,000 | — | |||||||
| Net borrowings on (repayments of) revolving credit facility | 93,200 | 49,230 | (9,070 | ) | |||||||
| Payment of debt issue costs | (11,961 | ) | (4,751 | ) | (7,816 | ) | |||||
| Payment of debt extinguishment costs | (14,241 | ) | (399 | ) | (391 | ) | |||||
| Repurchases of common partnership units held by General Partner and Special Limited Partner | (373,593 | ) | — | — | |||||||
| Redemption of preferred units from Aimco | — | — | (34,799 | ) | |||||||
| Payment of distributions to preferred units | (16,334 | ) | (16,358 | ) | (17,253 | ) | |||||
| Payment of distributions to General Partner and Special Limited Partner | (237,504 | ) | (225,377 | ) | (206,279 | ) | |||||
| Payment of distributions to Limited Partners | (11,987 | ) | (10,668 | ) | (10,214 | ) | |||||
| Payment of distributions to noncontrolling interests | (9,469 | ) | (8,367 | ) | (18,253 | ) | |||||
| Redemption of common and preferred units | (9,885 | ) | (13,546 | ) | (12,544 | ) | |||||
| Purchases of noncontrolling interests in consolidated real estate partnerships | (3,579 | ) | (314,269 | ) | (13,941 | ) | |||||
| Other financing activities | 5,233 | (2,462 | ) | 844 | |||||||
| Net cash used in financing activities | (588,180 | ) | (393,700 | ) | (283,949 | ) | |||||
| NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (69,946 | ) | 11,391 | (6,595 | ) | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 142,541 | 131,150 | 137,745 | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 72,595 | $ | 142,541 | $ | 131,150 | |||||
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In thousands)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
| $ | 160,961 |
|
| $ | 199,996 |
|
| $ | 196,438 |
|
Cash paid for income taxes |
|
| 12,238 |
|
|
| 11,522 |
|
|
| 7,401 |
|
Non-cash transactions associated with the acquisition or disposition of real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse property debt assumed in connection with the acquisition of real estate |
|
| 97,565 |
|
|
| 208,885 |
|
|
| — |
|
Deferred tax liability assumed in connection with the acquisition of real estate |
|
| 148,809 |
|
|
| — |
|
|
| — |
|
Issuance of common OP Units in connection with acquisition of real estate |
|
| 3,034 |
|
|
| 50,151 |
|
|
| — |
|
Non-recourse property debt assumed by buyer in connection with the disposition of the Asset Management business |
|
| — |
|
|
| 227,708 |
|
|
| — |
|
Other non-cash transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of right of use lease assets |
|
| 54,626 |
|
|
| — |
|
|
| — |
|
Recognition of lease liabilities |
|
| 59,251 |
|
|
| — |
|
|
| — |
|
Accrued capital expenditures (at end of period) |
|
| 54,358 |
|
|
| 40,185 |
|
|
| 31,719 |
|
Accrued dividends on TSR restricted stock and LTIP awards (at end of period) (Note 9) |
|
| 1,420 |
|
|
| 1,266 |
|
|
| 1,720 |
|
| 2018 | 2017 | 2016 | |||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
| Interest paid | $ | 199,996 | $ | 196,438 | $ | 200,278 | |||||
| Cash paid for income taxes | 11,522 | 7,401 | 2,152 | ||||||||
| Non-cash transactions associated with the acquisition or disposition of real estate: | |||||||||||
| Non-recourse property debt assumed by buyer in connection with the disposition of the Asset Management business | 227,708 | — | — | ||||||||
| Non-recourse property debt assumed in connection with the acquisition of real estate | 208,885 | — | — | ||||||||
| Issuance of preferred OP Units in connection with acquisition of real estate | — | — | 17,000 | ||||||||
| Issuance of common OP Units in connection with acquisition of real estate | 50,151 | — | — | ||||||||
| Other non-cash investing and financing transactions: | |||||||||||
| Accrued capital expenditures (at end of period) | 40,185 | 31,719 | 35,594 | ||||||||
| Accrued dividends on TSR restricted stock and LTIP awards (at end of period) (Note 8) | 2,217 | 1,818 | 927 | ||||||||
See notes to the consolidated financial statements.
AIMCO PROPERTIES, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018
Note 1 — Organization
Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. Aimco is a self-administered and self-managed real estate investment trust, or REIT. AIMCO Properties, L.P., or the Aimco Operating Partnership, is a Delaware limited partnership formed on May 16, 1994, to conduct our business, which is focused on the ownership, management, redevelopment and limitedsome development of quality apartment communities located in several of the largest markets in the United States.
Aimco, through its wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, ownsholds a majority of the ownership interests in the Aimco Operating Partnership. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as OP Units. OP Units include common partnership units, which we refer to as common OP Units, as well as preferred partnership preferred units, which we refer to as preferred OP Units. As of December 31, 2018,2019, after eliminations forelimination of units held by consolidated subsidiaries, the Aimco Operating Partnership had 158,140,169158,419,051 common partnership unitsOP Units outstanding. As of December 31, 2018,2019, Aimco owned 149,133,826148,885,197, or 94.0%, of the common partnership units (94.3% of the common partnership units)OP Units of the Aimco Operating Partnership and Aimco had outstanding an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock.
Except as the context otherwise requires, “we,” “our” and “us” refer to Aimco, the Aimco Operating Partnership and their consolidated subsidiaries, collectively.
We own and operate a portfolio of apartment communities, diversified by both geography and price point, in 17 states and the District of Columbia. As of December 31, 2018, we owned an equity interest in 1342019, our portfolio included 124 apartment communities with 36,54932,839 apartment homes in our Real Estate portfolio. Our Real Estate portfolio, is diversified by both price point and geography and consists of market rate apartment communities in which we own a substantial interest.held an average ownership of approximately 99%. We consolidated 130120 of these apartment communities with 36,40732,697 apartment homes and these communities comprise our reportable segment.
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
Aimco’s accompanying consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership and their consolidated subsidiaries. The Aimco Operating Partnership’s consolidated financial statements include the accounts of the Aimco Operating Partnership and its consolidated subsidiaries (see
We consolidate a variable interest entity, or VIE, in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. As of December 31, 2019 and 2018, Aimco consolidated 6 and 9 VIEs, respectively, including the Aimco Operating Partnership.
As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company.
Noncontrolling Interests in the Aimco Operating Partnership that are held by limited partners other than
Noncontrolling interests in Aimco Operating Partnership consist of common OP Units and preferred OP Units and are reflected in Aimco’s accompanying consolidated balance sheets as noncontrolling interests in Aimco Operating Partnership. InterestsHolders of preferred OP Units participate in partnershipsthe Aimco Operating Partnership’s income or loss only to the extent of their preferred distributions. Within Aimco’s consolidated financial statements, after provision for preferred OP Unit distributions, the Aimco Operating Partnership’s income or loss is allocated to the holders of common OP Units based on the weighted-average number of common OP Units (including those held by Aimco) outstanding during the period. During the years ended December 31, 2019, 2018, and 2017, the holders of common OP Units had a weighted-average ownership interest in the Aimco Operating Partnership thatof 6.0%, 4.9%, and 4.5%, respectively. Please refer to Note 8 for further information regarding the items comprising noncontrolling interests in the Aimco Operating Partnership. Substantially all of the assets and liabilities of Aimco are held by third parties are reflectedthose of the Aimco Operating Partnership.
Noncontrolling Interests in Consolidated Real Estate Partnerships
We generally report the unaffiliated partners’ interests in the net assets of our accompanying consolidated balance sheetsreal estate partnerships as noncontrolling interests in consolidated real estate partnerships. partnerships within consolidated equity and partners’ capital. If a real estate partnership includes redemption rights that are not within Aimco and the Aimco Operating Partnership’s control, the
F-17
noncontrolling interest is included as temporary equity or temporary capital. If the redemption right is not currently redeemable but probable of being redeemable in the future, changes in redemption value are recognized each quarter with the change in value being reflected in additional paid-in-capital.
The assets of real estate partnerships consolidated by the Aimco Operating Partnership must first be used to settle the liabilities of such consolidated real estate partnerships. These consolidated real estate partnerships’ creditors do not have recourse to the general credit of the Aimco Operating Partnership.
Noncontrolling interests in consolidated real estate partnerships consist primarily of equity interests held by limited partners in consolidated real estate partnerships that have finite lives. We generally attribute to noncontrolling interests their share of income or loss of consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity and partners’ capital accounts.
The terms of the related partnership agreements generally require the partnerships to be liquidated following the sale of the underlying real estate. As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to ageneral partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of noncontrolling interests.
Changes in our ownership interest in consolidated real estate partnerships generally consist of our purchase of an additional interest in or the sale of our entire interest in a limited partnershipconsolidated real estate partnership. The effect on our equity and partners’ capital of our purchase of additional interests in consolidated real estate partnerships during the years ended December 31, 2019, 2018, and 2017, is shown in our consolidated statements of equity and partners’ capital. The effect on our equity and partners’ capital of sales of consolidated real estate or a membersales of our entire interest in consolidated real estate partnerships is reflected in our consolidated financial statements as gains or losses on dispositions of real estate and accordingly the effect on our equity and partners’ capital is reflected within the amount of net income allocated to us and to noncontrolling interests. Upon our deconsolidation of a limited liability company.
Investments in Unconsolidated Real Estate Partnerships
We own general and Related Depreciationlimited partner interests in partnerships that either directly, or through interests in other real estate partnerships, own apartment communities. We generally account for investments in real estate partnerships that we do not consolidate under the equity method. Under the equity method, we recognize our share of the earnings or losses of the entity for the periods presented, inclusive of our share of any impairments and Amortization
The excess of our cost of the acquired partnership interests over our share of the partners’ equity or deficit is generally ascribed to the fair values of land and buildings owned by the partnerships. We amortize the excess cost ascribed to the buildings over the related estimated useful lives. Such amortization is recorded as an adjustment of the amounts of earnings or losses we recognize from such unconsolidated real estate partnerships.
We may also originate loans for real estate acquisitions or developments where we either expect, or have the opportunity, to participate in the residual profits from such projects. When the risks and rewards of these arrangements are similar to an equity investor or joint venture partner, we account for these arrangements as real estate investments using the equity method of accounting. We recognize as income changes in our share of net assets, adjusted for any basis differential, in mezzanine investment income, net, in our consolidated statements of operations.
Real Estate
Acquisitions
Upon the acquisition of real estate, we determine whether the purchase qualifies as an asset acquisition or, less frequently, meets the definition of an acquisition of a business. We generally recognize the acquisition of apartment communities or interests in partnerships that own apartment communities at our cost. Thecost, including the related transaction costs, are included in the cost of the acquired apartment community.
We allocate the cost of apartment communities acquired based on the relative fair value of the assets acquired and liabilities assumed. The fair value of these assets and liabilities is determined using valuation techniques that rely on Level 2 and Level 3 inputs within the fair value framework. We determine the fair value of tangible assets, such as land, buildings, furniture, fixtures and equipment using valuation techniques that consider comparable market transactions, replacement costs and other available information. We determine the fair value of identified intangible assets or liabilities, which typically relate to in-place leases, using valuation techniques that consider the terms of the in-place leases, current market data for comparable leases and our experience in leasing similar communities.
F-18
The intangible assets or liabilities related to in-place leases are comprised of: (a) the value of the above- and below-market leases in-place, measured over the period, including probable lease renewals for below-market leases, that the leases are
| Estimated Amortization | |||
| 2019 | $1,986 | ||
| 2020 | 1,741 | ||
| 2021 | 1,668 | ||
| 2022 | 1,621 | ||
| 2023 | 1,571 | ||
Capital Additions and Related Depreciation
We capitalize costs, including certain indirect costs, incurred in connection with our capital additions activities, including redevelopments, developments, other tangible apartment community improvements, and replacements of existing apartment community components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with capital additions activities at the apartment community level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the area operations and corporate levels that clearly relate to capital additions activities. We also capitalize interest, property taxes, and insurance during periods in which redevelopments, developments and construction projects are in progress. We begin capitalization of costs, including certain indirect costs, incurred in connection with our capital addition activities, upon commencement of activities necessary to ready apartment communities for their intended use. These activities include when apartment communities or apartment homes are undergoing physical construction, as well as when apartment homes are held vacant in advance of planned construction, provided that other activities such as permitting, planning and design are in progress. We cease the capitalization of costs when the apartment communities are substantially complete and ready for their intended use, which is typically when construction has been substantially completed and apartment homes are available for occupancy. Costs, including ordinary repairs, maintenance, and resident turnover costs, are charged to property operating expense as incurred.
For the years ended December 31, 2019, 2018, 2017 and 2016,2017, we capitalized to buildings and improvements $7.6$11.8 million, $7.6 million, and $9.6$7.6 million of interest costs, respectively, and $37.8 million, $36.8 million, $36.0 million and $32.9$36.0 million of other direct and indirect costs, respectively.
Gain or Loss on Dispositions
Gain or loss on real estate dispositions are recognized when we no longer hold a controlling financial interest in the real estate and sufficient consideration has been received. Upon disposition, the related assets and liabilities are derecognized, and the gain or loss on disposition is recognized as the difference between the carrying amount of Long-Lived Assets
Impairment
Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of an apartment community may not be recoverable, we make an assessment ofassess its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the apartment community. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the apartment community.
Cash Equivalents
We classify highly liquid investments with an original maturity of three months or less as cash equivalents. We maintain cash equivalents in financial institutions in excess of insured limits. We have not experienced any losses in these accounts in the past and believe that we are not exposed to significant credit risk because our accounts are deposited with major financial institutions.
Restricted Cash
Restricted cash includes capital replacement reserves, completion repair reserves, bond sinking fund amounts, real estate tax and insurance escrow accounts held by lenders and resident security deposits.
As of December 31, 20182019 and 2017,2018, other assets was comprised of the following amounts (dollars in(in thousands):
| 2019 |
| 2018 |
| ||
Investments in securitization trust that holds Aimco property debt | $ | 94,251 |
| $ | 83,587 |
|
Right of use lease assets |
| 61,911 |
|
| — |
|
Goodwill and other intangible assets, net |
| 56,905 |
|
| 43,424 |
|
Notes receivable, net |
| 41,300 |
|
| 39,254 |
|
Software, equipment and leasehold improvements |
| 25,750 |
|
| 18,309 |
|
Accounts receivable, net |
| 20,949 |
|
| 16,376 |
|
Prepaid expenses, real estate taxes and insurance |
| 12,767 |
|
| 25,657 |
|
Investments in unconsolidated real estate partnerships |
| 12,759 |
|
| 12,650 |
|
Deferred tax asset, net (Note 10) |
| — |
|
| 67,060 |
|
Deferred costs, deposits and other |
| 24,880 |
|
| 45,224 |
|
Total other assets | $ | 351,472 |
| $ | 351,541 |
|
| 2018 | 2017 | ||||||
| Investments in securitization trust that holds Aimco property debt | $ | 83,587 | $ | 82,794 | |||
| Deferred tax asset, net (Note 9) | 67,060 | 32,227 | |||||
| Intangible assets, net | 43,424 | 38,701 | |||||
| Prepaid expenses, real estate taxes and insurance | 25,657 | 25,144 | |||||
| Software, equipment and leasehold improvements | 18,309 | 20,048 | |||||
| Investments in unconsolidated real estate partnerships | 12,650 | 12,636 | |||||
| Accounts and notes receivable, net | 55,630 | 17,035 | |||||
| Deferred costs, deposits and other | 45,224 | 44,154 | |||||
| Total other assets | $ | 351,541 | $ | 272,739 | |||
Investments in Securitization Trust that holds Aimco Property Debt
We hold investments in a securitization trust that primarily holds certain of our property debt. These investments were initially recognized at their purchase price and the discount to the face value is being accreted into interest income over the expected term of the securities. We have designated these investments as available for sale, or AFS, debt securities and we measure these investments at fair value with changes in their fair value, other than the changes attributed to the accretion described above, recognized as an adjustment of accumulated other comprehensive income or loss within equity and partners’ capital. ReferPlease refer to
Goodwill and Other Intangible Assets,
As of December 31, 20182019 and 2017,2018, other assets included goodwill associated with our reportable segmentsegments of $37.8 million. We perform an annual impairment test of goodwill by evaluating qualitative factors to determine the likelihood that goodwill may be impaired. We primarily consider the fair value of our real estate portfolio and the fair value of our debt relative to their carrying values. As a result of the qualitative analysis, we do not believe our goodwill is impaired as of the date of our annual test.
Deferred Costs Equipment
We defer, as debt issuance costs, lender fees and Leasehold Improvements
We defer leasing costs incremental to a lease that we would not have incurred if the contract had not been obtained. Amortization of these costs is included in depreciation and amortization.
Revenue from Leases
We are a lessor primarily for residential leases. We also own approximately 1.1 million square feet of commercial space across our portfolio.
In 2019 we adopted ASC 842, Leases. The adoption of the standard did not affect the accounting for leases in our position as lessor, except for how we recognize costs incurred to obtain residential leases. Please refer to the Accounting Pronouncements Adopted in the Current Year heading below for further information about this standard.
Our operating leases with residents may also provide that the resident reimburse us for certain costs, primarily the resident’s share of utilities expenses, incurred by the apartment community. These reimbursements represent revenue attributable to nonlease components for which the timing and pattern of recognition is the same as the revenue for the lease components. We adopted the practical expedient that allows us to account for the lease and nonlease components as a single component. Reimbursement and related expense are presented on a gross basis in our consolidated statements of operations, with the reimbursement included in rental and other property revenues attributable to real estate in our consolidated statements of operations. We recognize rental revenue attributed to lease components, net of any concessions, on a straight-line basis over the term of the lease.
F-20
Asset Management Business
Prior to the July 2018 sale of our Asset Management business, we provided asset management and other services to certain consolidated partnerships owning apartment communities that qualify for low-income housing tax credits and are structured to provide for the pass-through of tax credits and tax deductions to their partners. We consolidated those low-income housing tax credit partnerships in which we were the sole general partner and decision maker of the partnerships. We recognized income from asset management and other services when the related fees were earned and realized or realizable.
Depreciation and Amortization
Depreciation for all tangible assets is calculated using the straight-line method over their estimated useful lives. Acquired buildings and improvements are depreciated over a useful life based on the age, condition, and other physical characteristics of the asset. Furniture, fixtures, and equipment are generally depreciated over five years.
We depreciate capitalized costs using the straight-line method over the estimated useful life of the related improvement, which is generally 5, 15, or 30 years. We also capitalize payroll and other indirect costs incurred in connection with preparing an asset for its intended used. These costs include corporate-level costs that clearly relate to the capital addition activities, which we allocate to the applicable assets. All capitalized payroll costs and indirect costs are allocated to capital additions proportionately based on direct costs and depreciated over the estimated useful lives of such capital additions.
Purchased software and other costs related to software purchased or developed for internal use are capitalized during the application development stage and are amortized using the straight-line method over the estimated useful life of the software, generally three to five years. Purchased equipment is recognized at cost and depreciated using the straight-line method over the estimated useful life of the asset, which is generally five years. Leasehold improvements are also recorded at cost and depreciated on a straight-line basis over the shorter of the asset’s estimated useful life or the term of the related lease.
Certain homogeneous items that are purchased in Unconsolidated Real Estate Partnerships
Insurance
We believe our insurance coverages insure our apartment communities adequately against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, and other perils. In addition, we have third-party insurance coverage (after self-insured retentions) that defray the costs of large workers’ compensation, health, and general liability exposures. We accrue losses based upon our estimates of the aggregate liability for uninsured losses incurred using certain actuarial assumptions followed in the insurance industry and based on our experience.
Share-Based Compensation
We issue various forms of share-based compensation, including stock options and restricted stock awards with service conditions and/or market conditions. We recognize share-based employee compensation based on the fair value on the grant date and recognize compensation cost over the awards’ requisite service periods. We reduce compensation cost related to forfeited awards in the period of forfeiture. See
Income Taxes
Aimco has elected to be taxed as a REIT under the Internal Revenue Code commencing with its taxable year ended December 31, 1994, and it intends to continue to operate in such a manner. Aimco’s current and continuing qualification as a REIT depends on its ability to meet the various requirements imposed by the Internal Revenue Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If Aimco qualifies 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.
Even if Aimco qualifies as a REIT, it may be subject to United States federal income and excise taxes in various situations, such as on our undistributed income. Aimco also will be required to pay a 100% tax on any net income on non-arm’s length transactions between it and a TRS (described below) and on any net income from sales of apartment communities that were held for sale in the ordinary course. The 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, including those in which we transact business. Any taxes imposed on us reduce our operating cash flow and net income.
F-21
Certain of our operations or a portion thereof, including property management and risk management, are conducted through taxable REIT subsidiaries, which are subsidiaries of the Aimco Operating Partnership, and each of which we refer to as a TRS. A TRS is a subsidiary C-corporation that has not elected REIT status and, as such, is subject to United States federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents and investment partners that cannot be offered directly by a REIT. We also use TRS entities to hold investments in certain apartment communities.
For our TRS entities, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for United States federal income tax purposes, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We reduce deferred tax assets by recording a valuation allowance when we determine, based on available evidence, that it is more likely than not that the assets will not be realized. We recognize the tax consequences associated with intercompany transfers between the Aimco Operating Partnership and TRS entities when such transactions occur. ReferPlease refer to
Earnings per Share and Unit
Aimco and the Aimco Operating Partnership calculate earnings per share and unit based on the weighted averageweighted-average number of shares of Common Stock or common partnership units, participating securities, common stock or common unit equivalents and dilutive convertible securities outstanding during the period. The Aimco Operating Partnership considers both common partnership units and equivalents, which have identical rights to distributions and undistributed earnings, to be common units for purposes of the earnings per unit computations. See
Use of Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.
Reclassifications
On February 20, 2019, Aimco and the 2017Aimco Operating Partnership effected a reverse split of Common Stock and 2016 consolidated financial statementscommon partnership units, respectively, at a ratio of one share or unit for every 1.03119 shares or units outstanding on the date of effectiveness. The accounting guidance for recapitalization events requires that we revise Aimco’s equity and the Aimco Operating Partnership’s partners’ capital as if the reverse split had occurred at the beginning of the earliest period presented. As such, we have been reclassified to conform torevised the current presentation. We have also reclassified certain itemsoutstanding share and unit counts, presentation of share and unit activity, and earnings per share and unit, as if the reverse split had occurred on our consolidated statements of operations to comply with the SEC disclosure amendments summarized below.
Accounting Pronouncements Adopted in the Current Year
Effective January 1, 2018,2019, we adopted a new standardASC 842 issued by the Financial Accounting Standards Board, or FASB, that affects accounting for revenue. Under this new standard, revenue is generally recognized when an entity has transferred control of goods or servicesFASB. We elected to a customer for an amount reflecting the consideration to which the entity expects to be entitled for such exchange.
Lessor accounting remains largely unchanged other than how we recognize costs incurred to obtain leases. Under ASC 842, we defer leasing costs incremental to a lease that we would not have incurred if the contract had not been obtained. As a result of the practical expedient related to the combination of revenue from nonlease and lease components described above, we will combine rent payments with payments for other services we provide to our residents, including residents’ reimbursement of utility expenses. We have adopted the standard using the optional transition method effective January 1, 2018, with no effect on our results of operations or financial position.
| 2017 | 2016 | ||||||||||||||||||||||
| As Previously Reported | Adjustments | As Revised | As Previously Reported | Adjustments | As Revised | ||||||||||||||||||
| Net cash provided by operating activities | $ | 394,139 | $ | (2,067 | ) | $ | 392,072 | $ | 377,724 | $ | (1,223 | ) | $ | 376,501 | |||||||||
| Net cash used in investing activities | 14,704 | (1,685 | ) | 13,019 | (97,773 | ) | (1,374 | ) | (99,147 | ) | |||||||||||||
| Net cash used in financing activities | (393,301 | ) | (399 | ) | (393,700 | ) | (269,496 | ) | (14,453 | ) | (283,949 | ) | |||||||||||
In 2018, the Securities Exchange Commission, or SEC, amended its rules to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amendments are intended to simplify compliance without significantly changing the total mix of information provided to investors and were generally effective on November 5, 2018.investors. The amendments remove the SEC rule that requires REITs to present gain or loss on the sale of real estate, net of income tax, in the statement of operations. Consistent with the SEC’s historical requirements, we previously presented gain or loss on dispositions of real estate below continuing operations and net of tax. For the year ended December 31, 2018, we present gain on dispositions of real estate as a component of income before income taxes in our consolidated statements of operations and we have revised the 2017 and 2016 comparative periods to conform to this presentation as follows:
| 2017 | 2016 | ||||||||||||||||
| As Previously Reported | Adjustments | As Revised | As Previously Reported | Adjustments | As Revised | ||||||||||||
| Income tax benefit | 32,126 | (1,290 | ) | 30,836 | 25,208 | (6,366 | ) | 18,842 | |||||||||
| Gain on dispositions of real estate | 299,559 | 1,290 | 300,849 | 393,790 | 6,366 | 400,156 | |||||||||||
Recent Accounting Pronouncements
In 2016, the FASB issued ASC 326, Financial Instruments-Credit Losses, which changes the method and timing of the recognition of credit losses on financial assets. The standard will require us to estimate and record credit losses over the life of a
F-22
financial instrument, including receivables, at its inception. Our notes receivable and AFS debt securities are subject to the new standard. For AFS debt securities, the new standard would require us to estimate a credit loss if the fair value of the instruments are less than their carrying value of the instruments. This disclosurecredit loss standard is required for interim financial statements beginning in 2019; therefore, we will present comparative interim statementsto be applied using a modified-retrospective approach and requires a cumulative-effect adjustment to retained earnings be recorded as of stockholders equity beginning in our condensed consolidated financial statements for the three months ending March 31, 2019.
Note 3 — Significant Transactions
Parkmerced Mezzanine Investment
On November 26, 2019, we loaned $275 million to the partnership that aidowns Parkmerced Apartments. The loan accrues interest at 10% per annum with a five-year term and the right to extend for a second five-year term. Along with our mezzanine loan, we received a ten-year option to acquire a 30% interest in calculating the valuepartnership at a $1.0 million exercise price, increased by 30% of future capital spending to progress development and redevelopment of the lease liabilitypartnership’s apartment homes. The existence of the option provides us with the opportunity to participate in residual profits of the partnership and related right of use asset onin accordance with the date of adoption, as well asacquisition, development, and construction guidance within ASC 310, Receivables, we account for this transaction under the prospective practical expedient that allows lessors to combine lease and nonlease components where the timing and pattern of transfer are the same.
Acquisitions of Apartment Communities
During the year ended December 31, 2018,2019, we acquired a 95% interest in 1001 Brickell Bay Drive, a 1.8-acre waterfront parcel in Miami, Florida, currently improved with an office building. The remaining 5% is held by an outside partner and is redeemable at the holder’s option for cash during a three-month exercise period, which begins on July 2, 2022. As the redemption of this put is not within Aimco and the Aimco Operating Partnership’s control, the noncontrolling interest is reflected in temporary equity in Aimco’s consolidated balance sheets and within temporary capital in the Aimco Operating Partnership’s consolidated balance sheets.
We also acquired One Ardmore, an apartment communitiescommunity located in Arlington, Virginia, Fairfax County, VirginiaArdmore, Pennsylvania, a suburb of Philadelphia, and Prism, an apartment community under development in the Center City and University City areas of Philadelphia.Cambridge, Massachusetts. Summarized information regarding these acquisitions is set forth in the table below (dollars in(in thousands):
Purchase price | $ | 229,711 |
|
Capitalized transaction costs |
| 4,057 |
|
Noncontrolling interests in consolidated real estate partnership |
| 8,250 |
|
Total consideration (1) | $ | 242,018 |
|
Consideration allocated to building and improvements |
| 218,752 |
|
Consideration allocated to land |
| 162,094 |
|
Consideration allocated to intangible assets |
| 16,500 |
|
Consideration allocated to intangible liabilities |
| (6,519 | ) |
Deferred tax liability assumed (2) |
| (148,809 | ) |
Total consideration | $ | 242,018 |
|
| 2018 | |||
| Number of apartment communities | 6 | ||
| Number of apartment homes | 1,480 | ||
| Purchase price (1) | $ | 483,066 | |
| Capitalized transaction costs | 7,591 | ||
| Total fair value allocated to land | 69,177 | ||
| Total fair value allocated to building and improvements | 424,718 | ||
| Total fair value allocated to intangible assets | 9,700 | ||
| Total fair value allocated to intangible liabilities | 12,938 | ||
(1) | |
Total consideration includes $97.6 million of debt assumed |
(2) | The deferred tax liability of $148.8 million resulted from the corporate structure used to complete the acquisition of 1001 Brickell Bay Drive and is due to the difference between the purchase price determined in accordance with GAAP and the tax basis of the property. |
Dispositions of Apartment Communities
During the years ended December 31, 2019, 2018, and Assets Held for Sale2017, we sold apartment communities as summarized below (dollars in thousands):
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Number of apartment communities sold |
| 12 |
|
|
| 4 |
|
|
| 5 |
|
Number of apartment homes sold |
| 3,596 |
|
|
| 1,334 |
|
|
| 2,291 |
|
Gain on dispositions of real estate (1) | $ | 503,168 |
|
| $ | 175,213 |
|
| $ | 297,730 |
|
(1) | During the year ended December 31, 2019, gain on dispositions of real estate includes the expiration of indemnification liabilities related to the sale of our Asset Management business. |
F-23
The apartment communities sold were predominantly located outside of our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.
During the year ended December 31, 2018, we also sold for $590.0 million our Asset Management business and our four affordable apartment communities located in the Hunters Point area of San Francisco. The sale resulted in a gain of $500.3 million and net cash proceeds of $512.2 million, after payment of transaction costs and repayment of property-level debt encumbering the Hunters Point apartment communities. In addition to the Hunters Point apartment communities, we sold the following apartment communities from our Real Estate portfolio during the years ended December 31, 2018, 2017 and 2016 (dollars in thousands):
| 2018 | 2017 | 2016 | |||||||||
| Real Estate portfolio: | |||||||||||
| Apartment communities sold | 4 | 5 | 7 | ||||||||
| Apartment homes sold | 1,334 | 2,291 | 3,045 | ||||||||
| Gain on dispositions of real estate | $ | 175,213 | $ | 297,730 | $ | 383,647 | |||||
In addition to the apartment communities we sold during the periods presented,current period, from time to time we may be marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy. At the end of each reporting period we evaluate whether such communities meet the criteria to be classified as held for sale. As of December 31, 2018, we had two apartment2019, 0 communities with 782 apartment homes in our Real Estate portfolio that were classified as held for sale.
Note 4 — Leases
Lessor Arrangements
The majority of payments we receive for our residential and commercial leases are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements. Our total lease income was comprised of the following amounts for all operating leases for the year ended December 31, 2019 (in thousands):
Fixed lease income |
| $ | 855,326 |
|
Variable lease income |
|
| 56,424 |
|
Total lease income |
| $ | 911,750 |
|
In Januarygeneral, our commercial leases have options to extend for a certain period of time at the tenant’s option. Future minimum annual rental payments we will receive under commercial leases, excluding such extension options, are as follows as of December 31, 2019 (in thousands):
2020 |
| $ | 26,770 |
|
2021 |
|
| 23,277 |
|
2022 |
|
| 19,766 |
|
2023 |
|
| 15,853 |
|
2024 |
|
| 13,512 |
|
Thereafter |
|
| 52,040 |
|
Total |
| $ | 151,218 |
|
Generally, our residential leases do not provide extension options and, as of December 31, 2019, have an average remaining term of 8.8 months.
Lessee Arrangements
Beginning in 2019, we soldrecognize right of use assets and related lease liabilities, which are included in other assets and accrued liabilities and other, respectively, in our consolidated balance sheets. We estimated the apartment communitiesvalue of the lease liabilities using a discount rate equivalent to the rate we would pay on a secured borrowing with similar terms to the lease. On October 1, 2019, we revised our estimate of the incremental borrowing rate, which resulted in a reduction of our right of use assets and related lease liabilities for a gain on dispositionground leases. The adjustment recorded to our right of $87.5use assets and lease liabilities did not impact our consolidated statements of operations.
Substantially all of the payments under our ground and office leases are fixed. We exclude options to extend the lease in our minimum lease terms unless the option is reasonably certain to be exercised. Our total lease cost for ground and office leases for the years ended December 31, 2019, 2018, and 2017 was $10.7 million, net$5.1 million, and $4.8 million, respectively.
F-24
As of December 31, 2019, the ground and gross proceedsoffice leases have weighted-average remaining terms of $141.2 million, resulting74.0 years and 8.4 years, respectively, and weighted-average discount rates of 6.55% and 3.22%, respectively. Minimum annual rental payments under these operating leases, reconciled to the lease liability included in $114.9accrued liabilities and other in our consolidated balance sheets, are as follows (in thousands):
|
| Operating Lease Future Minimum Rent |
| |
2020 |
| $ | 5,156 |
|
2021 |
|
| 5,143 |
|
2022 |
|
| 5,053 |
|
2023 |
|
| 4,363 |
|
2024 |
|
| 4,392 |
|
Thereafter |
|
| 427,935 |
|
Total |
| $ | 452,042 |
|
Less: Discount |
|
| (394,735 | ) |
Total lease liability |
| $ | 57,307 |
|
Of the total lease liability as of December 31, 2019, $43.7 million of net proceedsthe balance relates to Aimco.
Note 45 — Non-Recourse Property Debt and Credit Agreement
Non-Recourse Property Debt (Real Estate Portfolio)
We finance apartment communities in our Real Estate portfolio primarily using property-level, non-recourse, long-dated, fixed-rate, amortizing debt. The following table summarizes non-recourse property debt related to assets classified as held for use atas of December 31, 2019 and 2018 and 2017 (in(dollars in thousands):
| Latest Maturity Date |
| Interest Rate Range |
| Weighted-Average Interest Rate |
|
| 2019 |
|
| 2018 |
| |||
Fixed-rate property debt | January 1, 2055 |
| 2.73% to 6.79% |
| 3.93% |
|
| $ | 4,081,221 |
|
| $ | 3,676,882 |
| |
Variable-rate property debt | July 13, 2033 |
| 2.51% to 3.00% |
| 2.88% |
|
|
| 170,118 |
|
|
| 260,118 |
| |
Debt issuance costs, net of accumulated amortization |
|
|
|
|
|
|
|
|
| (20,749) |
|
|
| (21,695 | ) |
Non-recourse property debt, net |
|
|
|
|
|
|
|
| $ | 4,230,590 |
|
| $ | 3,915,305 |
|
| 2018 | 2017 | ||||||
| Fixed-rate property debt | $ | 3,676,882 | $ | 3,480,378 | |||
| Variable-rate property debt | 260,118 | 82,663 | |||||
| Debt issue costs, net of accumulated amortization | (21,695 | ) | (17,932 | ) | |||
| Non-recourse property debt, net | $ | 3,915,305 | $ | 3,545,109 | |||
Principal and interest on fixed-rate debt are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity. AtAs of December 31, 2018, each of the2019, our fixed-rate loans payable related to apartment communities classified as held for use wereproperty debt was secured by one of 8278 apartment communities that had an aggregate net book value of $4.2$4.3 billion.
Principal and interest on variable-rate debt are generally payable in semi-annual installments with balloon payments due at maturity. As of December 31, 2018,2019, our variable-rate property debt related to apartment communities classified as held for use were eachwas secured by eight7 apartment communities that had an aggregate net book value of $239.5$105.7 million.
These non-recourse property debt instruments contain covenants common to the type of borrowing, and atas of December 31, 2018,2019, we were in compliance with all such covenants.
As of December 31, 2018,2019, the scheduled principal amortization and maturity payments for the non-recourse property debt related to apartment communities classified as held for use were as follows (in thousands):
| Amortization |
|
| Maturities |
|
| Total |
| |||
2020 | $ | 92,177 |
|
| $ | 78,930 |
|
| $ | 171,107 |
|
2021 (1) |
| 83,427 |
|
|
| 598,263 |
|
|
| 681,690 |
|
2022 |
| 78,909 |
|
|
| 260,671 |
|
|
| 339,580 |
|
2023 |
| 71,332 |
|
|
| 249,251 |
|
|
| 320,583 |
|
2024 |
| 67,561 |
|
|
| 285,517 |
|
|
| 353,078 |
|
Thereafter |
| 391,512 |
|
|
| 1,993,789 |
|
|
| 2,385,301 |
|
Total | $ | 784,918 |
|
| $ | 3,466,421 |
|
| $ | 4,251,339 |
|
| Amortization | Maturities | ||||||
| 2019 | $ | 77,791 | $ | 168,554 | |||
| 2020 | 79,592 | 78,930 | |||||
| 2021 (1) | 69,995 | 611,039 | |||||
| 2022 | 64,991 | 283,629 | |||||
| 2023 | 55,450 | 337,871 | |||||
| Thereafter | 2,109,158 | ||||||
| Total | $ | 3,937,000 | |||||
(1) | |
Pursuant to the terms of our loan agreements, we may prepay in 2020 $246.5 million of loans maturing in 2021, without penalty. |
F-25
Revolving Credit Facility
We have a revolving credit facility with a syndicate of financial institutions. Our revolving credit facility provides for $800.0 million of revolving loan commitments. As of December 31, 20182019 and 2017,2018, we had $160.4$275.0 million and $67.2$160.4 million, respectively, of outstanding borrowings under our revolving credit facility. The interest rate on our outstanding borrowings was 3.00% and 3.93% and 3.26% atas of December 31, 20182019 and 2017,2018, respectively. As of December 31, 2018,2019, after outstanding borrowings and $7.1$7.2 million of undrawn letters of credit backed by the Credit Agreement, our available borrowing capacity was $632.5$517.8 million. During the year ended December 31, 2018, we repaid the $250.0 million term loan in full.
Borrowings against the revolving loan commitments bear interest at a rate set forth on a pricing grid, which rate varies based on our credit rating as assigned by specified rating agencies (LIBOR plus 1.20%, or, at our option, a base rate plus 0.20% atas of December 31, 2018)2019). The revolving credit facility matures on January 22, 2022. The revolving credit facility provides that we may make distributions to our investors during any four consecutive quarters in an aggregate amount that does not exceed the greater of 95% of our Funds From Operationsfunds from operations, as defined by Nareit, for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain Aimco’s REIT status.
Note 56 — Commitments and Contingencies
Commitments
In connection with our redevelopment, development, and other capital improvement activities, we have entered into various construction-related contracts and we have made commitments to complete redevelopment and development of certain apartment communities, pursuant to financing or other arrangements. As of December 31, 2018,2019, our commitments related to these capital activitiesactive redevelopments and developments totaled approximately $207.0$254.5 million, most of which we expect to incur during the next 12 months.
We enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
Legal Matters
In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Environmental
Various federal, state and local laws subject apartment community owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present in the land or buildings of an apartment community. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such apartment communities as well as the ability to sell or finance such apartment communities. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur or for personal injury, disease, disability or other infirmities related to the alleged presence of hazardous materials. In addition to potential environmental liabilities
We are engaged in discussions with the Environmental Protection Agency, or EPA, and the Indiana Department of Environmental Management, or IDEM, regarding contaminated groundwater in a residential area near an Indiana apartment community that has not been owned by us since 2008. The contamination allegedly derives from a dry cleaner that operated on our former property, prior to our ownership. We undertook a voluntary remediation of the dry cleaner contamination under IDEM’sstate oversight. In 2016, EPA listed our former community and a number of residential communities in the vicinity on the National Priorities List, or NPL (i.e.(i.e., as a Superfund site). In May 2018, we prevailed on our federal judicial appeal vacating the Superfund listing. We continue to work with EPA and IDEM to identify options for clean-up of the site.site outside the Superfund program. Although the outcome of these processes are uncertain, we do not expect their resolution to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
We also have been contacted by regulators and the current owner ofa contingent liability related to a property in Lake Tahoe, California, regarding environmental issues allegedly stemmingcontamination from the historic operation of a dry cleaner. An entity owned by us was the former general partner of a now-dissolved partnership that previously owned a site that was used for dry cleaning.a laundromat with a self-service dry-cleaning machine. That entity and the current property owner have been remediating the dry cleaner site since 2009, under the oversight of the Lahontan Regional Water Quality Control Board, or Lahontan. In May 2017, Lahontan issued a final cleanup and abatement order that names four4 potentially-responsible parties, acknowledges that there may be additional responsible parties, and requires the named parties to perform additional groundwater
F-26
investigation and corrective actions with respect to onsite and offsite contamination. We are appealing the final order while simultaneously complying with it. Although the outcome of this process is uncertain, we do not expect its resolution to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
We have determined that our legal obligations to remove or remediate certain potentially hazardous materials may be conditional asset retirement obligations, as defined inby GAAP. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or apartment community casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of December 31, 2018,2019, are immaterial to our consolidated financial condition, results of operations and cash flows.
| Office Lease Obligations | Ground Lease Obligations | Total Operating Lease Obligations | |||||||||
| 2019 | $ | 2,237 | $ | 2,114 | $ | 4,351 | |||||
| 2020 | 2,821 | 2,350 | 5,171 | ||||||||
| 2021 | 2,719 | 2,439 | 5,158 | ||||||||
| 2022 | 2,582 | 2,492 | 5,074 | ||||||||
| 2023 | 1,871 | 2,492 | 4,363 | ||||||||
| Thereafter | 10,644 | 422,169 | 432,813 | ||||||||
| Total | $ | 22,874 | $ | 434,056 | $ | 456,930 | |||||
Note 67 — Aimco Equity
Preferred Stock
During the year ended December 31, 2016,2019, Aimco redeemed all of the outstanding shares of its 6.88% Class ZA Cumulative Preferred Stock. Aimco’s Class A Preferred Stock athad a redemption$0.01 per share par value, was senior to Aimco’s Common Stock, had a liquidation preference per share of $34.8 million. We reflected the $0.7 million excess of the redemption value over the carrying amount and $1.3 million of previously deferred issuance costs as an adjustment of net income attributable to preferred stockholders for the year ended December 31, 2016.
In connection with the redemption of Aimco preferred stock, the Aimco Operating Partnership redeemed from Aimco a number of Preferred Partnership Preferred Units equal to the number of shares redeemed or repurchased by Aimco.
Common Stock
During the years ended December 31, 2019, 2018, 2017 and 2016,2017, Aimco declared dividends per common share of $1.56, $1.52 and $1.44, and $1.32, respectively.
On February 3, 2019, Aimco’s Board of Directors authorized a reverse stock split, in which every 1.03119 Aimco common share will bewas combined into one Aimco common share, effective at the close of business on February 20, 2019. On the same date, the Board of Directors also declared a special dividend on the Aimco common stockCommon Stock that consistsconsisted of $67.1 million in cash, and 4.5 million shares of Aimco common stock. TheCommon Stock, and $0.4 million of cash paid in lieu of issuing fractional units. We paid the special dividend will be payable on March 22, 2019, to stockholders of record as of February 22, 2019. The special dividend amount includesincluded the regular quarterly cash dividend which for 2019 is expected to beof $0.39 per share.
Stockholders will havehad the opportunity to elect to receive the special dividend in the form of all cash or all stock, subject to proration if either option iswas oversubscribed. TheAimco’s Board of Directors also authorized a reverse stock split was authorized in orderintended to neutralize the dilutive impact of the stock issued in the special dividend. As a result, the total number of shares outstanding following completion of bothafter the specialstock dividend and the reverse stock split are expected to bewas unchanged from the totalnumber of shares outstanding immediately prior to the transactions. Some stockholders maytwo actions. All equity and earnings per share data, including the number of shares outstanding, have more Aimco shares and some may have fewer based on their individual elections.
Change to retroactively recognizeour charter
On February 24, 2020, pursuant to Maryland law and our charter, our Board of Directors reclassified into Common Stock, all of the reverse stock split inauthorized and unissued shares of each of the calculationfollowing classes of basicpreferred stock: Class Z Cumulative Preferred Stock, Class A Cumulative Preferred Stock, and diluted earnings per share.Series A Community Reinvestment Act Preferred Stock. The reclassification increases the number of authorized shares issued in connection with the special dividend will be included in the calculation of basic and diluted earnings per share on a prospective basis, and are therefore not included in the pro forma amounts disclosed below. If the reverse stock split had been effectiveclassified as Common Stock by 9,800,240 shares, from 500,787,260 shares immediately prior to issuancethe reclassification to 510,587,500 shares immediately after the reclassification. The reclassification does not impact any of these financial statements, basicour issued and diluted weighted averageoutstanding shares outstanding and earnings per share for the years ending December 31, 2018, 2017 and 2016 would have been (shares in thousands):
| 2018 | 2017 | 2016 | |||||||||
| Weighted average shares, basic | 151,152 | 151,595 | 151,282 | ||||||||
| Weighted average shares, diluted | 151,334 | 152,060 | 151,669 | ||||||||
| Basic earnings per share | $ | 4.34 | $ | 2.02 | $ | 2.76 | |||||
| Diluted earnings per share | $ | 4.34 | $ | 2.02 | $ | 2.75 | |||||
Registration Statements
Aimco and the Aimco Operating Partnership have a shelf registration statement that provides for the issuance of equity and debt securities by Aimco and debt securities by the Aimco Operating Partnership.
Redeemable Preferred OP Units
The Aimco Operating Partnership has outstanding various classes of redeemable Partnership Preferred Units owned by third parties, which we refer to as preferred OP Units. As of December 31, 20182019 and 2017,2018, the Aimco Operating Partnership had the following classes of preferred OP Units (stated at their redemption values, in thousands, except unit and per unit data):
|
| Distributions per Annum |
|
| Units Issued and Outstanding |
|
| Redemption Values |
| |||||||||||||||
Class of Preferred Units |
| Percent |
|
| Per Unit |
|
| 2019 |
|
| 2018 |
|
| 2019 |
|
| 2018 |
| ||||||
Class One |
|
| 8.75 | % |
| $ | 8.00 |
|
|
| 90,000 |
|
|
| 90,000 |
|
| $ | 8,229 |
|
| $ | 8,229 |
|
Class Two |
|
| 1.92 | % |
| $ | 0.48 |
|
|
| 11,122 |
|
|
| 14,240 |
|
|
| 278 |
|
|
| 356 |
|
Class Three |
|
| 7.88 | % |
| $ | 1.97 |
|
|
| 1,338,524 |
|
|
| 1,338,524 |
|
|
| 33,463 |
|
|
| 33,463 |
|
Class Four |
|
| 8.00 | % |
| $ | 2.00 |
|
|
| 644,954 |
|
|
| 644,954 |
|
|
| 16,124 |
|
|
| 16,124 |
|
Class Six |
|
| 8.50 | % |
| $ | 2.13 |
|
|
| 773,693 |
|
|
| 773,693 |
|
|
| 19,342 |
|
|
| 19,342 |
|
Class Seven |
|
| 7.87 | % |
| $ | 1.97 |
|
|
| 26,150 |
|
|
| 27,960 |
|
|
| 654 |
|
|
| 699 |
|
Class Nine |
|
| 6.00 | % |
| $ | 1.50 |
|
|
| 78,956 |
|
|
| 243,112 |
|
|
| 1,974 |
|
|
| 6,078 |
|
Class Ten |
|
| 6.00 | % |
| $ | 1.50 |
|
|
| 680,000 |
|
|
| 680,000 |
|
|
| 17,000 |
|
|
| 17,000 |
|
Total |
|
|
|
|
|
|
|
|
|
| 3,643,399 |
|
|
| 3,812,483 |
|
| $ | 97,064 |
|
| $ | 101,291 |
|
| Distributions per Annum | Units Issued and Outstanding | Redemption Values | ||||||||||||||||||
| Class of Preferred Units | Percent | Per Unit | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Class One | 8.75 | % | $ | 8.00 | 90,000 | 90,000 | $ | 8,229 | $ | 8,229 | ||||||||||
| Class Two | 1.92 | % | $ | 0.48 | 14,240 | 17,750 | 356 | 444 | ||||||||||||
| Class Three | 7.88 | % | $ | 1.97 | 1,338,524 | 1,338,524 | 33,463 | 33,462 | ||||||||||||
| Class Four | 8.00 | % | $ | 2.00 | 644,954 | 644,954 | 16,124 | 16,124 | ||||||||||||
| Class Six | 8.50 | % | $ | 2.13 | 773,693 | 780,036 | 19,342 | 19,501 | ||||||||||||
| Class Seven | 7.87 | % | $ | 1.97 | 27,960 | 27,960 | 699 | 699 | ||||||||||||
| Class Nine | 6.00 | % | $ | 1.50 | 243,112 | 243,112 | 6,078 | 6,078 | ||||||||||||
| Class Ten | 6.00 | % | $ | 1.50 | 680,000 | 680,000 | 17,000 | 17,000 | ||||||||||||
| Total | 3,812,483 | 3,822,336 | $ | 101,291 | $ | 101,537 | ||||||||||||||
Each class of preferred OP Units is currently redeemable at the holders’ option. The Aimco Operating Partnership, at its sole discretion, may settle such redemption requests in cash or cause Aimco to issue shares of its Common Stock with a value equal to the redemption price. In the event the Aimco Operating Partnership requires Aimco to issue shares of Common Stock to settle a redemption request, the Aimco Operating Partnership would issue to Aimco a corresponding number of common partnership units.OP Units. The Aimco Operating Partnership has a redemption policy that requires cash settlement of redemption requests for the preferred OP Units, subject to limited exceptions. Subject to certain conditions, the Class Four and Class Six preferred OP Units may be converted into common OP Units.
These redeemable units are classified within temporary equity in Aimco’s consolidated balance sheets and within temporary capital in the Aimco Operating Partnership’s consolidated balance sheets.
During the years ended December 31, 2019, 2018, and 2017, approximately 169,000, 10,000 and 2016, approximately 10,000, 67,000 and 69,000 preferred OP Units, respectively, were redeemed in exchange for cash, and no0 preferred OP Units were redeemed in exchange for shares of Aimco Common Stock.
The following table presents a reconciliation of the Aimco Operating Partnership’s preferred OP Units during the yearsyear ended December 31, 2018, 2017 and 20162019 (in thousands):
|
| 2019 |
| |
Balance at January 1 |
| $ | 101,291 |
|
Preferred distributions |
|
| (7,708 | ) |
Redemption of preferred units |
|
| (4,227 | ) |
Net income |
|
| 7,708 |
|
Balance at December 31 |
| $ | 97,064 |
|
| 2018 | 2017 | 2016 | |||||||||
| Balance at January 1 | $ | 101,537 | $ | 103,201 | $ | 87,926 | |||||
| Preferred distributions | (7,740 | ) | (7,764 | ) | (7,239 | ) | |||||
| Redemption of preferred units and other | (246 | ) | (1,664 | ) | (1,725 | ) | |||||
| Issuance of preferred units | — | — | 17,000 | ||||||||
| Net income | 7,740 | 7,764 | 7,239 | ||||||||
| Balance at December 31 | $ | 101,291 | $ | 101,537 | $ | 103,201 | |||||
Aimco Operating Partnership Partners’ Capital
Common Partnership Units
In the Aimco Operating Partnership’s consolidated balance sheets, the common partnership units held by Aimco are classified within Partners’ Capital as General Partner and Special Limited Partner capital and the common OP Units are classified within Limited Partners’ capital. In Aimco’s consolidated balance sheets, the common OP Units are classified within permanent equity as common noncontrolling interests in the Aimco Operating Partnership.
Common partnership units held by Aimco are not redeemable whereas common OP Units are redeemable at the holders’ option, subject to certain restrictions, on the basis of one common OP Unit for either one share of Common Stock or cash equal to the fair value of a share of Common Stock at the time of redemption. Aimco has the option to deliver shares of Common Stock in exchange for all or any portion of the common OP Units tendered for redemption. When a limited partner redeems a common OP Unit for Common Stock, Limited Partners’ capital is reduced and the General Partner and Special Limited Partners’ capital is increased.
During the years ended December 31, 2019, 2018, and 2017, approximately 129,000, 224,000 and 2016, approximately 224,000, 268,000 and 248,000 common OP Units, respectively, were redeemed in exchange for cash, and nocash. During the year ended December 31, 2019, 127,000 common OP Units were
F-28
redeemed in exchange for shares of Common Stock. NaN common OP Units were redeemed in exchange for shares ofAimco Common Stock.
The holders of the common OP Units receive distributions, prorated from the date of issuance, in an amount equivalent to the dividends paid to holders of Common Stock. During the years ended December 31, 2019, 2018, 2017 and 2016,2017, the Aimco Operating Partnership declared distributions per common unit of $1.56, $1.52 and $1.44, and $1.32, respectively
On February 3, 2019, the Board of Directors of the Aimco Operating Partnership’s general partner authorized a reverse unit split in which every 1.03119 common partnership units will be combined into one common partnership unit. The reverse split is effective at the close of business on February 20, 2019, and corresponds to a similar split effected by Aimco with respect to its common shares atspecial distribution in the same time. Onform and with the same date,timing as the Board of Directors also declared areverse stock split and special dividend discussed in Note 7 above. The special distribution to the holders of Aimco Operating Partnership common partnership units that consistsconsisted of $71.5$72.7 million in cash, and 4.8 million common partnership units and $0.4 million of cash paid in lieu of issuing fractional units. The special distribution will be payable on March 22, 2019, to unitholders of record as of February 22, 2019. The special distribution also corresponds to a similar special dividend paid at the same time to holders of Aimco common shares. The reverse split was authorized in order to neutralize the dilutive impact of the units issued in the special distribution. As a result, totalTotal common partnership units outstanding following completion of both the special distribution and the reverse unit split are expected to be unchanged from the total common partnership units outstanding immediately prior to the transactions.
| 2018 | 2017 | 2016 | |||||||||
| Weighted average units, basic | 158,890 | 158,793 | 158,808 | ||||||||
| Weighted average units, diluted | 159,073 | 159,257 | 159,194 | ||||||||
| Basic earnings per unit | $ | 4.35 | $ | 2.02 | $ | 2.76 | |||||
| Diluted earnings per unit | $ | 4.34 | $ | 2.02 | $ | 2.75 | |||||
Note 89 — Share-Based Compensation
We have a stock award and incentive program to attract and retain officers and independent directors. As of December 31, 2018,2019, approximately 4.73.9 million shares were available for issuance under our Amended and Restated 2015 Stock Award and Incentive Plan, or the 2015 Plan. The total number of shares available for issuance under this plan may be increased by an additional 0.3 million sharesincrease due to the extent of any forfeiture, cancellation, exchange, surrender, termination or expiration of an award outstanding under our 2007 Stock Award and Incentive Plan. Awards under the 2015 Plan may be in the form of incentive stock options, non-qualified stock options and restricted stock, or other types of awards as authorized under the plan.
Our plans are administered by the Compensation and Human Resources Committee of Aimco’s Board of Directors. In the case of stock options, the exercise price of the options granted may not be less than the fair market value of a share of Common Stock at the date of grant.
Total compensation cost recognized for stock basedshare-based awards was $9.7 million, $9.3 million and $8.6 millionas follows for the years ended December 31, 2019, 2018, and 2017 and 2016, respectively. Of these amounts, $1.2 million, $1.4 million and $1.0 million, respectively, were capitalized. At(in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Share-based compensation expense (1) |
| $ | 8,146 |
|
| $ | 8,550 |
|
| $ | 7,877 |
|
Capitalized share-based compensation (2) |
|
| 962 |
|
|
| 1,215 |
|
|
| 1,374 |
|
Total share-based compensation (3) |
| $ | 9,108 |
|
| $ | 9,765 |
|
| $ | 9,251 |
|
(1) | Amounts are recorded in general and administrative expenses on the consolidated statements of operations. |
(2) | Amounts are recorded in building and improvements on the consolidated balance sheets. |
(3) | Amounts are recorded in additional paid-in capital and common noncontrolling interests in the Aimco Operating Partnership on the Aimco consolidated balance sheets, and in general partner and special limited partner and limited partners on the Aimco Operating Partnership consolidated balance sheets. |
As of December 31, 2018,2019, total unvested compensation cost not yet recognized was $11.0$10.3 million. We expect to recognize this compensation over a weighted averageweighted-average period of approximately 1.6 years.
We have granted five different types of awards that are outstanding as of December 31, 2018. We have outstandinggrant stock options and restricted stock awards that are subject to time-based vesting and require continuous employment, typically over a period of four years from the grant date, and we refer to these awards as Time-Based Stock Options and Time-Based Restricted Stock, respectively. We also have outstandinggrant stock options, restricted stock awards, and two forms of long-term incentive partnership units, or LTIP units, that vest conditioned on Aimco’s total shareholder return, or TSR, relative to the NAREIT Equity Apartment Index (60% weighting) and the MSCI US REIT Index (40% weighting) over a forward-looking performance period of three years. We refer to these awards as TSR Stock Options, TSR Restricted Stock, TSR LTIP I units, and TSR LTIP II units. Vested LTIP II units may be converted at the holdersholders’ option to LTIP Units for a strike price over a term of ten10 years. Earned TSR-based awards, if any, will vest 50% on each of the third anniversary and fourth anniversary of the grant date, based on continued employment. The term ofOur Time-Based Stock Options and TSR Stock Options isexpire generally ten10 years from the date of grant.
We recognize compensation cost associated with Time-Based awards ratably over the requisite service periods, which are typically four years. We recognize compensation cost related to the TSR-based awards, which have graded vesting periods, over the requisite service period for each separate vesting tranche of the award, commencing on the grant date. The value of the TSR-based awards take into consideration the probability that the market condition will be achieved; therefore previously recorded compensation cost is not adjusted in the event that the market condition is not achieved and awards do not vest.
We had Time-Based Stock Options,
F-29
Stock Options.
The following table summarizes activity for our outstanding stock options, for the years ended December 31, 2019, 2018, 2017 and 20162017 (options in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
| Number of Options |
|
| Weighted-Average Exercise Price |
|
| Number of Options |
|
| Weighted-Average Exercise Price |
|
| Number of Options |
|
| Weighted-Average Exercise Price |
| ||||||
Outstanding at beginning of year |
|
| 646 |
|
| $ | 40.12 |
|
|
| 648 |
|
| $ | 40.08 |
|
|
| 675 |
|
| $ | 29.55 |
|
Granted |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 184 |
|
|
| 44.07 |
|
Exercised |
|
| (5 | ) |
|
| 8.92 |
|
|
| (2 | ) |
|
| 28.33 |
|
|
| (211 | ) |
|
| 9.90 |
|
Forfeited |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Outstanding at end of year |
|
| 641 |
|
| $ | 40.30 |
|
|
| 646 |
|
| $ | 40.12 |
|
|
| 648 |
|
| $ | 40.08 |
|
Exercisable at end of year |
|
| 458 |
|
| $ | 38.78 |
|
|
| 186 |
|
| $ | 38.18 |
|
|
| 128 |
|
| $ | 37.59 |
|
| 2018 | 2017 | 2016 | ||||||||||||||||||
| Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | |||||||||||||||
| Outstanding at beginning of year | 648 | $ | 40.08 | 675 | $ | 29.55 | 1,394 | $ | 30.85 | |||||||||||
| Granted | — | — | 184 | 44.07 | 216 | 38.73 | ||||||||||||||
| Exercised | (2 | ) | 28.33 | (211 | ) | 9.90 | (934 | ) | 33.61 | |||||||||||
| Forfeited | — | — | — | — | (1 | ) | 29.11 | |||||||||||||
| Outstanding at end of year | 646 | $ | 40.12 | 648 | $ | 40.08 | 675 | $ | 29.55 | |||||||||||
| Exercisable at end of year | 186 | $ | 38.18 | 128 | $ | 37.59 | 280 | $ | 16.38 | |||||||||||
The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option. As of December 31, 2018,2019, stock options outstanding had an aggregate intrinsic value of $2.5$7.3 million and a weighted averageweighted-average remaining contractual term of 7.06 years. OptionsStock options exercisable atas of December 31, 2018,2019, had an aggregate intrinsic value of $1.1$5.9 million and a weighted averageweighted-average remaining contractual term of 5.95.5 years. The intrinsic value of stock options exercised during the years ended December 31, 2019, 2018, and 2017, and 2016, was $32 thousand,$0.1 million, $0.0 million and $7.1 million, and $11.1 million, respectively.
During 2017, we granted TSR Stock Options. The weighted averageweighted-average grant date fair value of stock options granted during the yearsyear ended 2017 and 2016 was $11.39 and $9.94 per option, respectively.
Time-Based Restricted Stock Awards
The following table summarizes activity for Time-Based Restricted Stock awards for the years ended December 31, 2019, 2018, 2017 and 20162017 (shares in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
| Number of Shares |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Shares |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Shares |
|
| Weighted-Average Grant-Date Fair Value |
| ||||||
Unvested at beginning of year |
|
| 121 |
|
| $ | 40.82 |
|
|
| 155 |
|
| $ | 37.63 |
|
|
| 241 |
|
| $ | 33.61 |
|
Granted |
|
| 48 |
|
|
| 47.71 |
|
|
| 49 |
|
|
| 40.01 |
|
|
| 44 |
|
|
| 44.07 |
|
Vested |
|
| (75 | ) |
|
| 42.76 |
|
|
| (83 | ) |
|
| 34.42 |
|
|
| (130 | ) |
|
| 32.35 |
|
Forfeited |
|
| (2 | ) |
|
| 38.80 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Unvested at end of year |
|
| 92 |
|
| $ | 42.86 |
|
|
| 121 |
|
| $ | 40.82 |
|
|
| 155 |
|
| $ | 37.63 |
|
| 2018 | 2017 | 2016 | ||||||||||||||||||
| Number of Shares | Weighted Average Grant-Date Fair Value | Number of Shares | Weighted Average Grant-Date Fair Value | Number of Shares | Weighted Average Grant-Date Fair Value | |||||||||||||||
| Unvested at beginning of year | 160 | $ | 37.63 | 249 | $ | 33.61 | 339 | $ | 29.96 | |||||||||||
| Granted | 51 | 40.01 | 45 | 44.07 | 91 | 40.03 | ||||||||||||||
| Vested | (86 | ) | 34.42 | (134 | ) | 32.35 | (181 | ) | 29.99 | |||||||||||
| Unvested at end of year | 125 | $ | 40.82 | 160 | $ | 37.63 | 249 | $ | 33.61 | |||||||||||
The aggregate fair value of sharesTime-Based Restricted Stock awards and TSR Restricted Stock awards that vested during the years ended December 31, 2019, 2018, and 2017 and 2016 was $13.7 million, $8.4 million and $6.0 million, and $7.0 million, respectively.
TSR Restricted Stock Awards
The following table summarizes activity for TSR Restricted Stock awards for the years ended December 31, 2019, 2018, 2017 and 20162017 (shares in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
| Number of Shares |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Shares |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Shares |
|
| Weighted-Average Grant-Date Fair Value |
| ||||||
Unvested at beginning of year |
|
| 171 |
|
| $ | 41.65 |
|
|
| 246 |
|
| $ | 40.70 |
|
|
| 208 |
|
| $ | 39.66 |
|
Granted (1) |
|
| 39 |
|
|
| 54.73 |
|
|
| 44 |
|
|
| 41.71 |
|
|
| 38 |
|
|
| 46.39 |
|
Change in awards (2) |
|
| 216 |
|
|
| 39.67 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Vested |
|
| (213 | ) |
|
| 39.67 |
|
|
| (119 | ) |
|
| 39.72 |
|
|
| — |
|
|
| — |
|
Unvested at end of year |
|
| 213 |
|
| $ | 43.99 |
|
|
| 171 |
|
| $ | 41.65 |
|
|
| 246 |
|
| $ | 40.70 |
|
F-30
(1) | Based on target performance payout. |
(2) | Represents the change in the number of restricted stock awards earned at the end of the measurement period. |
| 2018 | 2017 | 2016 | ||||||||||||||||||
| Number of Shares | Weighted Average Grant-Date Fair Value | Number of Shares | Weighted Average Grant-Date Fair Value | Number of Shares | Weighted Average Grant-Date Fair Value | |||||||||||||||
| Unvested at beginning of year | 253 | $ | 40.70 | 214 | $ | 39.66 | 123 | $ | 39.72 | |||||||||||
| Granted | 45 | 41.71 | 39 | 46.39 | 91 | 39.59 | ||||||||||||||
| Vested | (123 | ) | 39.72 | — | — | — | — | |||||||||||||
| Unvested at end of year | 175 | $ | 41.65 | 253 | $ | 40.70 | 214 | $ | 39.66 | |||||||||||
TSR LTIP I Units
The following table summarizes activity for TSR LTIP I units for the years ended December 31, 2019, 2018, and 2017 (units in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
| Number of Units |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Units |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Units |
|
| Weighted-Average Grant-Date Fair Value |
| ||||||
Unvested at beginning of year |
|
| 93 |
|
| $ | 43.78 |
|
|
| 45 |
|
| $ | 46.21 |
|
|
| — |
|
| $ | — |
|
Granted |
|
| 6 |
|
|
| 55.17 |
|
|
| 48 |
|
|
| 41.48 |
|
|
| 45 |
|
|
| 46.21 |
|
Unvested at end of year |
|
| 99 |
|
| $ | 44.38 |
|
|
| 93 |
|
| $ | 43.78 |
|
|
| 45 |
|
| $ | 46.21 |
|
| 2018 | 2017 | ||||||||||||
| Number of Units | Weighted Average Grant-Date Fair Value | Number of Units | Weighted Average Grant-Date Fair Value | ||||||||||
| Unvested at beginning of year | 45 | $ | 46.21 | — | $ | — | |||||||
| Granted | 48 | 41.48 | 45 | 46.21 | |||||||||
| Unvested at end of year | 93 | $ | 43.78 | 45 | $ | 46.21 | |||||||
TSR LTIP II Units
The following table summarizes activity for TSR LTIP II units for the years ended December 31, 2019 and 2018 and 2017 (numbers of units(units in thousands):
|
| 2019 |
|
| 2018 |
| ||||||||||
|
| Number of Units |
|
| Weighted-Average Grant-Date Fair Value |
|
| Number of Units |
|
| Weighted-Average Grant-Date Fair Value |
| ||||
Unvested at beginning of year |
|
| 243 |
|
| $ | 8.29 |
|
|
| — |
|
| $ | — |
|
Granted |
|
| 356 |
|
|
| 12.03 |
|
|
| 243 |
|
|
| 8.29 |
|
Unvested at end of year |
|
| 599 |
|
| $ | 10.51 |
|
|
| 243 |
|
| $ | 8.29 |
|
| 2018 | ||||||
| Number of Units | Weighted Average Grant-Date Fair Value | |||||
| Unvested at beginning of year | — | $ | — | |||
| Granted | 243 | 41.84 | ||||
| Unvested at end of year | 243 | $ | 41.84 | |||
Determination of Grant-Date Fair Value of Awards
We estimated the fair value of TSR-based awards granted in 2019, 2018, 2017 and 20162017 using a Monte Carlo model usingwith the assumptions set forth in the table below.
The risk-free interest rate reflects the annualized yield of a zero coupon U.S.United States Treasury security with a term equal to the expected term of the option.awards. The expected dividend yield reflects expectations regarding cash dividend amounts per share paid on Aimco’s Common Stock during the expected term of the awards. Expected volatility reflects an average of the historical volatility of Aimco’s Common Stock during the historical period commensurate with the expected term of the optionsaward that ended on the date of grant, and the implied volatility is calculated from observed call option contracts closest to the expected term. The derived vesting period of TSR Restricted Stock and TSR LTIP I units was determined based on the graded vesting terms. The expected term of the TSR-options and TSR LTIP II units was based on historical option exercises and post-vesting terminations. The midpoints of our valuation assumptions for the 2019, 2018, 2017 and 20162017 grants were as follows:
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Grant date market value of a common share |
| $ | 49.24 |
|
| $ | 40.95 |
|
| $ | 44.07 |
|
Risk-free interest rate |
|
| 2.59% - 2.66 | % |
|
| 2.32% - 2.68 | % |
|
| 1.57% - 2.22 | % |
Dividend yield |
|
| 3.09 | % |
|
| 3.52 | % |
|
| 3.27 | % |
Expected volatility |
|
| 19.08% - 19.24 | % |
|
| 17.64% - 18.02 | % |
|
| 21.33% - 23.00 | % |
Derived vesting period of TSR Restricted Stock and TSR LTIP I units |
| 3.4 years |
|
| 3.4 years |
|
| 3.4 years |
| |||
Weighted average expected term of TSR Stock Options and LTIP II units |
| 5.8 years |
|
| 5.6 years |
|
| 5.8 years |
| |||
| 2018 | 2017 | 2016 | |||||||||
| Grant date market value of a common share | $ | 40.95 | $ | 44.07 | $ | 38.73 | |||||
| Risk-free interest rate | 2.32 | % | 1.57 | % | 1.15 | % | |||||
| Dividend yield | 3.52 | % | 3.27 | % | 3.41 | % | |||||
| Expected volatility | 18.02 | % | 21.33 | % | 21.24 | % | |||||
| Derived vesting period of TSR Restricted Stock and TSR LTIP I units | 3.4 years | 3.4 years | 3.4 years | ||||||||
| Weighted average expected term of TSR Stock Options and LTIP II units | 5.6 years | 5.8 years | 5.8 years | ||||||||
The grant date fair value for the Time-Based Restricted Stock awards reflects the closing price of a share of Aimco common stockCommon Stock on the grant date.
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities of the TRS entities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax liabilities and assets are as follows (in thousands):
|
| December 31, |
| |||||
|
| 2019 |
|
| 2018 |
| ||
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Real estate and real estate partnership basis differences |
| $ | 126,269 |
|
| $ | 12,058 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Tax credit carryforwards |
| $ | 53,776 |
|
| $ | 67,530 |
|
Net operating, capital and other loss carryforwards |
|
| 6,147 |
|
|
| 7,022 |
|
Accruals and expenses |
|
| 6,138 |
|
|
| 7,432 |
|
Management contracts and other |
|
| 1,379 |
|
|
| 2,064 |
|
Total deferred tax assets |
|
| 67,440 |
|
|
| 84,048 |
|
Valuation allowance |
|
| (4,766 | ) |
|
| (4,930 | ) |
Net deferred tax (liabilities) assets |
| $ | (63,595 | ) |
| $ | 67,060 |
|
| December 31, | |||||||
| 2018 | 2017 | ||||||
| Deferred tax liabilities: | |||||||
| Real estate and real estate partnership basis differences | $ | 12,058 | $ | 32,032 | |||
| Deferred tax assets: | |||||||
| Net operating, capital and other loss carryforwards | $ | 7,022 | $ | 9,523 | |||
| Accruals and expenses | 7,432 | 6,575 | |||||
| Tax credit carryforwards | 67,530 | 73,450 | |||||
| Management contracts and other | 2,064 | 200 | |||||
| Total deferred tax assets | 84,048 | 89,748 | |||||
| Valuation allowance | (4,930 | ) | (25,489 | ) | |||
| Net deferred tax assets | $ | 67,060 | $ | 32,227 | |||
As of December 2017, the U.S. Congress passed the Tax Cuts31, 2019, deferred tax liabilities, net, were presented in accrued liabilities and Jobs Act, or the 2017 Act, which is effective for years beginning with 2018. The 2017 Act provided for a reductionother in the federal income tax rate. In accordance with GAAP, we revalued our consolidated balance sheets. As of December 31, 2018, deferred tax assets, and liabilities as of December 31, 2017. We finalizednet, were presented in other assets in our accounting for the tax effects of enactment of the 2017 Act duringconsolidated balance sheets.
During the year ended December 31, 2018, resulting2019, we recognized a $148.8 million deferred tax liability in our recognitionconnection with the acquisition of a cumulative net tax benefit1001 Brickell Bay Drive, as discussed in Note 3.
As of $15.6 million over the two years.
A reconciliation of the beginning and ending balance of our unrecognized tax benefits is presented below (in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Balance at January 1 |
| $ | 2,618 |
|
| $ | 2,476 |
|
| $ | 2,286 |
|
Additions based on tax position taken in current year |
|
| 2,758 |
|
|
| — |
|
|
| — |
|
Additions based on tax positions related to prior years |
|
| 226 |
|
|
| 142 |
|
|
| 190 |
|
Reductions as a result of a lapse of the applicable statutes |
|
| (522 | ) |
|
| — |
|
|
| — |
|
Balance at December 31 |
| $ | 5,080 |
|
| $ | 2,618 |
|
| $ | 2,476 |
|
| 2018 | 2017 | 2016 | |||||||||
| Balance at January 1 | $ | 2,476 | $ | 2,286 | $ | 2,897 | |||||
| Additions (reductions) based on tax positions related to prior years | 142 | 190 | (611 | ) | |||||||
| Balance at December 31 | $ | 2,618 | $ | 2,476 | $ | 2,286 | |||||
Because the statute of limitations has not yet elapsed, our United States federal income tax returns for the year ended December 31, 2014, and subsequent years and certain of our State income tax returns for the year ended December 31, 2014, and subsequent years are currently subject to examination by the IRS or other taxing authorities. If recognized, the unrecognized benefit would affect the effective rate.
In 2014, the IRS initiated an audit of the Aimco Operating Partnership’s 2011 and 2012 tax years. This audit remains in process as ofwas concluded during the year ended December 31, 2018. We do not believe the audit will have any2019, with no material effect on our unrecognized tax benefits, financial condition or results of operations.
Our policy is to include any interest and penalties related to income taxes within the income tax line item in our consolidated statements of operations.
In accordance with the accounting requirements for stock-based compensation, we may recognize tax benefits in connection with the exercise of stock options by employees of our TRS entities and the vesting of restricted stock awards. We recognize the tax effects related to stock basedstock-based compensation through earnings in the period the compensation was recognized.
F-32
Significant components of the income tax benefit or expense are as follows and are classified within income tax benefit in income before gain on dispositions and gain on dispositions of real estate, net of tax, in our consolidated statements of operations for the years ended December 31, 2019, 2018, 2017 and 20162017 (in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
| $ | 6,115 |
|
| $ | 11,269 |
|
| $ | (938 | ) |
State |
|
| 8,982 |
|
|
| 10,537 |
|
|
| 525 |
|
Total current |
|
| 15,097 |
|
|
| 21,806 |
|
|
| (413 | ) |
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
| (12,891 | ) |
|
| (29,243 | ) |
|
| (10,908 | ) |
State |
|
| (5,341 | ) |
|
| (5,590 | ) |
|
| (3,621 | ) |
Revaluation of deferred taxes due to change in tax rate |
|
| — |
|
|
| — |
|
|
| (15,894 | ) |
Total deferred |
|
| (18,232 | ) |
|
| (34,833 | ) |
|
| (30,423 | ) |
Total benefit |
| $ | (3,135 | ) |
| $ | (13,027 | ) |
| $ | (30,836 | ) |
| 2018 | 2017 | 2016 | |||||||||
| Current: | |||||||||||
| Federal | $ | 11,269 | $ | (938 | ) | $ | 5,038 | ||||
| State | 10,537 | 525 | 2,916 | ||||||||
| Total current | 21,806 | (413 | ) | 7,954 | |||||||
| Deferred: | |||||||||||
| Federal | (29,243 | ) | (10,908 | ) | (26,173 | ) | |||||
| State | (5,590 | ) | (3,621 | ) | (623 | ) | |||||
| Revaluation of deferred taxes due to change in tax rate | — | (15,894 | ) | — | |||||||
| Total deferred | (34,833 | ) | (30,423 | ) | (26,796 | ) | |||||
| Total benefit | $ | (13,027 | ) | $ | (30,836 | ) | $ | (18,842 | ) | ||
Consolidated income or loss subject to tax consists of pretax income or loss of our TRS entities and income and gains retained by the REIT. For the years ended December 31, 2019, 2018, 2017 and 2016,2017, we had consolidated net loss subject to tax of $21.2 million, net income subject to tax of $158.6 million, and net loss subject to tax of $55.6 million, and net incomerespectively. Net loss subject to tax for the year ended December 31, 2019 included a $7.7 million net loss of $109.3 million, respectively.
The reconciliation of income tax attributable to operations computed at the United States statutory rate to income tax benefit is shown below (dollars in thousands):
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
| Amount |
|
| Percent |
|
| Amount |
|
| Percent |
|
| Amount |
|
| Percent |
| ||||||
Tax (benefit) provision at United States statutory rates on consolidated income or loss subject to tax |
| $ | (4,442 | ) |
|
| 21.0 | % |
| $ | 33,296 |
|
|
| 21.0 | % |
| $ | (19,459 | ) |
|
| 35.0 | % |
United States branch profits tax on losses of a foreign subsidiary |
|
| (1,813 | ) |
|
| 8.6 | % |
|
| — |
|
|
| — | % |
|
| — |
|
|
| — | % |
State income tax expense, net of federal tax (benefit) expense |
|
| 3,935 |
|
|
| (18.6 | %) |
|
| 12,252 |
|
|
| 7.7 | % |
|
| (1,769 | ) |
|
| 3.2 | % |
Establishment of deferred tax asset related to partnership basis difference (1) |
|
| — |
|
|
| — | % |
|
| — |
|
|
| — | % |
|
| (3,501 | ) |
|
| 6.3 | % |
Effect of permanent differences |
|
| (138 | ) |
|
| 0.7 | % |
|
| 302 |
|
|
| 0.2 | % |
|
| (1,629 | ) |
|
| 2.9 | % |
Tax effect of intercompany transactions (2) |
|
| — |
|
|
| — | % |
|
| (33,250 | ) |
|
| (21.0 | %) |
|
| — |
|
|
| — | % |
Tax credits |
|
| (667 | ) |
|
| 3.2 | % |
|
| (6,897 | ) |
|
| (4.4 | %) |
|
| (9,607 | ) |
|
| 17.3 | % |
Tax reform revaluation (3) |
|
| — |
|
|
| — | % |
|
| 288 |
|
|
| 0.2 | % |
|
| (15,894 | ) |
|
| 28.6 | % |
(Decrease) increase in valuation allowance (4) |
|
| (164 | ) |
|
| 0.8 | % |
|
| (20,434 | ) |
|
| (12.9 | %) |
|
| 21,023 |
|
|
| (37.8 | %) |
Other |
|
| 154 |
|
|
| (0.7 | %) |
|
| 1,416 |
|
|
| 0.9 | % |
|
| — |
|
|
| — | % |
Total income tax benefit |
| $ | (3,135 | ) |
|
| 15.0 | % |
| $ | (13,027 | ) |
|
| (8.3 | %) |
| $ | (30,836 | ) |
|
| 55.5 | % |
| 2018 | 2017 | 2016 | ||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
| Tax provision (benefit) at United States statutory rates on consolidated income or loss subject to tax | $ | 33,296 | 21.0 | % | $ | (19,459 | ) | 35.0 | % | $ | 38,257 | 35.0 | % | |||||||
| State income tax expense, net of federal tax (benefit) expense | 12,252 | 7.7 | % | (1,769 | ) | 3.2 | % | 7,152 | 6.5 | % | ||||||||||
| Establishment of deferred tax asset related to partnership basis difference (1) | — | — | % | (3,501 | ) | 6.3 | % | — | — | % | ||||||||||
| Effect of permanent differences | 302 | 0.2 | % | (1,629 | ) | 2.9 | % | (132 | ) | (0.1 | )% | |||||||||
| Tax effect of intercompany transactions (2) | (33,250 | ) | (21.0 | )% | — | — | % | (47,369 | ) | (43.3 | )% | |||||||||
| Tax credits | (6,897 | ) | (4.4 | )% | (9,607 | ) | 17.3 | % | (16,750 | ) | (15.3 | )% | ||||||||
| Tax reform revaluation (3) | 288 | 0.2 | % | (15,894 | ) | 28.6 | % | — | — | % | ||||||||||
| (Decrease) increase in valuation allowance (4) | (20,434 | ) | (12.9 | )% | 21,023 | (37.8 | )% | — | — | % | ||||||||||
| Other | 1,416 | 0.9 | % | — | — | % | — | — | % | |||||||||||
| Total income tax benefit | $ | (13,027 | ) | (8.3 | )% | $ | (30,836 | ) | 55.5 | % | $ | (18,842 | ) | (17.2 | )% | |||||
(1) | |
2017 includes the establishment of a deferred tax asset related to partnership basis difference when it became apparent that it would reverse in the foreseeable future. This deferred tax asset was fully reserved in the valuation allowance described below as of December 31, 2017. |
(2) | |
Effective January 1, 2017, we adopted a new accounting standard applicable to intercompany asset transfers. As a result, the accumulated unrecognized deferred tax expense associated with historical intercompany transfers was recognized as a cumulative effect adjustment through retained earnings at that time. 2018 includes the tax benefit to establish the initial deferred tax asset from the intercompany transfer of a portion of the Asset Management business between the Aimco Operating Partnership and TRS entities. |
(3) | |
Reflects revaluation of deferred tax assets and liabilities using the TRS entities’ lower effective tax rates resulting from the 2017 Act. Accounting for the tax effects of enactment of the 2017 Act was finalized during the year ended December 31, 2018. |
(4) | |
2019 includes a $0.2 million release of a valuation allowance for expired state NOL carryforwards. 2017 includes a $15.4 million valuation allowance against the deferred tax assets associated with rehabilitation tax credits due to the lower federal tax rate under the 2017 Act. This valuation allowance was reversed in 2018 as a result of the sale of our Asset Management business. |
Income taxes paid totaled approximately $12.2 million, $11.5 million $7.4 million and $2.2$7.4 million in the years ended December 31, 2019, 2018, and 2017, and 2016, respectively.
F-33
For income tax purposes, dividends paid to holders of Common Stock primarily consist of ordinary income, capital gains, qualified dividends and unrecaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2019, 2018, 2017 and 2016,2017, dividends per share held for the entire year were estimated to be taxable as follows:
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||||||||||||||
|
| Amount |
|
| Percentage |
|
| Amount |
|
| Percentage |
|
| Amount |
|
| Percentage |
| ||||||
Ordinary income |
| $ | 0.66 |
|
|
| 20.7 | % |
| $ | 0.51 |
|
|
| 33.4 | % |
| $ | 0.75 |
|
|
| 51.5 | % |
Capital gains |
|
| 1.29 |
|
|
| 40.4 | % |
|
| 0.93 |
|
|
| 61.2 | % |
|
| 0.51 |
|
|
| 35.7 | % |
Qualified dividends |
|
| 0.66 |
|
|
| 20.7 | % |
|
| — |
|
|
| — | % |
|
| 0.02 |
|
|
| 1.6 | % |
Unrecaptured Section 1250 gain |
|
| 0.58 |
|
|
| 18.2 | % |
|
| 0.08 |
|
|
| 5.4 | % |
|
| 0.16 |
|
|
| 11.2 | % |
Total |
| $ | 3.19 |
|
|
| 100.0 | % |
| $ | 1.52 |
|
|
| 100.0 | % |
| $ | 1.44 |
|
|
| 100.0 | % |
| 2018 | 2017 | 2016 | ||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||
| Ordinary income | $ | 0.51 | 33.4 | % | $ | 0.75 | 51.5 | % | $ | 0.45 | 34.2 | % | ||||||||
| Capital gains | 0.93 | 61.2 | % | 0.51 | 35.7 | % | 0.47 | 35.4 | % | |||||||||||
| Qualified dividends | — | — | % | 0.02 | 1.6 | % | 0.13 | 9.9 | % | |||||||||||
| Unrecaptured Section 1250 gain | 0.08 | 5.4 | % | 0.16 | 11.2 | % | 0.27 | 20.5 | % | |||||||||||
| $ | 1.52 | 100.0 | % | $ | 1.44 | 100.0 | % | $ | 1.32 | 100.0 | % | |||||||||
Note 1011 — Earnings per Share/Share and per Unit
Aimco and the Aimco Operating Partnership calculate basic earnings per common share and basic earnings per common unit based on the weighted averageweighted-average number of shares of Common Stock and common partnership units and participating securities outstanding, andoutstanding. We calculate diluted earnings per share and diluted earnings per unit taking into consideration dilutive common stock and common partnership unit equivalents and dilutive convertible securities outstanding during the period.
Our common stock equivalents and common partnership unit equivalents include options to purchase shares of Common Stock, which, if exercised, would result in Aimco’s issuance of additional shares and the Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares purchased under the options. These equivalents also include unvested TSR Restricted Stock awards that do not meet the definition of participating securities, which would result in an increase in the issuancenumber of additional common shares of Common Stock and common partnership units outstanding equal to the number of the shares that vest. The dilutive effect of theseCommon partnership unit equivalents also include unvested long-term incentive partnership units. We include in the denominator securities was 0.2 million shares or units, 0.5 million shares or units, and 0.4 million shares or units, respectively, for the years ended December 31, 2018, 2017 and 2016. Securities with dilutive effect are included in the denominator for calculating diluted earnings per share and unit during these periods. There were 0.3 million potential shares and 0.3 million potential units not dilutive and excluded from the denominator for calculating diluted earnings per share and per unit respectively, for the year ended December 31, 2018. There were 0.2 million potential shares and 0.2 million potential units not dilutive and excluded from the denominator for calculating diluted earnings per share and per unit, respectively, for the years ended December 31, 2017 and 2016.
Our Time-Based Restricted Stock awards receive non-forfeitable dividends similar to shares of Common Stock and common partnership units prior to vesting, and our TSR LTIP I units and TSR LTIP II units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting and conversion. These dividends and distributions are not forfeited in the event the awards do not vest. Therefore, theThe unvested restricted shares and units related to these awards are participating securities. TheWe include the effect of participating securities is included in basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and undistributed earnings when the two-class method is more dilutive than the treasury stock method. At
Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the years ended December 31, 2019, 2018, and 2017 are as follows (in thousands, except per share and 2016, there were 0.3 million, 0.2 million and 0.2 million sharesper unit data):
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
Basic and dilutive net income attributable to Aimco common stockholders | $ | 466,144 |
|
| $ | 656,597 |
|
| $ | 306,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator - shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average Common Stock outstanding |
| 147,718 |
|
|
| 151,152 |
|
|
| 151,595 |
|
Dilutive share equivalents outstanding |
| 226 |
|
|
| 182 |
|
|
| 465 |
|
Dilutive weighted-average Common Stock outstanding |
| 147,944 |
|
|
| 151,334 |
|
|
| 152,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic | $ | 3.16 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
Earnings per share – dilutive | $ | 3.15 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-dilutive share equivalents outstanding |
| — |
|
|
| 269 |
|
|
| 184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per unit |
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
Basic and dilutive net income attributable to the Aimco Operating Partnership's common unitholders | $ | 492,177 |
|
| $ | 690,874 |
|
| $ | 321,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator - units |
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common partnership units outstanding |
| 155,882 |
|
|
| 158,890 |
|
|
| 158,793 |
|
Dilutive partnership unit equivalents outstanding |
| 335 |
|
|
| 183 |
|
|
| 464 |
|
Dilutive weighted-average common partnership units outstanding |
| 156,217 |
|
|
| 159,073 |
|
|
| 159,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per unit – basic | $ | 3.16 |
|
| $ | 4.35 |
|
| $ | 2.02 |
|
Earnings per unit – dilutive | $ | 3.15 |
|
| $ | 4.34 |
|
| $ | 2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-dilutive partnership unit equivalents outstanding |
| — |
|
|
| 269 |
|
|
| 184 |
|
F-34
As discussed in
Note 7,Note 1112 — Fair Value Measurements
Recurring Fair Value Measurements
We measure at fair value on a recurring basis our investment in the securitization trust that holds certain of our property debt, which we classify as AFS debt securities.
Our investments in AFS debt securities are classified within Level 2 of the GAAP fair value hierarchy. We estimate the fair value of these investments using an income and market approach with primarily observable inputs, including yields and other information regarding similar types of investments, and adjusted for certain unobservable inputs specific to these investments. The fair value of the positions that pay interest currently typically moves in an inverse relationship with movements in interest rates. The fair value of the first loss position is primarily correlated to collateral quality and demand for similar subordinate commercial mortgage-backed securities.
The following table summarizes fair value for our AFS debt securities as of December 31, 2019 and 2018 (in thousands):
| As of December 31, |
| |||||||||||||||||||||||||||||
| 2019 |
|
| 2018 |
| ||||||||||||||||||||||||||
| Total Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||
AFS debt securities | $ | 94,251 |
|
| $ | — |
|
| $ | 94,251 |
|
| $ | — |
|
| $ | 88,457 |
|
| $ | — |
|
| $ | 88,457 |
|
| $ | — |
|
Non-Recurring Fair Value Disclosures
We believe that the carrying valuesvalue of the consolidated amounts of cash and cash equivalents, accounts receivables and payables approximatesapproximated their fair value atas of December 31, 20182019 and 2017,2018, due to their relatively short-term nature and high probability of realization. The carrying amountamounts of seller financing notes receivable and the revolving credit facility approximated their estimated fair value atas of December 31, 2018. The carrying amount of the total indebtedness associated with our Real Estate portfolio approximated its estimated fair value at December 31, 2018 and 2017.2019. We estimate the fair value of our seller financing notes and our consolidatednon-recourse property debt using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, collateral quality and loan to value ratios on similarly encumbered apartment communities within our portfolio. We classify the fair value of our non-recourse property debt and seller financing notes within Level 32 of the GAAP valuation hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.
The following table summarizes carrying value and fair value of our non-recourse property debt as of December 31, 2019 and 2018 (in thousands):
| As of December 31, |
| |||||||||||||
| 2019 |
|
| 2018 |
| ||||||||||
| Carrying Value |
|
| Fair Value |
|
| Carrying Value |
|
| Fair Value |
| ||||
Non-recourse property debt | $ | 4,251,339 |
|
| $ | 4,298,630 |
|
| $ | 3,937,000 |
|
| $ | 3,893,171 |
|
Note 1213 — Business Segments
In 2019, as a result of the 2018 sale of the Asset Management business, we revised the information regularly reviewed by our chief executive officer, who is our chief operating decision maker, to assess our operating performance. We have determined we have 4 segments: Same Store, Redevelopment and Development, Acquisition, and Other Real Estate.
Our Same Store segment includes communities that have reached a stabilized level of operations as of the beginning of a two-year comparable period and maintained it throughout the current and comparable prior year, and are not expected to be sold
F-35
within 12 months. Our Redevelopment and Development segment includes apartment communities that are currently under construction that have not achieved a stabilized level of operations, and those that have been completed in recent years that have not achieved and maintained stabilized operations for both the current and comparable prior year. Our Acquisition segment includes communities that we have acquired since the beginning of a two-year comparable period. Our Other Real Estate segment primarily includes communities that are subject to limitations on rent increases, communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale, certain retail spaces and 1001 Brickell Bay Drive.
Our chief operating decision maker uses proportionate property net operating income to assess the operating performance of our apartment communities. Proportionate property net operating income is defined as our share of rental and other property revenuerevenues, excluding utility costs reimbursed by residents, less our share of property operating expenses, including real estate taxes,net of utility reimbursements, for consolidated apartment communities we own and manage. Beginning in 2018, we exclude from rental and other property revenues the amount of utilities cost reimbursed by residents and reflect such amount as a reduction of the related utility expense within property operating expenses in our evaluation of segment results.communities. In our consolidated statements of operation,operations, utility reimbursements are included in rental and other property revenues attributable to real estate, in accordance with GAAP. The 2017 and 2016 tables below have been revised to conform to this presentation.
As of December 31, 2018, for2019, our Same Store segment performance evaluation,included 91 consolidated apartment communities with 26,649 apartment homes; our Redevelopment and Development segment included 7 consolidated communities with 3,143 homes; our Acquisition segment included 7 consolidated communities with 1,590 homes; and our Other Real Estate segment included 13015 consolidated apartment communities with 36,407 apartment1,315 homes and excluded four1 office building.
The following tables present the revenues, proportionate property net operating income and income before income tax benefit of our segments on a proportionate basis and excluding our proportionate share of 4 apartment communities with 142 apartment homes that we neither manage nor consolidate.
| Same Store |
|
| Redevelopment and Development |
|
| Acquisition |
|
| Other Real Estate |
|
| Proportionate and Other Adjustments (1) |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| |||||||
Year ended December 31, 2019: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues | $ | 691,379 |
|
| $ | 75,522 |
|
| $ | 42,038 |
|
| $ | 45,105 |
|
| $ | 33,450 |
|
| $ | 26,800 |
|
| $ | 914,294 |
|
Property operating expenses attributable to real estate |
| 181,802 |
|
|
| 27,919 |
|
|
| 11,715 |
|
|
| 17,717 |
|
|
| 31,140 |
|
|
| 40,928 |
|
|
| 311,221 |
|
Other operating expenses not allocated to segments (3) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 446,300 |
|
|
| 446,300 |
|
Total operating expenses |
| 181,802 |
|
|
| 27,919 |
|
|
| 11,715 |
|
|
| 17,717 |
|
|
| 31,140 |
|
|
| 487,228 |
|
|
| 757,521 |
|
Proportionate property net operating income |
| 509,577 |
|
|
| 47,603 |
|
|
| 30,323 |
|
|
| 27,388 |
|
|
| 2,310 |
|
|
| (460,428 | ) |
|
| 156,773 |
|
Other items included in income before income tax benefit (4) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 348,119 |
|
|
| 348,119 |
|
Income before income tax benefit | $ | 509,577 |
|
| $ | 47,603 |
|
| $ | 30,323 |
|
| $ | 27,388 |
|
| $ | 2,310 |
|
| $ | (112,309 | ) |
| $ | 504,892 |
|
| Same Store |
|
| Redevelopment and Development |
|
| Acquisition |
|
| Other Real Estate |
|
| Proportionate and Other Adjustments (1) |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| |||||||
Year ended December 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues | $ | 665,835 |
|
| $ | 76,687 |
|
| $ | 27,923 |
|
| $ | 37,647 |
|
| $ | 31,442 |
|
| $ | 132,876 |
|
| $ | 972,410 |
|
Property operating expenses attributable to real estate |
| 177,466 |
|
|
| 27,836 |
|
|
| 7,689 |
|
|
| 14,910 |
|
|
| 29,323 |
|
|
| 50,677 |
|
|
| 307,901 |
|
Other operating expenses not allocated to segments (3) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 448,753 |
|
|
| 448,753 |
|
Total operating expenses |
| 177,466 |
|
|
| 27,836 |
|
|
| 7,689 |
|
|
| 14,910 |
|
|
| 29,323 |
|
|
| 499,430 |
|
|
| 756,654 |
|
Proportionate property net operating income |
| 488,369 |
|
|
| 48,851 |
|
|
| 20,234 |
|
|
| 22,737 |
|
|
| 2,119 |
|
|
| (366,554 | ) |
|
| 215,756 |
|
Other items included in income before income tax benefit (4) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 487,820 |
|
|
| 487,820 |
|
Income before income tax benefit | $ | 488,369 |
|
| $ | 48,851 |
|
| $ | 20,234 |
|
| $ | 22,737 |
|
| $ | 2,119 |
|
| $ | 121,266 |
|
| $ | 703,576 |
|
F-36
| Same Store |
|
| Redevelopment and Development |
|
| Acquisition |
|
| Other Real Estate |
|
| Proportionate and Other Adjustments (1) |
|
| Corporate and Amounts Not Allocated to Segments (2) |
|
| Consolidated |
| |||||||
Year ended December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues | $ | 626,311 |
|
| $ | 72,995 |
|
| $ | — |
|
| $ | 36,869 |
|
| $ | 39,776 |
|
| $ | 229,486 |
|
| $ | 1,005,437 |
|
Property operating expenses attributable to real estate |
| 171,167 |
|
|
| 26,471 |
|
|
| — |
|
|
| 14,121 |
|
|
| 29,782 |
|
|
| 77,585 |
|
|
| 319,126 |
|
Other operating expenses not allocated to segments (3) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 492,328 |
|
|
| 492,328 |
|
Total operating expenses |
| 171,167 |
|
|
| 26,471 |
|
|
| — |
|
|
| 14,121 |
|
|
| 29,782 |
|
|
| 569,913 |
|
|
| 811,454 |
|
Proportionate property net operating income |
| 455,144 |
|
|
| 46,524 |
|
|
| — |
|
|
| 22,748 |
|
|
| 9,994 |
|
|
| (340,427 | ) |
|
| 193,983 |
|
Other items included in income before income tax benefit (4) |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 122,260 |
|
|
| 122,260 |
|
Income before income tax benefit | $ | 455,144 |
|
| $ | 46,524 |
|
| $ | — |
|
| $ | 22,748 |
|
| $ | 9,994 |
|
| $ | (218,167 | ) |
| $ | 316,243 |
|
| Real Estate | Proportionate and Other Adjustments (1) | Corporate and Amounts Not Allocated to Reportable Segment (2) | Consolidated | ||||||||||||
| Year Ended December 31, 2018: | |||||||||||||||
| Rental and other property revenues attributable to Real Estate | $ | 854,240 | $ | 34,282 | $ | 34,071 | $ | 922,593 | |||||||
| Rental and other property revenues of partnerships served by Asset Management business | — | — | 42,830 | 42,830 | |||||||||||
| Tax credit and transaction revenues | — | — | 6,987 | 6,987 | |||||||||||
| Total revenues | 854,240 | 34,282 | 83,888 | 972,410 | |||||||||||
| Property operating expenses attributable to Real Estate | 238,860 | 32,169 | 36,872 | 307,901 | |||||||||||
| Property operating expenses of partnerships served by Asset Management business | — | — | 20,921 | 20,921 | |||||||||||
Other operating expenses not allocated to reportable segment (3) | — | — | 427,832 | 427,832 | |||||||||||
| Total operating expenses | 238,860 | 32,169 | 485,625 | 756,654 | |||||||||||
| Proportionate property net operating income | 615,380 | — | — | — | |||||||||||
| Other items included in income before income tax benefit (4) | — | — | 487,820 | 487,820 | |||||||||||
| Income before income tax benefit | $ | 615,380 | $ | 2,113 | $ | 86,083 | $ | 703,576 | |||||||
| Real Estate | Proportionate and Other Adjustments (1) | Corporate and Amounts Not Allocated to Reportable Segment (2) | Consolidated | ||||||||||||
| Year Ended December 31, 2017: | |||||||||||||||
| Rental and other property revenues attributable to Real Estate | $ | 781,194 | $ | 43,043 | $ | 93,911 | $ | 918,148 | |||||||
| Rental and other property revenues of partnerships served by Asset Management business | — | — | 74,046 | 74,046 | |||||||||||
| Tax credit and transaction revenues | — | — | 13,243 | 13,243 | |||||||||||
| Total revenues | 781,194 | 43,043 | 181,200 | 1,005,437 | |||||||||||
| Property operating expenses attributable to Real Estate | 222,731 | 32,432 | 63,963 | 319,126 | |||||||||||
| Property operating expenses of partnerships served by Asset Management business | — | — | 35,458 | 35,458 | |||||||||||
Other operating expenses not allocated to reportable segment (3) | — | — | 456,870 | 456,870 | |||||||||||
| Total operating expenses | 222,731 | 32,432 | 556,291 | 811,454 | |||||||||||
| Proportionate property net operating income | 558,463 | — | — | — | |||||||||||
| Other items included in income before income tax benefit (4) | — | — | 122,260 | 122,260 | |||||||||||
| Income before income tax benefit | $ | 558,463 | $ | 10,611 | $ | (252,831 | ) | $ | 316,243 | ||||||
| Real Estate | Proportionate and Other Adjustments (1) | Corporate and Amounts Not Allocated to Reportable Segment (2) | Consolidated | ||||||||||||
| Year Ended December 31, 2016: | |||||||||||||||
| Rental and other property revenues attributable to Real Estate | $ | 720,302 | $ | 55,257 | $ | 124,332 | $ | 899,891 | |||||||
| Rental and other property revenues of partnerships served by Asset Management business | — | — | 74,640 | 74,640 | |||||||||||
| Tax credit and transaction revenues | — | — | 21,323 | 21,323 | |||||||||||
| Total revenues | 720,302 | 55,257 | 220,295 | 995,854 | |||||||||||
| Property operating expenses attributable to Real Estate | 210,426 | 35,468 | 72,063 | 317,957 | |||||||||||
| Property operating expenses of partnerships served by Asset Management business | — | — | 36,956 | 36,956 | |||||||||||
Other operating expenses not allocated to reportable segment (3) | — | — | 394,145 | 394,145 | |||||||||||
| Total operating expenses | 210,426 | 35,468 | 503,164 | 749,058 | |||||||||||
| Proportionate property net operating income | 509,876 | — | — | — | |||||||||||
| Other items included in income before income tax benefit (4) | — | — | 217,635 | 217,635 | |||||||||||
| Income before income tax benefit | $ | 509,876 | $ | 19,789 | $ | (65,234 | ) | $ | 464,431 | ||||||
(1) | |
Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of consolidated apartment communities in our |
(2) | |
Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any, and the operating results of |
(3) | |
Other operating expenses not allocated to |
(4) | |
Other items included in income before income tax benefit primarily consists of gain on dispositions of real estate and the Asset Management business and interest expense. |
The assets of our reportable segmentsegments and the consolidated assets not allocated to our segment aresegments were as follows (in thousands):
| December 31, 2019 |
|
| December 31, 2018 |
| ||
Same Store | $ | 3,982,586 |
|
| $ | 4,068,880 |
|
Redevelopment and Development |
| 946,390 |
|
|
| 792,126 |
|
Acquisition |
| 623,037 |
|
|
| 507,190 |
|
Other Real Estate |
| 647,725 |
|
|
| 327,092 |
|
Corporate and other assets (1) |
| 629,001 |
|
|
| 494,716 |
|
Total consolidated assets | $ | 6,828,739 |
|
| $ | 6,190,004 |
|
| December 31, | |||||||
| 2018 | 2017 | ||||||
| Real Estate | $ | 5,849,638 | $ | 5,346,390 | |||
| Corporate and other assets (1) | 340,366 | 732,650 | |||||
| Total consolidated assets | $ | 6,190,004 | $ | 6,079,040 | |||
(1) | |
Includes the assets not allocated to our |
For the years ended December 31, 2019, 2018, 2017 and 2016,2017, capital additions related to our Real Estate segment totaled $338.8 million, $321.9 million and $312.8 million, respectively.
| December 31, | |||||
| 2018 | 2017 | ||||
| Real Estate portfolio: | |||||
| VIEs with interests in apartment communities | 9 | 14 | |||
| Apartment communities owned by VIEs | 9 | 14 | |||
| Apartment homes in communities owned by VIEs | 3,592 | 4,321 | |||
| Consolidated partnerships served by the Asset Management business: | |||||
| VIEs with interests in apartment communities | — | 49 | |||
| Apartment communities owned by VIEs | — | 37 | |||
| Apartment homes in communities owned by VIEs | — | 5,893 | |||
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Same Store | $ | 153,944 |
|
| $ | 171,869 |
|
| $ | 215,130 |
|
Redevelopment and Development |
| 194,498 |
|
|
| 138,103 |
|
|
| 84,712 |
|
Acquisition |
| 33,122 |
|
|
| 14,228 |
|
|
| — |
|
Other Real Estate |
| 20,011 |
|
|
| 6,314 |
|
|
| 12,044 |
|
Total capital additions | $ | 401,575 |
|
| $ | 330,514 |
|
| $ | 311,886 |
|
| December 31, | |||||||
| 2018 | 2017 | ||||||
| Real Estate portfolio: | |||||||
| Assets | |||||||
| Net real estate | $ | 488,127 | $ | 529,898 | |||
| Cash and cash equivalents | 15,416 | 16,111 | |||||
| Restricted cash | 4,461 | 4,798 | |||||
| Liabilities | |||||||
| Non-recourse property debt | 322,685 | 412,205 | |||||
| Accrued liabilities and other | 13,576 | 10,623 | |||||
| Consolidated partnerships served by the Asset Management business: | |||||||
| Assets | |||||||
| Real estate, net | — | 215,580 | |||||
| Cash and cash equivalents | — | 15,931 | |||||
| Restricted cash | — | 30,107 | |||||
| Liabilities | |||||||
| Non-recourse property debt | — | 220,356 | |||||
| Accrued liabilities and other | — | 20,241 | |||||
Aimco
Aimco’s summarized unaudited consolidated quarterly information for the years ended December 31, 20182019 and 2017,2018, is provided below (in thousands, except per share amounts):
|
| Quarter |
| |||||||||||||
2019 |
| First |
|
| Second |
|
| Third |
|
| Fourth |
| ||||
Total revenues |
| $ | 230,235 |
|
| $ | 224,200 |
|
| $ | 229,827 |
|
| $ | 230,032 |
|
Net income |
|
| 291,295 |
|
|
| 69,996 |
|
|
| 3,970 |
|
|
| 142,766 |
|
Net income attributable to Aimco common stockholders |
|
| 271,568 |
|
|
| 59,234 |
|
|
| 2,003 |
|
|
| 133,339 |
|
Net income attributable to Aimco common stockholders per common share – basic |
| $ | 1.88 |
|
| $ | 0.40 |
|
| $ | 0.01 |
|
| $ | 0.90 |
|
Net income attributable to Aimco common stockholders per common share – diluted |
| $ | 1.88 |
|
| $ | 0.40 |
|
| $ | 0.01 |
|
| $ | 0.90 |
|
|
| Quarter |
| |||||||||||||
2018 |
| First |
|
| Second |
|
| Third |
|
| Fourth |
| ||||
Total revenues |
| $ | 247,720 |
|
| $ | 250,187 |
|
| $ | 242,481 |
|
| $ | 232,022 |
|
Net income |
|
| 95,690 |
|
|
| 7,156 |
|
|
| 603,917 |
|
|
| 9,840 |
|
Net income attributable to Aimco common stockholders |
|
| 81,525 |
|
|
| 2,817 |
|
|
| 567,029 |
|
|
| 5,226 |
|
Net income attributable to Aimco common stockholders per common share – basic |
| $ | 0.54 |
|
| $ | 0.02 |
|
| $ | 3.73 |
|
| $ | 0.04 |
|
Net income attributable to Aimco common stockholders per common share – diluted |
| $ | 0.54 |
|
| $ | 0.02 |
|
| $ | 3.73 |
|
| $ | 0.04 |
|
| Quarter | |||||||||||||||
| 2018 | First | Second | Third | Fourth | |||||||||||
| Total revenues | $ | 247,720 | $ | 250,187 | $ | 242,481 | $ | 232,022 | |||||||
| Net income | 95,690 | 7,156 | 603,917 | 9,840 | |||||||||||
| Net income attributable to Aimco common stockholders | 81,525 | 2,817 | 567,029 | 5,226 | |||||||||||
Net income attributable to Aimco common stockholders per common share - basic | $ | 0.52 | $ | 0.02 | $ | 3.62 | $ | 0.03 | |||||||
Net income attributable to Aimco common stockholders per common share - diluted | $ | 0.52 | $ | 0.02 | $ | 3.61 | $ | 0.03 | |||||||
| Quarter | |||||||||||||||
| 2017 | First | Second | Third | Fourth | |||||||||||
| Total revenues | $ | 246,481 | $ | 249,092 | $ | 254,635 | $ | 255,229 | |||||||
| Net income | 17,155 | 21,591 | 22,144 | 286,189 | |||||||||||
| Net income attributable to Aimco common stockholders | 11,491 | 15,843 | 17,430 | 262,097 | |||||||||||
Net income attributable to Aimco common stockholders per common share - basic | $ | 0.07 | $ | 0.10 | $ | 0.11 | $ | 1.68 | |||||||
Net income attributable to Aimco common stockholders per common share - diluted | $ | 0.07 | $ | 0.10 | $ | 0.11 | $ | 1.67 | |||||||
The Aimco Operating Partnership
The Aimco Operating Partnership’s summarized unaudited consolidated quarterly information for the years ended December 31, 20182019 and 2017,2018, is provided below (in thousands, except per unit amounts):
|
| Quarter |
| |||||||||||||
2019 |
| First |
|
| Second |
|
| Third |
|
| Fourth |
| ||||
Total revenues |
| $ | 230,235 |
|
| $ | 224,200 |
|
| $ | 229,827 |
|
| $ | 230,032 |
|
Net income |
|
| 291,295 |
|
|
| 69,996 |
|
|
| 3,970 |
|
|
| 142,766 |
|
Net income attributable to the Partnership’s common unitholders |
|
| 286,639 |
|
|
| 62,817 |
|
|
| 2,138 |
|
|
| 140,583 |
|
Net income attributable to the Partnership’s common unitholders per common unit – basic |
| $ | 1.88 |
|
| $ | 0.40 |
|
| $ | 0.01 |
|
| $ | 0.90 |
|
Net income attributable to the Partnership’s common unitholders per common unit – diluted |
| $ | 1.88 |
|
| $ | 0.40 |
|
| $ | 0.01 |
|
| $ | 0.90 |
|
|
| Quarter |
| |||||||||||||
2018 |
| First |
|
| Second |
|
| Third |
|
| Fourth |
| ||||
Total revenues |
| $ | 247,720 |
|
| $ | 250,187 |
|
| $ | 242,481 |
|
| $ | 232,022 |
|
Net income |
|
| 95,690 |
|
|
| 7,156 |
|
|
| 603,917 |
|
|
| 9,840 |
|
Net income attributable to the Partnership’s common unitholders |
|
| 85,274 |
|
|
| 2,949 |
|
|
| 597,100 |
|
|
| 5,551 |
|
Net income attributable to the Partnership’s common unitholders per common unit – basic |
| $ | 0.54 |
|
| $ | 0.02 |
|
| $ | 3.73 |
|
| $ | 0.04 |
|
Net income attributable to the Partnership’s common unitholders per common unit – diluted |
| $ | 0.54 |
|
| $ | 0.02 |
|
| $ | 3.72 |
|
| $ | 0.04 |
|
| Quarter | |||||||||||||||
| 2018 | First | Second | Third | Fourth | |||||||||||
| Total revenues | $ | 247,720 | $ | 250,187 | $ | 242,481 | $ | 232,022 | |||||||
| Net income | 95,690 | 7,156 | 603,917 | 9,840 | |||||||||||
| Net income attributable to the Partnership’s common unitholders | 85,274 | 2,949 | 597,100 | 5,551 | |||||||||||
| Net income attributable to the Partnership’s common unitholders per common unit - basic | $ | 0.52 | $ | 0.02 | $ | 3.62 | $ | 0.03 | |||||||
| Net income attributable to the Partnership’s common unitholders per common unit - diluted | $ | 0.52 | $ | 0.02 | $ | 3.61 | $ | 0.03 | |||||||
| Quarter | |||||||||||||||
| 2017 | First | Second | Third | Fourth | |||||||||||
| Total revenues | $ | 246,481 | $ | 249,092 | $ | 254,635 | $ | 255,229 | |||||||
| Net income | 17,155 | 21,591 | 22,144 | 286,189 | |||||||||||
| Net income attributable to the Partnership’s common unitholders | 12,047 | 16,627 | 18,246 | 274,380 | |||||||||||
| Net income attributable to the Partnership’s common unitholders per common unit - basic | $ | 0.07 | $ | 0.10 | $ | 0.11 | $ | 1.68 | |||||||
| Net income attributable to the Partnership’s common unitholders per common unit - diluted | $ | 0.07 | $ | 0.10 | $ | 0.11 | $ | 1.67 | |||||||
| (2) | |||||||||||||||||||||||||||||||||
| (1) | Initial Cost | Cost Capitalized | December 31, 2018 | ||||||||||||||||||||||||||||||
| Apartment | Date | Year | Apartment | Buildings and | Subsequent to | Buildings and | (3) | Accumulated | Total Cost | (4) | |||||||||||||||||||||||
| Apartment Community Name | Type | Consolidated | Location | Built | Homes | Land | Improvements | Consolidation | Land | Improvements | Total | Depreciation (AD) | Net of AD | Encumbrances | |||||||||||||||||||
| Real Estate Segment: | |||||||||||||||||||||||||||||||||
| 100 Forest Place | High Rise | Dec 1997 | Oak Park, IL | 1987 | 234 | $ | 2,664 | $ | 18,815 | $ | 10,553 | $ | 2,664 | $ | 29,368 | $ | 32,032 | $ | (15,640 | ) | $ | 16,392 | $ | 35,048 | |||||||||
| 118-122 West 23rd Street | High Rise | Jun 2012 | New York, NY | 1987 | 42 | 14,985 | 23,459 | 6,752 | 14,985 | 30,211 | 45,196 | (9,121 | ) | 36,075 | 17,457 | ||||||||||||||||||
| 173 E. 90th Street | High Rise | May 2004 | New York, NY | 1910 | 72 | 12,066 | 4,535 | 8,068 | 12,066 | 12,603 | 24,669 | (3,730 | ) | 20,939 | — | ||||||||||||||||||
| 182-188 Columbus Avenue | Mid Rise | Feb 2007 | New York, NY | 1910 | 32 | 19,123 | 3,300 | 5,513 | 19,123 | 8,813 | 27,936 | (3,968 | ) | 23,968 | 13,925 | ||||||||||||||||||
| 1045 on the Park Apartments Homes | Mid Rise | Jul 2013 | Atlanta, GA | 2012 | 30 | 2,793 | 6,662 | 692 | 2,793 | 7,354 | 10,147 | (1,423 | ) | 8,724 | 5,627 | ||||||||||||||||||
| 1582 First Avenue | High Rise | Mar 2005 | New York, NY | 1900 | 17 | 4,281 | 752 | 499 | 4,281 | 1,251 | 5,532 | (578 | ) | 4,954 | 2,273 | ||||||||||||||||||
| 21 Fitzsimons | Mid Rise | Aug 2014 | Aurora, CO | 2008 | 600 | 12,864 | 104,720 | 20,379 | 12,864 | 125,099 | 137,963 | (19,590 | ) | 118,373 | 90,000 | ||||||||||||||||||
| 234 East 88th Street | Mid Rise | Jan 2014 | New York, NY | 1900 | 20 | 2,448 | 4,449 | 807 | 2,448 | 5,256 | 7,704 | (1,154 | ) | 6,550 | 3,223 | ||||||||||||||||||
| 236-238 East 88th Street | High Rise | Jan 2004 | New York, NY | 1900 | 43 | 8,820 | 2,914 | 2,681 | 8,820 | 5,595 | 14,415 | (1,930 | ) | 12,485 | 10,875 | ||||||||||||||||||
| 237-239 Ninth Avenue | High Rise | Mar 2005 | New York, NY | 1900 | 36 | 8,495 | 1,866 | 3,092 | 8,495 | 4,958 | 13,453 | (2,770 | ) | 10,683 | 5,553 | ||||||||||||||||||
| 240 West 73rd Street, LLC | High Rise | Sep 2004 | New York, NY | 1900 | 200 | 68,109 | 12,140 | 11,905 | 68,109 | 24,045 | 92,154 | (9,818 | ) | 82,336 | — | ||||||||||||||||||
| 2900 on First Apartments | Mid Rise | Oct 2008 | Seattle, WA | 1989 | 135 | 19,070 | 17,518 | 33,542 | 19,070 | 51,060 | 70,130 | (25,554 | ) | 44,576 | 13,915 | ||||||||||||||||||
| 306 East 89th Street | High Rise | Jul 2004 | New York, NY | 1930 | 20 | 2,680 | 1,006 | 1,098 | 2,680 | 2,104 | 4,784 | (888 | ) | 3,896 | 1,854 | ||||||||||||||||||
| 311 & 313 East 73rd Street | Mid Rise | Mar 2003 | New York, NY | 1904 | 34 | 5,678 | 1,609 | 520 | 5,678 | 2,129 | 7,807 | (1,487 | ) | 6,320 | 3,904 | ||||||||||||||||||
| 322-324 East 61st Street | High Rise | Mar 2005 | New York, NY | 1900 | 40 | 6,372 | 2,224 | 1,512 | 6,372 | 3,736 | 10,108 | (1,830 | ) | 8,278 | 3,410 | ||||||||||||||||||
| 3400 Avenue of the Arts | Mid Rise | Mar 2002 | Costa Mesa, CA | 1987 | 770 | 57,241 | 65,506 | 80,349 | 57,241 | 145,855 | 203,096 | (86,923 | ) | 116,173 | 145,752 | ||||||||||||||||||
| 452 East 78th Street | High Rise | Jan 2004 | New York, NY | 1900 | 12 | 1,982 | 608 | 548 | 1,982 | 1,156 | 3,138 | (486 | ) | 2,652 | 2,542 | ||||||||||||||||||
| 464-466 Amsterdam & 200-210 W. 83rd Street | Mid Rise | Feb 2007 | New York, NY | 1910 | 71 | 25,553 | 7,101 | 6,070 | 25,553 | 13,171 | 38,724 | (6,031 | ) | 32,693 | 20,520 | ||||||||||||||||||
| 510 East 88th Street | High Rise | Jan 2004 | New York, NY | 1900 | 20 | 3,163 | 1,002 | 622 | 3,163 | 1,624 | 4,787 | (642 | ) | 4,145 | 2,724 | ||||||||||||||||||
| 514-516 East 88th Street | High Rise | Mar 2005 | New York, NY | 1900 | 36 | 6,282 | 2,168 | 1,593 | 6,282 | 3,761 | 10,043 | (1,619 | ) | 8,424 | 3,696 | ||||||||||||||||||
| 518 East 88th Street | Mid Rise | Jan 2014 | New York, NY | 1900 | 20 | 2,233 | 4,315 | 606 | 2,233 | 4,921 | 7,154 | (1,137 | ) | 6,017 | 2,792 | ||||||||||||||||||
| 707 Leahy | Garden | Apr 2007 | Redwood City, CA | 1973 | 110 | 15,444 | 7,909 | 7,406 | 15,444 | 15,315 | 30,759 | (6,964 | ) | 23,795 | 8,737 | ||||||||||||||||||
| 777 South Broad Street | Mid Rise | May 2018 | Philadelphia, PA | 2010 | 146 | 6,986 | 67,512 | 829 | 6,986 | 68,341 | 75,327 | (1,515 | ) | 73,812 | 57,627 | ||||||||||||||||||
| 865 Bellevue | Garden | Jul 2000 | Nashville, TN | 1972 | 326 | 3,562 | 12,037 | 23,538 | 3,562 | 35,575 | 39,137 | (23,393 | ) | 15,744 | — | ||||||||||||||||||
| Avery Row | Mid Rise | Dec 2018 | Arlington, VA | 2013 | 67 | 8,140 | 21,348 | — | 8,140 | 21,348 | 29,488 | — | 29,488 | — | |||||||||||||||||||
| Axiom | Mid Rise | Apr 2015 | Cambridge, MA | 2015 | 115 | — | 63,612 | 2,444 | — | 66,056 | 66,056 | (8,920 | ) | 57,136 | 32,978 | ||||||||||||||||||
| Bank Lofts | High Rise | Apr 2001 | Denver, CO | 1920 | 125 | 3,525 | 9,045 | 5,539 | 3,525 | 14,584 | 18,109 | (7,463 | ) | 10,646 | 10,476 | ||||||||||||||||||
| Bay Parc Plaza | High Rise | Sep 2004 | Miami, FL | 2000 | 474 | 22,680 | 41,847 | 34,053 | 22,680 | 75,900 | 98,580 | (22,485 | ) | 76,095 | 42,434 | ||||||||||||||||||
| Bay Ridge at Nashua | Garden | Jan 2003 | Nashua, NH | 1984 | 412 | 3,262 | 40,713 | 16,739 | 3,262 | 57,452 | 60,714 | (22,738 | ) | 37,976 | 51,450 | ||||||||||||||||||
| Bayberry Hill Estates | Garden | Aug 2002 | Framingham, MA | 1971 | 424 | 19,944 | 35,945 | 21,847 | 19,944 | 57,792 | 77,736 | (27,629 | ) | 50,107 | — | ||||||||||||||||||
| Bent Tree Apartments | Garden | Feb 2018 | Centreville, VA | 1986 | 748 | 46,975 | 113,695 | 7,493 | 46,975 | 121,188 | 168,163 | (4,331 | ) | 163,832 | — | ||||||||||||||||||
| Bluffs at Pacifica, The | Garden | Oct 2006 | Pacifica, CA | 1963 | 64 | 8,108 | 4,132 | 17,804 | 8,108 | 21,936 | 30,044 | (10,996 | ) | 19,048 | — | ||||||||||||||||||
| Boston Lofts | High Rise | Apr 2001 | Denver, CO | 1890 | 158 | 3,446 | 20,589 | 5,694 | 3,446 | 26,283 | 29,729 | (13,914 | ) | 15,815 | 15,303 | ||||||||||||||||||
| Boulder Creek | Garden | Jul 1994 | Boulder, CO | 1973 | 221 | 754 | 7,730 | 20,628 | 754 | 28,358 | 29,112 | (19,702 | ) | 9,410 | 38,500 | ||||||||||||||||||
| Broadcast Center | Garden | Mar 2002 | Los Angeles, CA | 1990 | 279 | 29,407 | 41,244 | 28,683 | 29,407 | 69,927 | 99,334 | (29,655 | ) | 69,679 | — | ||||||||||||||||||
| Broadway Lofts | High Rise | Sep 2012 | San Diego, CA | 1909 | 84 | 5,367 | 14,442 | 6,126 | 5,367 | 20,568 | 25,935 | (4,604 | ) | 21,331 | 11,531 | ||||||||||||||||||
| Burke Shire Commons | Garden | Mar 2001 | Burke, VA | 1986 | 360 | 4,867 | 23,617 | 17,678 | 4,867 | 41,295 | 46,162 | (24,737 | ) | 21,425 | 57,860 | ||||||||||||||||||
| (2) | |||||||||||||||||||||||||||||||||
| (1) | Initial Cost | Cost Capitalized | December 31, 2018 | ||||||||||||||||||||||||||||||
| Apartment | Date | Year | Apartment | ��Buildings and | Subsequent to | Buildings and | (3) | Accumulated | Total Cost | (4) | |||||||||||||||||||||||
| Apartment Community Name | Type | Consolidated | Location | Built | Homes | Land | Improvements | Consolidation | Land | Improvements | Total | Depreciation (AD) | Net of AD | Encumbrances | |||||||||||||||||||
| Calhoun Beach Club | High Rise | Dec 1998 | Minneapolis, MN | 1928 | 332 | 11,708 | 73,334 | 64,948 | 11,708 | 138,282 | 149,990 | (79,547 | ) | 70,443 | — | ||||||||||||||||||
| Canyon Terrace | Garden | Mar 2002 | Saugus, CA | 1984 | 130 | 7,508 | 6,601 | 6,525 | 7,508 | 13,126 | 20,634 | (6,960 | ) | 13,674 | — | ||||||||||||||||||
| Cedar Rim | Garden | Apr 2000 | Newcastle, WA | 1980 | 104 | 761 | 5,218 | 13,032 | 761 | 18,250 | 19,011 | (13,153 | ) | 5,858 | — | ||||||||||||||||||
| Charlesbank Apartment Homes | Mid Rise | Sep 2013 | Watertown, MA | 2012 | 44 | 3,399 | 11,726 | 821 | 3,399 | 12,547 | 15,946 | (2,404 | ) | 13,542 | 7,718 | ||||||||||||||||||
| Chestnut Hall | High Rise | Oct 2006 | Philadelphia, PA | 1923 | 315 | 12,338 | 14,299 | 12,074 | 12,338 | 26,373 | 38,711 | (12,144 | ) | 26,567 | 36,653 | ||||||||||||||||||
| Chimneys of Cradle Rock | Garden | Jun 2004 | Columbia, MD | 1979 | 198 | 2,040 | 8,108 | 1,116 | 2,040 | 9,224 | 11,264 | (4,206 | ) | 7,058 | — | ||||||||||||||||||
| Columbus Avenue | Mid Rise | Sep 2003 | New York, NY | 1880 | 59 | 35,527 | 9,450 | 9,117 | 35,527 | 18,567 | 54,094 | (10,600 | ) | 43,494 | 25,205 | ||||||||||||||||||
| Creekside | Garden | Jan 2000 | Denver, CO | 1974 | 328 | 3,189 | 12,698 | 7,450 | 3,189 | 20,148 | 23,337 | (13,072 | ) | 10,265 | 11,325 | ||||||||||||||||||
| Crescent at West Hollywood, The | Mid Rise | Mar 2002 | West Hollywood, CA | 1985 | 130 | 15,765 | 10,215 | 8,411 | 15,765 | 18,626 | 34,391 | (12,166 | ) | 22,225 | 40,000 | ||||||||||||||||||
| Elm Creek | Mid Rise | Dec 1997 | Elmhurst, IL | 1987 | 400 | 5,910 | 30,830 | 31,950 | 5,910 | 62,780 | 68,690 | (32,993 | ) | 35,697 | 51,341 | ||||||||||||||||||
| Evanston Place | High Rise | Dec 1997 | Evanston, IL | 1990 | 190 | 3,232 | 25,546 | 16,214 | 3,232 | 41,760 | 44,992 | (19,152 | ) | 25,840 | — | ||||||||||||||||||
| Farmingdale | Mid Rise | Oct 2000 | Darien, IL | 1975 | 240 | 11,763 | 15,174 | 11,173 | 11,763 | 26,347 | 38,110 | (13,618 | ) | 24,492 | 13,106 | ||||||||||||||||||
| Flamingo Towers | High Rise | Sep 1997 | Miami Beach, FL | 1960 | 1,324 | 32,427 | 48,808 | 339,187 | 32,427 | 387,995 | 420,422 | (174,249 | ) | 246,173 | 103,152 | ||||||||||||||||||
| Four Quarters Habitat | Garden | Jan 2006 | Miami, FL | 1976 | 336 | 2,379 | 17,199 | 30,286 | 2,379 | 47,485 | 49,864 | (27,112 | ) | 22,752 | 51,603 | ||||||||||||||||||
| Foxchase | Garden | Dec 1997 | Alexandria, VA | 1940 | 2,113 | 15,496 | 96,062 | 52,254 | 15,496 | 148,316 | 163,812 | (85,298 | ) | 78,514 | 223,626 | ||||||||||||||||||
| Georgetown | Garden | Aug 2002 | Framingham, MA | 1964 | 207 | 12,351 | 13,168 | 3,996 | 12,351 | 17,164 | 29,515 | (8,281 | ) | 21,234 | 14,697 | ||||||||||||||||||
| Georgetown II | Mid Rise | Aug 2002 | Framingham, MA | 1958 | 72 | 4,577 | 4,057 | 2,118 | 4,577 | 6,175 | 10,752 | (3,483 | ) | 7,269 | — | ||||||||||||||||||
| Heritage Park Escondido | Garden | Oct 2000 | Escondido, CA | 1986 | 196 | 1,055 | 7,565 | 2,572 | 1,055 | 10,137 | 11,192 | (6,993 | ) | 4,199 | 6,129 | ||||||||||||||||||
| Heritage Park Livermore | Garden | Oct 2000 | Livermore, CA | 1988 | 167 | — | 10,209 | 1,850 | — | 12,059 | 12,059 | (8,176 | ) | 3,883 | 6,353 | ||||||||||||||||||
| Heritage Village Anaheim | Garden | Oct 2000 | Anaheim, CA | 1986 | 196 | 1,832 | 8,541 | 2,084 | 1,832 | 10,625 | 12,457 | (6,999 | ) | 5,458 | 7,441 | ||||||||||||||||||
| Hidden Cove | Garden | Jul 1998 | Escondido, CA | 1983 | 334 | 3,043 | 17,616 | 10,802 | 3,043 | 28,418 | 31,461 | (16,205 | ) | 15,256 | 51,840 | ||||||||||||||||||
| Hidden Cove II | Garden | Jul 2007 | Escondido, CA | 1986 | 118 | 12,849 | 6,530 | 5,260 | 12,849 | 11,790 | 24,639 | (5,263 | ) | 19,376 | 20,160 | ||||||||||||||||||
| Hillcreste | Garden | Mar 2002 | Century City, CA | 1989 | 315 | 35,862 | 47,216 | 13,194 | 35,862 | 60,410 | 96,272 | (27,374 | ) | 68,898 | 63,479 | ||||||||||||||||||
| Hillmeade | Garden | Nov 1994 | Nashville, TN | 1986 | 288 | 2,872 | 16,070 | 20,200 | 2,872 | 36,270 | 39,142 | (21,006 | ) | 18,136 | 27,321 | ||||||||||||||||||
| Horizons West Apartments | Mid Rise | Dec 2006 | Pacifica, CA | 1970 | 78 | 8,887 | 6,377 | 1,634 | 8,887 | 8,011 | 16,898 | (3,689 | ) | 13,209 | — | ||||||||||||||||||
| Hunt Club | Garden | Sep 2000 | Gaithersburg, MD | 1986 | 336 | 17,859 | 13,149 | 14,154 | 17,859 | 27,303 | 45,162 | (16,083 | ) | 29,079 | — | ||||||||||||||||||
| Hyde Park Tower | High Rise | Oct 2004 | Chicago, IL | 1990 | 155 | 4,731 | 14,927 | 12,334 | 4,731 | 27,261 | 31,992 | (9,569 | ) | 22,423 | 12,620 | ||||||||||||||||||
| Indian Oaks | Garden | Mar 2002 | Simi Valley, CA | 1986 | 254 | 24,523 | 15,801 | 11,246 | 24,523 | 27,047 | 51,570 | (13,180 | ) | 38,390 | 27,596 | ||||||||||||||||||
| Indigo | High Rise | Aug 2016 | Redwood City, CA | 2016 | 463 | 26,932 | 296,116 | 1,771 | 26,932 | 297,887 | 324,819 | (24,707 | ) | 300,112 | 138,430 | ||||||||||||||||||
| Island Club | Garden | Oct 2000 | Oceanside, CA | 1986 | 592 | 18,027 | 28,654 | 18,740 | 18,027 | 47,394 | 65,421 | (30,320 | ) | 35,101 | 94,967 | ||||||||||||||||||
| Key Towers | High Rise | Apr 2001 | Alexandria, VA | 1964 | 140 | 1,526 | 7,050 | 7,781 | 1,526 | 14,831 | 16,357 | (11,892 | ) | 4,465 | — | ||||||||||||||||||
| Lakeside | Garden | Oct 1999 | Lisle, IL | 1972 | 568 | 5,840 | 27,937 | 22,408 | 5,840 | 50,345 | 56,185 | (33,582 | ) | 22,603 | 25,090 | ||||||||||||||||||
| Latrobe | High Rise | Jan 2003 | Washington, DC | 1980 | 175 | 3,459 | 9,103 | 12,715 | 3,459 | 21,818 | 25,277 | (11,916 | ) | 13,361 | 26,758 | ||||||||||||||||||
| Laurel Crossing | Garden | Jan 2006 | San Mateo, CA | 1971 | 418 | 49,474 | 17,756 | 14,166 | 49,474 | 31,922 | 81,396 | (15,757 | ) | 65,639 | — | ||||||||||||||||||
| Lincoln Place (5) | Garden | Oct 2004 | Venice, CA | 1951 | 795 | 128,332 | 10,439 | 337,267 | 44,197 | 347,706 | 391,903 | (121,677 | ) | 270,226 | 187,723 | ||||||||||||||||||
| Locust on the Park | High Rise | May 2018 | Philadelphia, PA | 1911 | 152 | 5,292 | 53,823 | 2,474 | 5,292 | 56,297 | 61,589 | (1,183 | ) | 60,406 | 35,728 | ||||||||||||||||||
| Lodge at Chattahoochee, The | Garden | Oct 1999 | Sandy Springs, GA | 1970 | 312 | 2,335 | 16,370 | 16,809 | 2,335 | 33,179 | 35,514 | (22,375 | ) | 13,139 | — | ||||||||||||||||||
| Malibu Canyon | Garden | Mar 2002 | Calabasas, CA | 1986 | 698 | 69,834 | 53,438 | 37,919 | 69,834 | 91,357 | 161,191 | (45,222 | ) | 115,969 | 105,367 | ||||||||||||||||||
| Mariners Cove | Garden | Mar 2002 | San Diego, CA | 1984 | 500 | — | 66,861 | 13,317 | — | 80,178 | 80,178 | (39,035 | ) | 41,143 | — | ||||||||||||||||||
| Meadow Creek | Garden | Jul 1994 | Boulder, CO | 1968 | 332 | 1,435 | 24,533 | 9,602 | 1,435 | 34,135 | 35,570 | (19,285 | ) | 16,285 | — | ||||||||||||||||||
| Merrill House | High Rise | Jan 2000 | Falls Church, VA | 1964 | 159 | 1,836 | 10,831 | 7,657 | 1,836 | 18,488 | 20,324 | (10,492 | ) | 9,832 | — | ||||||||||||||||||
| Mezzo | High Rise | Mar 2015 | Atlanta, GA | 2008 | 94 | 4,292 | 34,178 | 1,250 | 4,292 | 35,428 | 39,720 | (5,484 | ) | 34,236 | 23,496 | ||||||||||||||||||
| Monterey Grove | Garden | Jun 2008 | San Jose, CA | 1999 | 224 | 34,325 | 21,939 | 8,674 | 34,325 | 30,613 | 64,938 | (12,039 | ) | 52,899 | — | ||||||||||||||||||
| Ocean House on Prospect | Mid Rise | Apr 2013 | La Jolla, CA | 1970 | 53 | 12,528 | 18,805 | 15,089 | 12,528 | 33,894 | 46,422 | (6,592 | ) | 39,830 | 12,745 | ||||||||||||||||||
| One Canal | High Rise | Sep 2013 | Boston, MA | 2016 | 310 | — | 15,873 | 179,912 | — | 195,785 | 195,785 | (20,623 | ) | 175,162 | 110,310 | ||||||||||||||||||
| Pacific Bay Vistas (5) | Garden | Mar 2001 | San Bruno, CA | 1987 | 308 | 28,694 | 62,460 | 39,067 | 23,354 | 101,527 | 124,881 | (35,131 | ) | 89,750 | 67,826 | ||||||||||||||||||
| Pacifica Park | Garden | Jul 2006 | Pacifica, CA | 1977 | 104 | 12,970 | 6,579 | 7,879 | 12,970 | 14,458 | 27,428 | (6,565 | ) | 20,863 | 28,613 | ||||||||||||||||||
| (2) | |||||||||||||||||||||||||||||||||
| (1) | Initial Cost | Cost Capitalized | December 31, 2018 | ||||||||||||||||||||||||||||||
| Apartment | Date | Year | Apartment | Buildings and | Subsequent to | Buildings and | (3) | Accumulated | Total Cost | (4) | |||||||||||||||||||||||
| Apartment Community Name | Type | Consolidated | Location | Built | Homes | Land | Improvements | Consolidation | Land | Improvements | Total | Depreciation (AD) | Net of AD | Encumbrances | |||||||||||||||||||
| Palazzo at Park La Brea, The | Mid Rise | Feb 2004 | Los Angeles, CA | 2002 | 521 | 48,362 | 125,464 | 45,176 | 48,362 | 170,640 | 219,002 | (80,075 | ) | 138,927 | 168,654 | ||||||||||||||||||
| Palazzo East at Park La Brea, The | Mid Rise | Mar 2005 | Los Angeles, CA | 2005 | 611 | 72,578 | 136,503 | 19,328 | 72,578 | 155,831 | 228,409 | (72,709 | ) | 155,700 | 196,109 | ||||||||||||||||||
| Parc Mosaic | Garden | Dec 2014 | Boulder, CO | 1970 | 226 | 15,300 | — | 53,638 | 15,300 | 53,638 | 68,938 | — | 68,938 | — | |||||||||||||||||||
| Park Towne Place | High Rise | Apr 2000 | Philadelphia, PA | 1959 | 940 | 10,472 | 47,301 | 345,748 | 10,472 | 393,049 | 403,521 | (119,350 | ) | 284,171 | 200,000 | ||||||||||||||||||
| Pathfinder Village | Garden | Jan 2006 | Fremont, CA | 1973 | 246 | 19,595 | 14,838 | 18,457 | 19,595 | 33,295 | 52,890 | (14,518 | ) | 38,372 | 55,000 | ||||||||||||||||||
| Peachtree Park | Garden | Jan 1996 | Atlanta, GA | 1969 | 303 | 4,684 | 11,713 | 14,045 | 4,684 | 25,758 | 30,442 | (16,449 | ) | 13,993 | 27,800 | ||||||||||||||||||
| Plantation Gardens | Garden | Oct 1999 | Plantation, FL | 1971 | 372 | 3,773 | 19,443 | 25,655 | 3,773 | 45,098 | 48,871 | (27,273 | ) | 21,598 | — | ||||||||||||||||||
| Post Ridge | Garden | Jul 2000 | Nashville, TN | 1972 | 150 | 1,883 | 6,712 | 4,537 | 1,883 | 11,249 | 13,132 | (7,401 | ) | 5,731 | — | ||||||||||||||||||
| Preserve at Marin | Mid Rise | Aug 2011 | Corte Madera, CA | 1964 | 126 | 18,179 | 30,132 | 84,629 | 18,179 | 114,761 | 132,940 | (26,039 | ) | 106,901 | 36,260 | ||||||||||||||||||
| Ravensworth Towers | High Rise | Jun 2004 | Annandale, VA | 1974 | 219 | 3,455 | 17,157 | 4,490 | 3,455 | 21,647 | 25,102 | (14,617 | ) | 10,485 | 20,342 | ||||||||||||||||||
| River Club,The | Garden | Apr 2005 | Edgewater, NJ | 1998 | 266 | 30,579 | 30,638 | 7,475 | 30,579 | 38,113 | 68,692 | (17,293 | ) | 51,399 | 60,000 | ||||||||||||||||||
| Riverloft | High Rise | Oct 1999 | Philadelphia, PA | 1910 | 184 | 2,120 | 11,286 | 35,086 | 2,120 | 46,372 | 48,492 | (23,386 | ) | 25,106 | 7,680 | ||||||||||||||||||
| Rosewood | Garden | Mar 2002 | Camarillo, CA | 1976 | 152 | 12,430 | 8,060 | 5,754 | 12,430 | 13,814 | 26,244 | (6,984 | ) | 19,260 | — | ||||||||||||||||||
| Royal Crest Estates | Garden | Aug 2002 | Warwick, RI | 1972 | 492 | 22,433 | 24,095 | 5,512 | 22,433 | 29,607 | 52,040 | (20,050 | ) | 31,990 | — | ||||||||||||||||||
| Royal Crest Estates | Garden | Aug 2002 | Nashua, NH | 1970 | 902 | 68,230 | 45,562 | 15,751 | 68,230 | 61,313 | 129,543 | (41,440 | ) | 88,103 | 71,957 | ||||||||||||||||||
| Royal Crest Estates | Garden | Aug 2002 | Marlborough, MA | 1970 | 473 | 25,178 | 28,786 | 13,490 | 25,178 | 42,276 | 67,454 | (26,610 | ) | 40,844 | — | ||||||||||||||||||
| Royal Crest Estates | Garden | Aug 2002 | North Andover, MA | 1970 | 588 | 51,292 | 36,808 | 27,916 | 51,292 | 64,724 | 116,016 | (36,132 | ) | 79,884 | — | ||||||||||||||||||
| Saybrook Point | Garden | Dec 2014 | San Jose, CA | 1995 | 324 | 32,842 | 84,457 | 25,729 | 32,842 | 110,186 | 143,028 | (14,179 | ) | 128,849 | 62,329 | ||||||||||||||||||
| Shenandoah Crossing | Garden | Sep 2000 | Fairfax, VA | 1984 | 640 | 18,200 | 57,198 | 25,345 | 18,200 | 82,543 | 100,743 | (58,302 | ) | 42,441 | 58,565 | ||||||||||||||||||
| SouthStar Lofts | High Rise | May 2018 | Philadelphia, PA | 2014 | 85 | 1,780 | 37,428 | 402 | 1,780 | 37,830 | 39,610 | (836 | ) | 38,774 | 30,197 | ||||||||||||||||||
| Springwoods at Lake Ridge | Garden | Jul 2002 | Woodbridge, VA | 1984 | 180 | 5,587 | 7,284 | 3,642 | 5,587 | 10,926 | 16,513 | (4,606 | ) | 11,907 | — | ||||||||||||||||||
| St. George Villas | Garden | Jan 2006 | St. George, SC | 1984 | 40 | 107 | 1,025 | 410 | 107 | 1,435 | 1,542 | (1,256 | ) | 286 | 314 | ||||||||||||||||||
| Sterling Apartment Homes, The | Garden | Oct 1999 | Philadelphia, PA | 1961 | 534 | 8,871 | 55,365 | 120,426 | 8,871 | 175,791 | 184,662 | (82,367 | ) | 102,295 | 144,030 | ||||||||||||||||||
| Stone Creek Club | Garden | Sep 2000 | Germantown, MD | 1984 | 240 | 13,593 | 9,347 | 8,078 | 13,593 | 17,425 | 31,018 | (12,553 | ) | 18,465 | — | ||||||||||||||||||
| The Left Bank | Mid Rise | May 2018 | Philadelphia, PA | 1929 | 282 | — | 130,893 | 3,053 | — | 133,946 | 133,946 | (2,879 | ) | 131,067 | 82,532 | ||||||||||||||||||
| Timbers at Long Reach Apartment Homes | Garden | Apr 2005 | Columbia, MD | 1979 | 178 | 2,430 | 12,181 | 1,705 | 2,430 | 13,886 | 16,316 | (8,182 | ) | 8,134 | — | ||||||||||||||||||
| Towers Of Westchester Park, The | High Rise | Jan 2006 | College Park, MD | 1972 | 303 | 15,198 | 22,029 | 13,936 | 15,198 | 35,965 | 51,163 | (18,825 | ) | 32,338 | 23,232 | ||||||||||||||||||
| Township At Highlands | Town Home | Nov 1996 | Centennial, CO | 1985 | 161 | 1,536 | 9,773 | 9,280 | 1,536 | 19,053 | 20,589 | (12,181 | ) | 8,408 | 13,557 | ||||||||||||||||||
| Tremont | Mid Rise | Dec 2014 | Atlanta, GA | 2009 | 78 | 5,274 | 18,011 | 2,746 | 5,274 | 20,757 | 26,031 | (3,110 | ) | 22,921 | — | ||||||||||||||||||
| Twin Lake Towers | High Rise | Oct 1999 | Westmont, IL | 1969 | 399 | 3,268 | 18,763 | 37,904 | 3,268 | 56,667 | 59,935 | (43,106 | ) | 16,829 | 44,906 | ||||||||||||||||||
| Vantage Pointe | Mid Rise | Aug 2002 | Swampscott, MA | 1987 | 96 | 4,748 | 10,089 | 2,314 | 4,748 | 12,403 | 17,151 | (5,294 | ) | 11,857 | 2,746 | ||||||||||||||||||
| Villa Del Sol | Garden | Mar 2002 | Norwalk, CA | 1972 | 120 | 7,476 | 4,861 | 4,553 | 7,476 | 9,414 | 16,890 | (5,216 | ) | 11,674 | 10,582 | ||||||||||||||||||
| Villas at Park La Brea, The | Garden | Mar 2002 | Los Angeles, CA | 2002 | 250 | 8,630 | 48,871 | 16,008 | 8,630 | 64,879 | 73,509 | (30,510 | ) | 42,999 | 53,868 | ||||||||||||||||||
| Villas of Pasadena | Mid Rise | Jan 2006 | Pasadena, CA | 1973 | 92 | 9,693 | 6,818 | 4,493 | 9,693 | 11,311 | 21,004 | (4,397 | ) | 16,607 | — | ||||||||||||||||||
| Vivo | High Rise | Jun 2016 | Cambridge, MA | 2015 | 91 | 6,450 | 35,974 | 5,590 | 6,450 | 41,564 | 48,014 | (8,694 | ) | 39,320 | 20,310 | ||||||||||||||||||
| Waterford Village | Garden | Aug 2002 | Bridgewater, MA | 1971 | 588 | 29,110 | 28,101 | 8,222 | 29,110 | 36,323 | 65,433 | (26,540 | ) | 38,893 | 35,269 | ||||||||||||||||||
| Waterways Village | Garden | Jun 1997 | Aventura, FL | 1994 | 180 | 4,504 | 11,064 | 15,205 | 4,504 | 26,269 | 30,773 | (12,394 | ) | 18,379 | 13,168 | ||||||||||||||||||
| Waverly Apartments | Garden | Aug 2008 | Brighton, MA | 1970 | 103 | 7,920 | 11,347 | 6,299 | 7,920 | 17,646 | 25,566 | (6,323 | ) | 19,243 | 11,515 | ||||||||||||||||||
| Wexford Village | Garden | Aug 2002 | Worcester, MA | 1974 | 264 | 6,349 | 17,939 | 4,245 | 6,349 | 22,184 | 28,533 | (12,980 | ) | 15,553 | — | ||||||||||||||||||
| Willow Bend | Garden | May 1998 | Rolling Meadows, IL | 1969 | 328 | 2,717 | 15,437 | 19,609 | 2,717 | 35,046 | 37,763 | (23,492 | ) | 14,271 | 33,175 | ||||||||||||||||||
| Windrift | Garden | Mar 2001 | Oceanside, CA | 1987 | 404 | 24,960 | 17,590 | 21,487 | 24,960 | 39,077 | 64,037 | (23,762 | ) | 40,275 | — | ||||||||||||||||||
| Windsor Park | Garden | Mar 2001 | Woodbridge, VA | 1987 | 220 | 4,279 | 15,970 | 6,217 | 4,279 | 22,187 | 26,466 | (13,378 | ) | 13,088 | — | ||||||||||||||||||
| Yacht Club at Brickell | High Rise | Dec 2003 | Miami, FL | 1998 | 357 | 31,362 | 32,214 | 16,715 | 31,362 | 48,929 | 80,291 | (17,513 | ) | 62,778 | 44,219 | ||||||||||||||||||
| Yorktown Apartments | High Rise | Dec 1999 | Lombard, IL | 1971 | 364 | 3,055 | 18,162 | 52,436 | 3,055 | 70,598 | 73,653 | (29,697 | ) | 43,956 | 38,280 | ||||||||||||||||||
| Other (6) | — | 5,135 | — | 20,914 | 5,135 | 20,914 | 26,049 | — | 26,049 | — | |||||||||||||||||||||||
| Total Real Estate Segment | 35,625 | 1,846,000 | 3,494,014 | 3,058,051 | 1,756,525 | 6,552,065 | 8,308,590 | (2,585,115 | ) | 5,723,475 | 3,937,000 | ||||||||||||||||||||||
| (2) | |||||||||||||||||||||||||||||||||
| (1) | Initial Cost | Cost Capitalized | December 31, 2018 | ||||||||||||||||||||||||||||||
| Apartment | Date | Year | Apartment | Buildings and | Subsequent to | Buildings and | (3) | Accumulated | Total Cost | (4) | |||||||||||||||||||||||
| Apartment Community Name | Type | Consolidated | Location | Built | Homes | Land | Improvements | Consolidation | Land | Improvements | Total | Depreciation (AD) | Net of AD | Encumbrances | |||||||||||||||||||
| (1) Date we acquired the apartment community or first consolidated the partnership that owns the apartment community. | |||||||||||||||||||||||||||||||||
| (2) Includes costs capitalized since acquisition or date of initial consolidation of the partnership/apartment community. | |||||||||||||||||||||||||||||||||
| (3) The aggregate cost of land and depreciable property for federal income tax purposes was approximately $4.0 billion at December 31, 2018. | |||||||||||||||||||||||||||||||||
| (4) Encumbrances are presented before reduction for debt issuance costs. | |||||||||||||||||||||||||||||||||
| (5) The current carrying value of the apartment community reflects an impairment loss recognized during prior periods. | |||||||||||||||||||||||||||||||||
| (6) Other includes land parcels and certain non-residential properties held for future development. | |||||||||||||||||||||||||||||||||
AIMCO PROPERTIES, L.P.
SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2019
(In Thousands Except Apartment Home Data)
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| As of December 31, 2019 |
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| (1) |
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| Initial Cost |
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| Cost Capitalized |
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| Apartment |
| Date |
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| Year |
| Apartment |
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| Buildings and |
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| Subsequent to |
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| Buildings and |
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| (3) |
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| Accumulated |
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| Total Cost |
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| (5) |
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Apartment Community Name |
| Type |
| Consolidated |
| Location |
| Built |
| Homes |
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| Land |
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| Improvements |
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| Consolidation |
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| Land |
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| Improvements |
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| Total |
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| Depreciation (AD) |
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| Net of AD |
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| Encumbrances |
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Same Store Sales: |
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100 Forest Place |
| High Rise |
| Dec 1997 |
| Oak Park, IL |
| 1987 |
|
| 234 |
|
| $ | 2,664 |
|
| $ | 18,815 |
|
| $ | 11,145 |
|
| $ | 2,664 |
|
| $ | 29,960 |
|
| $ | 32,624 |
|
| $ | (16,676 | ) |
| $ | 15,948 |
|
| $ | 34,453 |
|
118-122 West 23rd Street |
| High Rise |
| Jun 2012 |
| New York, NY |
| 1987 |
|
| 42 |
|
|
| 14,985 |
|
|
| 23,459 |
|
|
| 6,914 |
|
|
| 14,985 |
|
|
| 30,373 |
|
|
| 45,358 |
|
|
| (10,461 | ) |
|
| 34,897 |
|
|
| 16,999 |
|
1045 on the Park Apartment Homes |
| Mid Rise |
| Jul 2013 |
| Atlanta, GA |
| 2012 |
|
| 30 |
|
|
| 2,793 |
|
|
| 6,662 |
|
|
| 819 |
|
|
| 2,793 |
|
|
| 7,481 |
|
|
| 10,274 |
|
|
| (1,739 | ) |
|
| 8,535 |
|
|
| — |
|
1582 First Avenue |
| High Rise |
| Mar 2005 |
| New York, NY |
| 1900 |
|
| 17 |
|
|
| 4,281 |
|
|
| 752 |
|
|
| 518 |
|
|
| 4,281 |
|
|
| 1,270 |
|
|
| 5,551 |
|
|
| (650 | ) |
|
| 4,901 |
|
|
| 2,226 |
|
21 Fitzsimons |
| Mid Rise |
| Aug 2014 |
| Aurora, CO |
| 2008 |
|
| 600 |
|
|
| 12,864 |
|
|
| 104,720 |
|
|
| 27,677 |
|
|
| 12,864 |
|
|
| 132,397 |
|
|
| 145,261 |
|
|
| (26,098 | ) |
|
| 119,163 |
|
|
| 89,413 |
|
2200 Grace |
| Mid Rise |
| Dec 1999 |
| Lombard, IL |
| 1971 |
|
| 72 |
|
|
| 642 |
|
|
| 7,788 |
|
|
| 294 |
|
|
| 642 |
|
|
| 8,082 |
|
|
| 8,724 |
|
|
| (4,549 | ) |
|
| 4,175 |
|
|
| 7,448 |
|
2900 on First Apartments |
| Mid Rise |
| Oct 2008 |
| Seattle, WA |
| 1989 |
|
| 135 |
|
|
| 19,070 |
|
|
| 17,518 |
|
|
| 34,356 |
|
|
| 19,070 |
|
|
| 51,874 |
|
|
| 70,944 |
|
|
| (29,578 | ) |
|
| 41,366 |
|
|
| 13,594 |
|
306 East 89th Street |
| High Rise |
| Jul 2004 |
| New York, NY |
| 1930 |
|
| 20 |
|
|
| 2,680 |
|
|
| 1,006 |
|
|
| 1,099 |
|
|
| 2,680 |
|
|
| 2,105 |
|
|
| 4,785 |
|
|
| (1,046 | ) |
|
| 3,739 |
|
|
| 1,816 |
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322-324 East 61st Street |
| High Rise |
| Mar 2005 |
| New York, NY |
| 1900 |
|
| 40 |
|
|
| 6,372 |
|
|
| 2,224 |
|
|
| 1,598 |
|
|
| 6,372 |
|
|
| 3,822 |
|
|
| 10,194 |
|
|
| (2,009 | ) |
|
| 8,185 |
|
|
| 3,339 |
|
3400 Avenue of the Arts |
| Mid Rise |
| Mar 2002 |
| Costa Mesa, CA |
| 1987 |
|
| 770 |
|
|
| 57,241 |
|
|
| 65,506 |
|
|
| 88,112 |
|
|
| 57,241 |
|
|
| 153,618 |
|
|
| 210,859 |
|
|
| (92,205 | ) |
|
| 118,654 |
|
|
| 142,476 |
|
452 East 78th Street |
| High Rise |
| Jan 2004 |
| New York, NY |
| 1900 |
|
| 12 |
|
|
| 1,982 |
|
|
| 608 |
|
|
| 600 |
|
|
| 1,982 |
|
|
| 1,208 |
|
|
| 3,190 |
|
|
| (548 | ) |
|
| 2,642 |
|
|
| — |
|
510 East 88th Street |
| High Rise |
| Jan 2004 |
| New York, NY |
| 1900 |
|
| 20 |
|
|
| 3,163 |
|
|
| 1,002 |
|
|
| 653 |
|
|
| 3,163 |
|
|
| 1,655 |
|
|
| 4,818 |
|
|
| (726 | ) |
|
| 4,092 |
|
|
| — |
|
514-516 East 88th Street |
| High Rise |
| Mar 2005 |
| New York, NY |
| 1900 |
|
| 36 |
|
|
| 6,282 |
|
|
| 2,168 |
|
|
| 1,617 |
|
|
| 6,282 |
|
|
| 3,785 |
|
|
| 10,067 |
|
|
| (1,868 | ) |
|
| 8,199 |
|
|
| 3,620 |
|
Axiom |
| Mid Rise |
| Apr 2015 |
| Cambridge, MA |
| 2015 |
|
| 115 |
|
|
| — |
|
|
| 63,612 |
|
|
| 2,665 |
|
|
| — |
|
|
| 66,277 |
|
|
| 66,277 |
|
|
| (11,504 | ) |
|
| 54,773 |
|
|
| 32,253 |
|
Bank Lofts |
| High Rise |
| Apr 2001 |
| Denver, CO |
| 1920 |
|
| 125 |
|
|
| 3,525 |
|
|
| 9,045 |
|
|
| 5,797 |
|
|
| 3,525 |
|
|
| 14,842 |
|
|
| 18,367 |
|
|
| (8,109 | ) |
|
| 10,258 |
|
|
| 10,218 |
|
Bay Ridge at Nashua |
| Garden |
| Jan 2003 |
| Nashua, NH |
| 1984 |
|
| 412 |
|
|
| 3,262 |
|
|
| 40,713 |
|
|
| 17,995 |
|
|
| 3,262 |
|
|
| 58,708 |
|
|
| 61,970 |
|
|
| (26,731 | ) |
|
| 35,239 |
|
|
| 50,638 |
|
Bayberry Hill Estates |
| Garden |
| Aug 2002 |
| Framingham, MA |
| 1971 |
|
| 424 |
|
|
| 19,944 |
|
|
| 35,945 |
|
|
| 25,151 |
|
|
| 19,944 |
|
|
| 61,096 |
|
|
| 81,040 |
|
|
| (30,503 | ) |
|
| 50,537 |
|
|
| 44,197 |
|
Bluffs at Pacifica, The |
| Garden |
| Oct 2006 |
| Pacifica, CA |
| 1963 |
|
| 64 |
|
|
| 8,108 |
|
|
| 4,132 |
|
|
| 17,349 |
|
|
| 8,108 |
|
|
| 21,481 |
|
|
| 29,589 |
|
|
| (11,400 | ) |
|
| 18,189 |
|
|
| — |
|
Boston Lofts |
| High Rise |
| Apr 2001 |
| Denver, CO |
| 1890 |
|
| 158 |
|
|
| 3,446 |
|
|
| 20,589 |
|
|
| 6,715 |
|
|
| 3,446 |
|
|
| 27,304 |
|
|
| 30,750 |
|
|
| (14,706 | ) |
|
| 16,044 |
|
|
| 14,927 |
|
Boulder Creek |
| Garden |
| Jul 1994 |
| Boulder, CO |
| 1973 |
|
| 221 |
|
|
| 754 |
|
|
| 7,730 |
|
|
| 20,791 |
|
|
| 754 |
|
|
| 28,521 |
|
|
| 29,275 |
|
|
| (20,708 | ) |
|
| 8,567 |
|
|
| 37,861 |
|
Broadcast Center |
| Garden |
| Mar 2002 |
| Los Angeles, CA |
| 1990 |
|
| 279 |
|
|
| 29,407 |
|
|
| 41,244 |
|
|
| 31,856 |
|
|
| 29,407 |
|
|
| 73,100 |
|
|
| 102,507 |
|
|
| (32,455 | ) |
|
| 70,052 |
|
|
| 96,880 |
|
Broadway Lofts |
| High Rise |
| Sep 2012 |
| San Diego, CA |
| 1909 |
|
| 84 |
|
|
| 5,367 |
|
|
| 14,442 |
|
|
| 7,647 |
|
|
| 5,367 |
|
|
| 22,089 |
|
|
| 27,456 |
|
|
| (6,031 | ) |
|
| 21,425 |
|
|
| 11,298 |
|
Burke Shire Commons |
| Garden |
| Mar 2001 |
| Burke, VA |
| 1986 |
|
| 360 |
|
|
| 4,867 |
|
|
| 23,617 |
|
|
| 19,855 |
|
|
| 4,867 |
|
|
| 43,472 |
|
|
| 48,339 |
|
|
| (27,328 | ) |
|
| 21,011 |
|
|
| 56,855 |
|
Calhoun Beach Club |
| High Rise |
| Dec 1998 |
| Minneapolis, MN |
| 1928 |
|
| 332 |
|
|
| 11,708 |
|
|
| 73,334 |
|
|
| 65,713 |
|
|
| 11,708 |
|
|
| 139,047 |
|
|
| 150,755 |
|
|
| (85,259 | ) |
|
| 65,496 |
|
|
| — |
|
Canyon Terrace |
| Garden |
| Mar 2002 |
| Saugus, CA |
| 1984 |
|
| 130 |
|
|
| 7,508 |
|
|
| 6,601 |
|
|
| 7,008 |
|
|
| 7,508 |
|
|
| 13,609 |
|
|
| 21,117 |
|
|
| (7,711 | ) |
|
| 13,406 |
|
|
| — |
|
Cedar Rim |
| Garden |
| Apr 2000 |
| Newcastle, WA |
| 1980 |
|
| 104 |
|
|
| 761 |
|
|
| 5,218 |
|
|
| 13,873 |
|
|
| 761 |
|
|
| 19,091 |
|
|
| 19,852 |
|
|
| (14,179 | ) |
|
| 5,673 |
|
|
| — |
|
Charlesbank Apartment Homes |
| Mid Rise |
| Sep 2013 |
| Watertown, MA |
| 2012 |
|
| 44 |
|
|
| 3,399 |
|
|
| 11,726 |
|
|
| 1,018 |
|
|
| 3,399 |
|
|
| 12,744 |
|
|
| 16,143 |
|
|
| (2,931 | ) |
|
| 13,212 |
|
|
| — |
|
Chestnut Hall |
| High Rise |
| Oct 2006 |
| Philadelphia, PA |
| 1923 |
|
| 315 |
|
|
| 12,338 |
|
|
| 14,299 |
|
|
| 13,223 |
|
|
| 12,338 |
|
|
| 27,522 |
|
|
| 39,860 |
|
|
| (13,266 | ) |
|
| 26,594 |
|
|
| 35,834 |
|
Creekside |
| Garden |
| Jan 2000 |
| Denver, CO |
| 1974 |
|
| 328 |
|
|
| 3,189 |
|
|
| 12,698 |
|
|
| 7,404 |
|
|
| 3,189 |
|
|
| 20,102 |
|
|
| 23,291 |
|
|
| (13,579 | ) |
|
| 9,712 |
|
|
| 11,066 |
|
Crescent at West Hollywood, The |
| Mid Rise |
| Mar 2002 |
| West Hollywood, CA |
| 1985 |
|
| 130 |
|
|
| 15,765 |
|
|
| 10,215 |
|
|
| 8,281 |
|
|
| 15,765 |
|
|
| 18,496 |
|
|
| 34,261 |
|
|
| (12,337 | ) |
|
| 21,924 |
|
|
| 39,336 |
|
Elm Creek |
| Mid Rise |
| Dec 1997 |
| Elmhurst, IL |
| 1987 |
|
| 400 |
|
|
| 5,910 |
|
|
| 30,830 |
|
|
| 32,788 |
|
|
| 5,910 |
|
|
| 63,618 |
|
|
| 69,528 |
|
|
| (35,969 | ) |
|
| 33,559 |
|
|
| 50,296 |
|
Evanston Place |
| High Rise |
| Dec 1997 |
| Evanston, IL |
| 1990 |
|
| 190 |
|
|
| 3,232 |
|
|
| 25,546 |
|
|
| 16,703 |
|
|
| 3,232 |
|
|
| 42,249 |
|
|
| 45,481 |
|
|
| (20,982 | ) |
|
| 24,499 |
|
|
| — |
|
Four Quarters Habitat |
| Garden |
| Jan 2006 |
| Miami, FL |
| 1976 |
|
| 336 |
|
|
| 2,379 |
|
|
| 17,199 |
|
|
| 32,991 |
|
|
| 2,379 |
|
|
| 50,190 |
|
|
| 52,569 |
|
|
| (30,456 | ) |
|
| 22,113 |
|
|
| 50,716 |
|
Foxchase |
| Garden |
| Dec 1997 |
| Alexandria, VA |
| 1940 |
|
| 2,113 |
|
|
| 15,496 |
|
|
| 96,062 |
|
|
| 64,213 |
|
|
| 15,496 |
|
|
| 160,275 |
|
|
| 175,771 |
|
|
| (92,368 | ) |
|
| 83,403 |
|
|
| 218,337 |
|
Georgetown |
| Garden |
| Aug 2002 |
| Framingham, MA |
| 1964 |
|
| 207 |
|
|
| 12,351 |
|
|
| 13,168 |
|
|
| 4,896 |
|
|
| 12,351 |
|
|
| 18,064 |
|
|
| 30,415 |
|
|
| (9,068 | ) |
|
| 21,347 |
|
|
| 14,355 |
|
Georgetown II |
| Mid Rise |
| Aug 2002 |
| Framingham, MA |
| 1958 |
|
| 72 |
|
|
| 4,577 |
|
|
| 4,057 |
|
|
| 2,316 |
|
|
| 4,577 |
|
|
| 6,373 |
|
|
| 10,950 |
|
|
| (3,871 | ) |
|
| 7,079 |
|
|
| — |
|
Hidden Cove |
| Garden |
| Jul 1998 |
| Escondido, CA |
| 1983 |
|
| 334 |
|
|
| 3,043 |
|
|
| 17,616 |
|
|
| 11,447 |
|
|
| 3,043 |
|
|
| 29,063 |
|
|
| 32,106 |
|
|
| (17,321 | ) |
|
| 14,785 |
|
|
| 51,840 |
|
Hidden Cove II |
| Garden |
| Jul 2007 |
| Escondido, CA |
| 1986 |
|
| 118 |
|
|
| 12,849 |
|
|
| 6,530 |
|
|
| 5,439 |
|
|
| 12,849 |
|
|
| 11,969 |
|
|
| 24,818 |
|
|
| (5,881 | ) |
|
| 18,937 |
|
|
| 20,160 |
|
Hillcreste |
| Garden |
| Mar 2002 |
| Century City, CA |
| 1989 |
|
| 315 |
|
|
| 35,862 |
|
|
| 47,216 |
|
|
| 15,706 |
|
|
| 35,862 |
|
|
| 62,922 |
|
|
| 98,784 |
|
|
| (29,709 | ) |
|
| 69,075 |
|
|
| 61,930 |
|
Hillmeade |
| Garden |
| Nov 1994 |
| Nashville, TN |
| 1986 |
|
| 288 |
|
|
| 2,872 |
|
|
| 16,070 |
|
|
| 22,103 |
|
|
| 2,872 |
|
|
| 38,173 |
|
|
| 41,045 |
|
|
| (22,434 | ) |
|
| 18,611 |
|
|
| 26,756 |
|
Horizons West Apartments |
| Mid Rise |
| Dec 2006 |
| Pacifica, CA |
| 1970 |
|
| 78 |
|
|
| 8,887 |
|
|
| 6,377 |
|
|
| 2,808 |
|
|
| 8,887 |
|
|
| 9,185 |
|
|
| 18,072 |
|
|
| (4,155 | ) |
|
| 13,917 |
|
|
| — |
|
Hunt Club |
| Garden |
| Sep 2000 |
| Gaithersburg, MD |
| 1986 |
|
| 336 |
|
|
| 17,859 |
|
|
| 13,149 |
|
|
| 14,807 |
|
|
| 17,859 |
|
|
| 27,956 |
|
|
| 45,815 |
|
|
| (17,241 | ) |
|
| 28,574 |
|
|
| — |
|
Hyde Park Tower |
| High Rise |
| Oct 2004 |
| Chicago, IL |
| 1990 |
|
| 155 |
|
|
| 4,731 |
|
|
| 14,927 |
|
|
| 16,765 |
|
|
| 4,731 |
|
|
| 31,692 |
|
|
| 36,423 |
|
|
| (11,613 | ) |
|
| 24,810 |
|
|
| 12,301 |
|
Indian Oaks |
| Garden |
| Mar 2002 |
| Simi Valley, CA |
| 1986 |
|
| 254 |
|
|
| 24,523 |
|
|
| 15,801 |
|
|
| 12,124 |
|
|
| 24,523 |
|
|
| 27,925 |
|
|
| 52,448 |
|
|
| (14,829 | ) |
|
| 37,619 |
|
|
| 26,944 |
|
Indigo |
| High Rise |
| Aug 2016 |
| Redwood City, CA |
| 2016 |
|
| 463 |
|
|
| 26,932 |
|
|
| 296,116 |
|
|
| 3,561 |
|
|
| 26,932 |
|
|
| 299,677 |
|
|
| 326,609 |
|
|
| (35,408 | ) |
|
| 291,201 |
|
|
| 135,348 |
|
Island Club |
| Garden |
| Oct 2000 |
| Oceanside, CA |
| 1986 |
|
| 592 |
|
|
| 18,027 |
|
|
| 28,654 |
|
|
| 21,829 |
|
|
| 18,027 |
|
|
| 50,483 |
|
|
| 68,510 |
|
|
| (32,842 | ) |
|
| 35,668 |
|
|
| 93,333 |
|
Latrobe |
| High Rise |
| Jan 2003 |
| Washington, D.C. |
| 1980 |
|
| 175 |
|
|
| 3,459 |
|
|
| 9,103 |
|
|
| 13,380 |
|
|
| 3,459 |
|
|
| 22,483 |
|
|
| 25,942 |
|
|
| (13,313 | ) |
|
| 12,629 |
|
|
| 26,128 |
|
Laurel Crossing |
| Garden |
| Jan 2006 |
| San Mateo, CA |
| 1971 |
|
| 418 |
|
|
| 49,474 |
|
|
| 17,756 |
|
|
| 15,017 |
|
|
| 49,474 |
|
|
| 32,773 |
|
|
| 82,247 |
|
|
| (17,078 | ) |
|
| 65,169 |
|
|
| 104,658 |
|
Lincoln Place (6) |
| Garden |
| Oct 2004 |
| Venice, CA |
| 1951 |
|
| 795 |
|
|
| 128,332 |
|
|
| 10,439 |
|
|
| 340,136 |
|
|
| 44,197 |
|
|
| 350,575 |
|
|
| 394,772 |
|
|
| (143,166 | ) |
|
| 251,606 |
|
|
| 184,330 |
|
Malibu Canyon |
| Garden |
| Mar 2002 |
| Calabasas, CA |
| 1986 |
|
| 698 |
|
|
| 69,834 |
|
|
| 53,438 |
|
|
| 41,577 |
|
|
| 69,834 |
|
|
| 95,015 |
|
|
| 164,849 |
|
|
| (51,078 | ) |
|
| 113,771 |
|
|
| 102,968 |
|
Mariners Cove |
| Garden |
| Mar 2002 |
| San Diego, CA |
| 1984 |
|
| 500 |
|
|
| — |
|
|
| 66,861 |
|
|
| 14,977 |
|
|
| — |
|
|
| 81,838 |
|
|
| 81,838 |
|
|
| (42,171 | ) |
|
| 39,667 |
|
|
| — |
|
Meadow Creek |
| Garden |
| Jul 1994 |
| Boulder, CO |
| 1968 |
|
| 332 |
|
|
| 1,435 |
|
|
| 24,533 |
|
|
| 10,058 |
|
|
| 1,435 |
|
|
| 34,591 |
|
|
| 36,026 |
|
|
| (21,082 | ) |
|
| 14,944 |
|
|
| — |
|
Merrill House |
| High Rise |
| Jan 2000 |
| Falls Church, VA |
| 1964 |
|
| 159 |
|
|
| 1,836 |
|
|
| 10,831 |
|
|
| 7,588 |
|
|
| 1,836 |
|
|
| 18,419 |
|
|
| 20,255 |
|
|
| (10,923 | ) |
|
| 9,332 |
|
|
| — |
|
Monterey Grove |
| Garden |
| Jun 2008 |
| San Jose, CA |
| 1999 |
|
| 224 |
|
|
| 34,325 |
|
|
| 21,939 |
|
|
| 16,051 |
|
|
| 34,325 |
|
|
| 37,990 |
|
|
| 72,315 |
|
|
| (13,236 | ) |
|
| 59,079 |
|
|
| 49,680 |
|
Ocean House on Prospect |
| Mid Rise |
| Apr 2013 |
| La Jolla, CA |
| 1970 |
|
| 53 |
|
|
| 12,528 |
|
|
| 18,805 |
|
|
| 15,336 |
|
|
| 12,528 |
|
|
| 34,141 |
|
|
| 46,669 |
|
|
| (8,635 | ) |
|
| 38,034 |
|
|
| 12,281 |
|
F-39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2) |
|
| As of December 31, 2019 |
| ||||||||||||||||||||||
|
|
|
| (1) |
|
|
|
|
|
|
|
|
| Initial Cost |
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4) |
|
|
|
|
|
|
|
|
| |||||||
|
| Apartment |
| Date |
|
|
| Year |
| Apartment |
|
|
|
|
|
| Buildings and |
|
| Subsequent to |
|
|
|
|
|
| Buildings and |
|
| (3) |
|
| Accumulated |
|
| Total Cost |
|
| (5) |
| ||||||||
Apartment Community Name |
| Type |
| Consolidated |
| Location |
| Built |
| Homes |
|
| Land |
|
| Improvements |
|
| Consolidation |
|
| Land |
|
| Improvements |
|
| Total |
|
| Depreciation (AD) |
|
| Net of AD |
|
| Encumbrances |
| ||||||||||
One Canal |
| High Rise |
| Sep 2013 |
| Boston, MA |
| 2016 |
|
| 310 |
|
| $ | — |
|
| $ | 15,873 |
|
| $ | 178,772 |
|
| $ | — |
|
| $ | 194,645 |
|
| $ | 194,645 |
|
| $ | (29,058 | ) |
| $ | 165,587 |
|
| $ | 108,491 |
|
Pacific Bay Vistas (6) |
| Garden |
| Mar 2001 |
| San Bruno, CA |
| 1987 |
|
| 308 |
|
|
| 28,694 |
|
|
| 62,460 |
|
|
| 40,698 |
|
|
| 23,354 |
|
|
| 103,158 |
|
|
| 126,512 |
|
|
| (39,188 | ) |
|
| 87,324 |
|
|
| 104,664 |
|
Pacifica Park |
| Garden |
| Jul 2006 |
| Pacifica, CA |
| 1977 |
|
| 104 |
|
|
| 12,970 |
|
|
| 6,579 |
|
|
| 8,815 |
|
|
| 12,970 |
|
|
| 15,394 |
|
|
| 28,364 |
|
|
| (7,517 | ) |
|
| 20,847 |
|
|
| 28,613 |
|
Palazzo at Park La Brea, The |
| Mid Rise |
| Feb 2004 |
| Los Angeles, CA |
| 2002 |
|
| 521 |
|
|
| 48,362 |
|
|
| 125,464 |
|
|
| 48,103 |
|
|
| 48,362 |
|
|
| 173,567 |
|
|
| 221,929 |
|
|
| (87,785 | ) |
|
| 134,144 |
|
|
| 165,344 |
|
Palazzo East at Park La Brea, The |
| Mid Rise |
| Mar 2005 |
| Los Angeles, CA |
| 2005 |
|
| 611 |
|
|
| 72,578 |
|
|
| 136,503 |
|
|
| 28,065 |
|
|
| 72,578 |
|
|
| 164,568 |
|
|
| 237,146 |
|
|
| (79,668 | ) |
|
| 157,478 |
|
|
| 192,083 |
|
Pathfinder Village |
| Garden |
| Jan 2006 |
| Fremont, CA |
| 1973 |
|
| 246 |
|
|
| 19,595 |
|
|
| 14,838 |
|
|
| 20,707 |
|
|
| 19,595 |
|
|
| 35,545 |
|
|
| 55,140 |
|
|
| (17,480 | ) |
|
| 37,660 |
|
|
| 55,000 |
|
Peachtree Park |
| Garden |
| Jan 1996 |
| Atlanta, GA |
| 1969 |
|
| 303 |
|
|
| 4,684 |
|
|
| 11,713 |
|
|
| 14,244 |
|
|
| 4,684 |
|
|
| 25,957 |
|
|
| 30,641 |
|
|
| (17,244 | ) |
|
| 13,397 |
|
|
| 27,316 |
|
Plantation Gardens |
| Garden |
| Oct 1999 |
| Plantation, FL |
| 1971 |
|
| 372 |
|
|
| 3,773 |
|
|
| 19,443 |
|
|
| 25,547 |
|
|
| 3,773 |
|
|
| 44,990 |
|
|
| 48,763 |
|
|
| (28,766 | ) |
|
| 19,997 |
|
|
| — |
|
Preserve at Marin |
| Mid Rise |
| Aug 2011 |
| Corte Madera, CA |
| 1964 |
|
| 126 |
|
|
| 13,516 |
|
|
| 30,132 |
|
|
| 82,512 |
|
|
| 13,516 |
|
|
| 112,644 |
|
|
| 126,160 |
|
|
| (32,015 | ) |
|
| 94,145 |
|
|
| 35,451 |
|
Ravensworth Towers |
| High Rise |
| Jun 2004 |
| Annandale, VA |
| 1974 |
|
| 219 |
|
|
| 3,455 |
|
|
| 17,157 |
|
|
| 4,575 |
|
|
| 3,455 |
|
|
| 21,732 |
|
|
| 25,187 |
|
|
| (15,171 | ) |
|
| 10,016 |
|
|
| 19,870 |
|
River Club, The |
| Garden |
| Apr 2005 |
| Edgewater, NJ |
| 1998 |
|
| 266 |
|
|
| 30,579 |
|
|
| 30,638 |
|
|
| 8,468 |
|
|
| 30,579 |
|
|
| 39,106 |
|
|
| 69,685 |
|
|
| (19,159 | ) |
|
| 50,526 |
|
|
| 59,070 |
|
Riverloft |
| High Rise |
| Oct 1999 |
| Philadelphia, PA |
| 1910 |
|
| 184 |
|
|
| 2,120 |
|
|
| 11,286 |
|
|
| 38,090 |
|
|
| 2,120 |
|
|
| 49,376 |
|
|
| 51,496 |
|
|
| (25,765 | ) |
|
| 25,731 |
|
|
| 5,881 |
|
Rosewood |
| Garden |
| Mar 2002 |
| Camarillo, CA |
| 1976 |
|
| 152 |
|
|
| 12,430 |
|
|
| 8,060 |
|
|
| 6,983 |
|
|
| 12,430 |
|
|
| 15,043 |
|
|
| 27,473 |
|
|
| (7,950 | ) |
|
| 19,523 |
|
|
| — |
|
Royal Crest Estates |
| Garden |
| Aug 2002 |
| Warwick, RI |
| 1972 |
|
| 492 |
|
|
| 22,433 |
|
|
| 24,095 |
|
|
| 6,736 |
|
|
| 22,433 |
|
|
| 30,831 |
|
|
| 53,264 |
|
|
| (21,454 | ) |
|
| 31,810 |
|
|
| — |
|
Royal Crest Estates |
| Garden |
| Aug 2002 |
| Nashua, NH |
| 1970 |
|
| 902 |
|
|
| 68,230 |
|
|
| 45,562 |
|
|
| 16,865 |
|
|
| 68,230 |
|
|
| 62,427 |
|
|
| 130,657 |
|
|
| (44,966 | ) |
|
| 85,691 |
|
|
| 70,299 |
|
Royal Crest Estates |
| Garden |
| Aug 2002 |
| Marlborough, MA |
| 1970 |
|
| 473 |
|
|
| 25,178 |
|
|
| 28,786 |
|
|
| 15,100 |
|
|
| 25,178 |
|
|
| 43,886 |
|
|
| 69,064 |
|
|
| (29,314 | ) |
|
| 39,750 |
|
|
| 62,074 |
|
Royal Crest Estates |
| Garden |
| Aug 2002 |
| North Andover, MA |
| 1970 |
|
| 588 |
|
|
| 51,292 |
|
|
| 36,808 |
|
|
| 30,314 |
|
|
| 51,292 |
|
|
| 67,122 |
|
|
| 118,414 |
|
|
| (39,455 | ) |
|
| 78,959 |
|
|
| 81,363 |
|
Saybrook Pointe |
| Garden |
| Dec 2014 |
| San Jose, CA |
| 1995 |
|
| 324 |
|
|
| 32,842 |
|
|
| 84,457 |
|
|
| 25,960 |
|
|
| 32,842 |
|
|
| 110,417 |
|
|
| 143,259 |
|
|
| (19,010 | ) |
|
| 124,249 |
|
|
| 61,073 |
|
Shenandoah Crossing |
| Garden |
| Sep 2000 |
| Fairfax, VA |
| 1984 |
|
| 640 |
|
|
| 18,200 |
|
|
| 57,198 |
|
|
| 26,395 |
|
|
| 18,200 |
|
|
| 83,593 |
|
|
| 101,793 |
|
|
| (62,964 | ) |
|
| 38,829 |
|
|
| 57,204 |
|
Springwoods at Lake Ridge |
| Garden |
| Jul 2002 |
| Woodbridge, VA |
| 1984 |
|
| 180 |
|
|
| 5,587 |
|
|
| 7,284 |
|
|
| 3,790 |
|
|
| 5,587 |
|
|
| 11,074 |
|
|
| 16,661 |
|
|
| (5,064 | ) |
|
| 11,597 |
|
|
| — |
|
Sterling Apartment Homes, The |
| Garden |
| Oct 1999 |
| Philadelphia, PA |
| 1961 |
|
| 534 |
|
|
| 8,871 |
|
|
| 55,365 |
|
|
| 118,250 |
|
|
| 8,871 |
|
|
| 173,615 |
|
|
| 182,486 |
|
|
| (91,452 | ) |
|
| 91,034 |
|
|
| 141,077 |
|
Stonecreek Club |
| Garden |
| Sep 2000 |
| Germantown, MD |
| 1984 |
|
| 240 |
|
|
| 13,593 |
|
|
| 9,347 |
|
|
| 8,450 |
|
|
| 13,593 |
|
|
| 17,797 |
|
|
| 31,390 |
|
|
| (13,092 | ) |
|
| 18,298 |
|
|
| — |
|
Township At Highlands |
| Town Home |
| Nov 1996 |
| Centennial, CO |
| 1985 |
|
| 161 |
|
|
| 1,536 |
|
|
| 9,773 |
|
|
| 10,121 |
|
|
| 1,536 |
|
|
| 19,894 |
|
|
| 21,430 |
|
|
| (13,167 | ) |
|
| 8,263 |
|
|
| 13,120 |
|
Vantage Pointe |
| Mid Rise |
| Aug 2002 |
| Swampscott, MA |
| 1987 |
|
| 96 |
|
|
| 4,748 |
|
|
| 10,089 |
|
|
| 2,661 |
|
|
| 4,748 |
|
|
| 12,750 |
|
|
| 17,498 |
|
|
| (5,806 | ) |
|
| 11,692 |
|
|
| — |
|
Villa Del Sol |
| Garden |
| Mar 2002 |
| Norwalk, CA |
| 1972 |
|
| 120 |
|
|
| 7,476 |
|
|
| 4,861 |
|
|
| 5,050 |
|
|
| 7,476 |
|
|
| 9,911 |
|
|
| 17,387 |
|
|
| (6,000 | ) |
|
| 11,387 |
|
|
| 10,338 |
|
Villas of Pasadena |
| Mid Rise |
| Jan 2006 |
| Pasadena, CA |
| 1973 |
|
| 92 |
|
|
| 9,693 |
|
|
| 6,818 |
|
|
| 4,696 |
|
|
| 9,693 |
|
|
| 11,514 |
|
|
| 21,207 |
|
|
| (5,230 | ) |
|
| 15,977 |
|
|
| — |
|
Vivo |
| High Rise |
| Jun 2016 |
| Cambridge, MA |
| 2015 |
|
| 91 |
|
|
| 6,450 |
|
|
| 35,974 |
|
|
| 5,851 |
|
|
| 6,450 |
|
|
| 41,825 |
|
|
| 48,275 |
|
|
| (11,588 | ) |
|
| 36,687 |
|
|
| 19,810 |
|
Waterford Village |
| Garden |
| Aug 2002 |
| Bridgewater, MA |
| 1971 |
|
| 588 |
|
|
| 29,110 |
|
|
| 28,101 |
|
|
| 11,636 |
|
|
| 29,110 |
|
|
| 39,737 |
|
|
| 68,847 |
|
|
| (29,186 | ) |
|
| 39,661 |
|
|
| 34,464 |
|
Waterways Village |
| Garden |
| Jun 1997 |
| Aventura, FL |
| 1994 |
|
| 180 |
|
|
| 4,504 |
|
|
| 11,064 |
|
|
| 16,910 |
|
|
| 4,504 |
|
|
| 27,974 |
|
|
| 32,478 |
|
|
| (13,996 | ) |
|
| 18,482 |
|
|
| 12,865 |
|
Waverly Apartments |
| Garden |
| Aug 2008 |
| Brighton, MA |
| 1970 |
|
| 103 |
|
|
| 7,920 |
|
|
| 11,347 |
|
|
| 6,844 |
|
|
| 7,920 |
|
|
| 18,191 |
|
|
| 26,111 |
|
|
| (7,441 | ) |
|
| 18,670 |
|
|
| 11,245 |
|
Wexford Village |
| Garden |
| Aug 2002 |
| Worcester, MA |
| 1974 |
|
| 264 |
|
|
| 6,349 |
|
|
| 17,939 |
|
|
| 5,183 |
|
|
| 6,349 |
|
|
| 23,122 |
|
|
| 29,471 |
|
|
| (14,281 | ) |
|
| 15,190 |
|
|
| — |
|
Willow Bend |
| Garden |
| May 1998 |
| Rolling Meadows, IL |
| 1969 |
|
| 328 |
|
|
| 2,717 |
|
|
| 15,437 |
|
|
| 20,130 |
|
|
| 2,717 |
|
|
| 35,567 |
|
|
| 38,284 |
|
|
| (24,855 | ) |
|
| 13,429 |
|
|
| 32,489 |
|
Windrift |
| Garden |
| Mar 2001 |
| Oceanside, CA |
| 1987 |
|
| 404 |
|
|
| 24,960 |
|
|
| 17,590 |
|
|
| 22,254 |
|
|
| 24,960 |
|
|
| 39,844 |
|
|
| 64,804 |
|
|
| (26,130 | ) |
|
| 38,674 |
|
|
| 72,646 |
|
Windsor Park |
| Garden |
| Mar 2001 |
| Woodbridge, VA |
| 1987 |
|
| 220 |
|
|
| 4,279 |
|
|
| 15,970 |
|
|
| 6,366 |
|
|
| 4,279 |
|
|
| 22,336 |
|
|
| 26,615 |
|
|
| (14,287 | ) |
|
| 12,328 |
|
|
| — |
|
Yacht Club at Brickell |
| High Rise |
| Dec 2003 |
| Miami, FL |
| 1998 |
|
| 357 |
|
|
| 31,362 |
|
|
| 32,214 |
|
|
| 18,825 |
|
|
| 31,362 |
|
|
| 51,039 |
|
|
| 82,401 |
|
|
| (19,678 | ) |
|
| 62,723 |
|
|
| 68,351 |
|
Yorktown Apartments |
| High Rise |
| Dec 1999 |
| Lombard, IL |
| 1971 |
|
| 292 |
|
|
| 2,413 |
|
|
| 10,374 |
|
|
| 53,236 |
|
|
| 2,413 |
|
|
| 63,610 |
|
|
| 66,023 |
|
|
| (31,274 | ) |
|
| 34,749 |
|
|
| 30,167 |
|
Total Same Store Sales |
|
|
|
|
|
|
|
|
|
| 26,649 |
|
| $ | 1,411,619 |
|
| $ | 2,597,010 |
|
| $ | 2,149,561 |
|
| $ | 1,322,144 |
|
| $ | 4,746,571 |
|
| $ | 6,068,715 |
|
| $ | (2,188,175 | ) |
| $ | 3,880,540 |
|
| $ | 3,579,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redevelopment and Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
236-238 East 88th Street |
| High Rise |
| Jan 2004 |
| New York, NY |
| 1900 |
|
| 42 |
|
| $ | 8,820 |
|
| $ | 2,914 |
|
| $ | 8,734 |
|
| $ | 8,820 |
|
| $ | 11,648 |
|
| $ | 20,468 |
|
| $ | (2,088 | ) |
| $ | 18,380 |
|
| $ | — |
|
707 Leahy |
| Garden |
| Apr 2007 |
| Redwood City, CA |
| 1973 |
|
| 110 |
|
|
| 15,444 |
|
|
| 7,909 |
|
|
| 16,619 |
|
|
| 15,444 |
|
|
| 24,528 |
|
|
| 39,972 |
|
|
| (6,731 | ) |
|
| 33,241 |
|
|
| 8,534 |
|
Bay Parc Plaza |
| High Rise |
| Sep 2004 |
| Miami, FL |
| 2000 |
|
| 474 |
|
|
| 22,680 |
|
|
| 41,847 |
|
|
| 38,851 |
|
|
| 22,680 |
|
|
| 80,698 |
|
|
| 103,378 |
|
|
| (26,606 | ) |
|
| 76,772 |
|
|
| 76,631 |
|
Flamingo Point |
| High Rise |
| Sep 1997 |
| Miami Beach, FL |
| 1960 |
|
| 1,101 |
|
|
| 32,427 |
|
|
| 48,808 |
|
|
| 400,164 |
|
|
| 32,427 |
|
|
| 448,972 |
|
|
| 481,399 |
|
|
| (188,572 | ) |
|
| 292,827 |
|
|
| — |
|
Parc Mosaic |
| Garden |
| Dec 2014 |
| Boulder, CO |
| 1970 |
|
| 226 |
|
|
| 15,300 |
|
|
| — |
|
|
| 107,179 |
|
|
| 15,300 |
|
|
| 107,179 |
|
|
| 122,479 |
|
|
| (461 | ) |
|
| 122,018 |
|
|
| — |
|
Park Towne Place |
| High Rise |
| Apr 2000 |
| Philadelphia, PA |
| 1959 |
|
| 940 |
|
|
| 10,472 |
|
|
| 47,301 |
|
|
| 353,053 |
|
|
| 10,472 |
|
|
| 400,354 |
|
|
| 410,826 |
|
|
| (152,223 | ) |
|
| 258,603 |
|
|
| 196,655 |
|
Villas at Park La Brea, The |
| Garden |
| Mar 2002 |
| Los Angeles, CA |
| 2002 |
|
| 250 |
|
|
| 8,630 |
|
|
| 48,871 |
|
|
| 19,251 |
|
|
| 8,630 |
|
|
| 68,122 |
|
|
| 76,752 |
|
|
| (33,834 | ) |
|
| 42,918 |
|
|
| 51,097 |
|
Other (7) |
|
|
|
|
|
|
|
|
|
| — |
|
|
| 9,598 |
|
|
| — |
|
|
| 82,830 |
|
|
| 9,598 |
|
|
| 82,830 |
|
|
| 92,428 |
|
|
| (2 | ) |
|
| 92,426 |
|
|
| — |
|
Total Redevelopment and Development |
|
|
|
|
|
|
|
|
|
| 3,143 |
|
| $ | 123,371 |
|
| $ | 197,650 |
|
| $ | 1,026,681 |
|
| $ | 123,371 |
|
| $ | 1,224,331 |
|
| $ | 1,347,702 |
|
| $ | (410,517 | ) |
| $ | 937,185 |
|
| $ | 332,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
777 South Broad Street |
| Mid Rise |
| May 2018 |
| Philadelphia, PA |
| 2010 |
|
| 146 |
|
| $ | 6,986 |
|
| $ | 67,512 |
|
| $ | 2,596 |
|
| $ | 6,986 |
|
| $ | 70,108 |
|
| $ | 77,094 |
|
| $ | (4,115 | ) |
| $ | 72,979 |
|
| $ | 56,581 |
|
Avery Row |
| Mid Rise |
| Dec 2018 |
| Arlington, VA |
| 2013 |
|
| 67 |
|
|
| 8,165 |
|
|
| 21,348 |
|
|
| 1,812 |
|
|
| 8,165 |
|
|
| 23,160 |
|
|
| 31,325 |
|
|
| (913 | ) |
|
| 30,412 |
|
|
| — |
|
Bent Tree Apartments |
| Garden |
| Feb 2018 |
| Centreville, VA |
| 1986 |
|
| 748 |
|
|
| 46,975 |
|
|
| 113,695 |
|
|
| 20,823 |
|
|
| 46,975 |
|
|
| 134,518 |
|
|
| 181,493 |
|
|
| (9,679 | ) |
|
| 171,814 |
|
|
| — |
|
Locust on the Park |
| High Rise |
| May 2018 |
| Philadelphia, PA |
| 1911 |
|
| 152 |
|
|
| 5,292 |
|
|
| 53,823 |
|
|
| 4,228 |
|
|
| 5,292 |
|
|
| 58,051 |
|
|
| 63,343 |
|
|
| (3,510 | ) |
|
| 59,833 |
|
|
| 34,891 |
|
One Ardmore |
| Mid Rise |
| Apr 2019 |
| Ardmore, PA |
| 2019 |
|
| 110 |
|
|
| 4,929 |
|
|
| 61,631 |
|
|
| 1,387 |
|
|
| 4,929 |
|
|
| 63,018 |
|
|
| 67,947 |
|
|
| (1,560 | ) |
|
| 66,387 |
|
|
| 31,052 |
|
Southstar Lofts |
| High Rise |
| May 2018 |
| Philadelphia, PA |
| 2014 |
|
| 85 |
|
|
| 1,780 |
|
|
| 37,428 |
|
|
| 683 |
|
|
| 1,780 |
|
|
| 38,111 |
|
|
| 39,891 |
|
|
| (2,235 | ) |
|
| 37,656 |
|
|
| 29,624 |
|
The Left Bank |
| Mid Rise |
| May 2018 |
| Philadelphia, PA |
| 1929 |
|
| 282 |
|
|
| — |
|
|
| 130,893 |
|
|
| 13,352 |
|
|
| — |
|
|
| 144,245 |
|
|
| 144,245 |
|
|
| (8,092 | ) |
|
| 136,153 |
|
|
| 80,679 |
|
Other (7) |
|
|
|
|
|
|
|
|
|
| — |
|
|
| 7,890 |
|
|
| — |
|
|
| 14,634 |
|
|
| 7,890 |
|
|
| 14,634 |
|
|
| 22,524 |
|
|
| — |
|
|
| 22,524 |
|
|
| — |
|
Total Acquisition |
|
|
|
|
|
|
|
|
|
| 1,590 |
|
| $ | 82,017 |
|
| $ | 486,330 |
|
| $ | 59,515 |
|
| $ | 82,017 |
|
| $ | 545,845 |
|
| $ | 627,862 |
|
| $ | (30,104 | ) |
| $ | 597,758 |
|
| $ | 232,827 |
|
F-40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2) |
|
| As of December 31, 2019 |
| ||||||||||||||||||||||
|
|
|
| (1) |
|
|
|
|
|
|
|
|
| Initial Cost |
|
| Cost Capitalized |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4) |
|
|
|
|
|
|
|
|
| |||||||
|
| Apartment |
| Date |
|
|
| Year |
| Apartment |
|
|
|
|
|
| Buildings and |
|
| Subsequent to |
|
|
|
|
|
| Buildings and |
|
| (3) |
|
| Accumulated |
|
| Total Cost |
|
| (5) |
| ||||||||
Apartment Community Name |
| Type |
| Consolidated |
| Location |
| Built |
| Homes |
|
| Land |
|
| Improvements |
|
| Consolidation |
|
| Land |
|
| Improvements |
|
| Total |
|
| Depreciation (AD) |
|
| Net of AD |
|
| Encumbrances |
| ||||||||||
Other Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1001 Brickell |
| High Rise |
| Jul 2019 |
| Miami, FL |
| 1985 |
|
| — |
|
| $ | 149,519 |
|
| $ | 152,892 |
|
| $ | 5,228 |
|
| $ | 149,519 |
|
| $ | 158,120 |
|
| $ | 307,639 |
|
| $ | (8,053 | ) |
| $ | 299,586 |
|
| $ | — |
|
173 E. 90th Street |
| High Rise |
| May 2004 |
| New York, NY |
| 1910 |
|
| 72 |
|
|
| 12,066 |
|
|
| 4,535 |
|
|
| 8,827 |
|
|
| 12,066 |
|
|
| 13,362 |
|
|
| 25,428 |
|
|
| (4,667 | ) |
|
| 20,761 |
|
|
| — |
|
182-188 Columbus Avenue |
| Mid Rise |
| Feb 2007 |
| New York, NY |
| 1910 |
|
| 32 |
|
|
| 19,123 |
|
|
| 3,300 |
|
|
| 5,769 |
|
|
| 19,123 |
|
|
| 9,069 |
|
|
| 28,192 |
|
|
| (4,603 | ) |
|
| 23,589 |
|
|
| 13,635 |
|
234 East 88th Street |
| Mid Rise |
| Jan 2014 |
| New York, NY |
| 1900 |
|
| 20 |
|
|
| 2,448 |
|
|
| 4,449 |
|
|
| 828 |
|
|
| 2,448 |
|
|
| 5,277 |
|
|
| 7,725 |
|
|
| (1,418 | ) |
|
| 6,307 |
|
|
| — |
|
237-239 Ninth Avenue |
| High Rise |
| Mar 2005 |
| New York, NY |
| 1900 |
|
| 36 |
|
|
| 8,495 |
|
|
| 1,866 |
|
|
| 3,132 |
|
|
| 8,495 |
|
|
| 4,998 |
|
|
| 13,493 |
|
|
| (3,166 | ) |
|
| 10,327 |
|
|
| 5,438 |
|
240 West 73rd Street |
| High Rise |
| Sep 2004 |
| New York, NY |
| 1900 |
|
| 200 |
|
|
| 68,109 |
|
|
| 12,140 |
|
|
| 14,048 |
|
|
| 68,109 |
|
|
| 26,188 |
|
|
| 94,297 |
|
|
| (10,715 | ) |
|
| 83,582 |
|
|
| — |
|
311 & 313 East 73rd Street |
| Mid Rise |
| Mar 2003 |
| New York, NY |
| 1904 |
|
| 34 |
|
|
| 5,678 |
|
|
| 1,609 |
|
|
| 598 |
|
|
| 5,678 |
|
|
| 2,207 |
|
|
| 7,885 |
|
|
| (1,625 | ) |
|
| 6,260 |
|
|
| — |
|
464-466 Amsterdam & 200-210 W. 83rd Street |
| Mid Rise |
| Feb 2007 |
| New York, NY |
| 1910 |
|
| 71 |
|
|
| 25,553 |
|
|
| 7,101 |
|
|
| 9,153 |
|
|
| 25,553 |
|
|
| 16,254 |
|
|
| 41,807 |
|
|
| (6,396 | ) |
|
| 35,411 |
|
|
| 20,094 |
|
518 East 88th Street |
| Mid Rise |
| Jan 2014 |
| New York, NY |
| 1900 |
|
| 20 |
|
|
| 2,233 |
|
|
| 4,315 |
|
|
| 625 |
|
|
| 2,233 |
|
|
| 4,940 |
|
|
| 7,173 |
|
|
| (1,388 | ) |
|
| 5,785 |
|
|
| — |
|
Columbus Avenue |
| Mid Rise |
| Sep 2003 |
| New York, NY |
| 1880 |
|
| 59 |
|
|
| 35,527 |
|
|
| 9,450 |
|
|
| 9,327 |
|
|
| 35,527 |
|
|
| 18,777 |
|
|
| 54,304 |
|
|
| (12,118 | ) |
|
| 42,186 |
|
|
| 24,608 |
|
Heritage Park Escondido |
| Garden |
| Oct 2000 |
| Escondido, CA |
| 1986 |
|
| 196 |
|
|
| 1,055 |
|
|
| 7,565 |
|
|
| 2,945 |
|
|
| 1,055 |
|
|
| 10,510 |
|
|
| 11,565 |
|
|
| (7,188 | ) |
|
| 4,377 |
|
|
| 5,867 |
|
Heritage Park Livermore |
| Garden |
| Oct 2000 |
| Livermore, CA |
| 1988 |
|
| 167 |
|
|
| — |
|
|
| 10,209 |
|
|
| 2,111 |
|
|
| — |
|
|
| 12,320 |
|
|
| 12,320 |
|
|
| (8,576 | ) |
|
| 3,744 |
|
|
| 6,090 |
|
Heritage Village Anaheim |
| Garden |
| Oct 2000 |
| Anaheim, CA |
| 1986 |
|
| 196 |
|
|
| 1,832 |
|
|
| 8,541 |
|
|
| 2,332 |
|
|
| 1,832 |
|
|
| 10,873 |
|
|
| 12,705 |
|
|
| (7,339 | ) |
|
| 5,366 |
|
|
| 7,124 |
|
Mezzo |
| High Rise |
| Mar 2015 |
| Atlanta, GA |
| 2008 |
|
| 94 |
|
|
| 4,292 |
|
|
| 34,178 |
|
|
| 1,817 |
|
|
| 4,292 |
|
|
| 35,995 |
|
|
| 40,287 |
|
|
| (6,918 | ) |
|
| 33,369 |
|
|
| 22,970 |
|
St. George Villas |
| Garden |
| Jan 2006 |
| St. George, SC |
| 1984 |
|
| 40 |
|
|
| 107 |
|
|
| 1,025 |
|
|
| 419 |
|
|
| 107 |
|
|
| 1,444 |
|
|
| 1,551 |
|
|
| (1,290 | ) |
|
| 261 |
|
|
| 293 |
|
Tremont |
| Mid Rise |
| Dec 2014 |
| Atlanta, GA |
| 2009 |
|
| 78 |
|
|
| 5,274 |
|
|
| 18,011 |
|
|
| 3,069 |
|
|
| 5,274 |
|
|
| 21,080 |
|
|
| 26,354 |
|
|
| (4,028 | ) |
|
| 22,326 |
|
|
| — |
|
Other (7) |
|
|
|
|
|
|
|
|
|
| — |
|
|
| 205 |
|
|
| — |
|
|
| 382 |
|
|
| 205 |
|
|
| 382 |
|
|
| 587 |
|
|
| — |
|
|
| 587 |
|
|
| — |
|
Total Other Real Estate |
|
|
|
|
|
|
|
|
|
| 1,315 |
|
| $ | 341,516 |
|
| $ | 281,186 |
|
| $ | 70,610 |
|
| $ | 341,516 |
|
| $ | 351,796 |
|
| $ | 693,312 |
|
| $ | (89,488 | ) |
| $ | 603,824 |
|
| $ | 106,119 |
|
Total Portfolio |
|
|
|
|
|
|
|
|
|
| 32,697 |
|
| $ | 1,958,523 |
|
| $ | 3,562,176 |
|
| $ | 3,306,367 |
|
| $ | 1,869,048 |
|
| $ | 6,868,543 |
|
| $ | 8,737,591 |
|
| $ | (2,718,284 | ) |
| $ | 6,019,307 |
|
| $ | 4,251,339 |
|
(1) | Date we acquired the apartment community or first consolidated the partnership that owns the community. |
(2) | Includes costs capitalized since acquisition or date of initial consolidation of the community. |
(3) | The aggregate cost of land and depreciable property for federal income tax purposes was approximately $3.8 billion as of December 31, 2019. |
(4) | Depreciable life for buildings and improvements ranges from 5 to 30 years and is calculated on a straight-line basis. |
(5) | Encumbrances are presented before reduction for debt issuance costs. |
(6) | The current carrying value of the apartment community reflects an impairment loss recognized during prior periods. |
(7) | Other includes apartment communities under development, land parcels, and certain non-residential properties held for future development. |
F-41
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO PROPERTIES, L.P.
SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Years Ended December 31, 2019, 2018, 2017 and 2016
(In Thousands)
|
| 2019 |
|
| 2018 |
|
| 2017 |
| |||
Total real estate balance at beginning of year |
| $ | 8,308,590 |
|
| $ | 8,478,877 |
|
| $ | 8,486,166 |
|
Additions during the year: |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
| 383,557 |
|
|
| 501,009 |
|
|
| 16,687 |
|
Capital additions |
|
| 404,896 |
|
|
| 348,727 |
|
|
| 354,229 |
|
Dispositions and other |
|
| (359,452 | ) |
|
| (1,020,023 | ) |
|
| (378,205 | ) |
Total real estate balance at end of year |
| $ | 8,737,591 |
|
| $ | 8,308,590 |
|
| $ | 8,478,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation balance at beginning of year |
| $ | 2,585,115 |
|
| $ | 2,848,609 |
|
| $ | 2,730,758 |
|
Depreciation |
|
| 358,661 |
|
|
| 354,208 |
|
|
| 344,960 |
|
Dispositions and other |
|
| (225,492 | ) |
|
| (617,702 | ) |
|
| (227,109 | ) |
Accumulated depreciation balance at end of year |
| $ | 2,718,284 |
|
| $ | 2,585,115 |
|
| $ | 2,848,609 |
|
| 2018 | 2017 | 2016 | |||||||||
| Real Estate Segment | |||||||||||
| Real Estate balance at beginning of year | $ | 7,927,753 | $ | 7,931,117 | $ | 7,744,894 | |||||
| Additions during the year: | |||||||||||
| Acquisitions | 501,009 | 16,687 | 333,174 | ||||||||
| Capital additions | 344,501 | 345,974 | 329,697 | ||||||||
| Deductions during the year: | |||||||||||
| Casualty and other write-offs (1) | (58,152 | ) | (106,590 | ) | (170,744 | ) | |||||
| Impairment of real estate | — | (35,881 | ) | — | |||||||
| Amounts related to assets held for sale | (83,905 | ) | (38,208 | ) | — | ||||||
| Sales | (322,616 | ) | (185,346 | ) | (305,904 | ) | |||||
| Real Estate balance at end of year | $ | 8,308,590 | $ | 7,927,753 | $ | 7,931,117 | |||||
| Accumulated Depreciation balance at beginning of year | $ | 2,522,358 | $ | 2,421,357 | $ | 2,488,448 | |||||
| Additions during the year: | |||||||||||
| Depreciation | 339,883 | 320,870 | 287,661 | ||||||||
| Deductions during the year: | |||||||||||
| Casualty and other write-offs (1) | (57,067 | ) | (106,521 | ) | (169,098 | ) | |||||
| Amounts related to assets held for sale | (41,717 | ) | (20,383 | ) | — | ||||||
| Sales | (178,342 | ) | (92,965 | ) | (185,654 | ) | |||||
| Accumulated depreciation balance at end of year | $ | 2,585,115 | $ | 2,522,358 | $ | 2,421,357 | |||||
| Asset Management Business | |||||||||||
| Real Estate balance at beginning of year | $ | 551,124 | $ | 555,049 | $ | 562,589 | |||||
| Additions during the year: | |||||||||||
| Capital additions | 4,226 | 8,255 | 8,909 | ||||||||
| Deductions during the year: | |||||||||||
| Casualty and other write-offs (2) | 6,603 | (1,711 | ) | (2,116 | ) | ||||||
| Amounts related to assets held for sale | — | — | (2,801 | ) | |||||||
| Sales | (561,953 | ) | (10,469 | ) | (11,532 | ) | |||||
| Real Estate balance at end of year | $ | — | $ | 551,124 | $ | 555,049 | |||||
| Accumulated Depreciation balance at beginning of year | $ | 326,251 | $ | 309,401 | $ | 289,574 | |||||
| Additions during the year: | |||||||||||
| Depreciation | 14,325 | 24,090 | 24,704 | ||||||||
| Deductions during the year: | |||||||||||
| Casualty and other write-offs (2) | 6,704 | (2,480 | ) | (68 | ) | ||||||
| Amounts related to assets held for sale | — | — | (1,525 | ) | |||||||
| Sales | (347,280 | ) | (4,760 | ) | (3,284 | ) | |||||
| Accumulated depreciation balance at end of year | $ | — | $ | 326,251 | $ | 309,401 | |||||
F-42