



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________________
Form 10-Q
(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~June 30, 2018~~March 31, 2019
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number 1-13232 (Apartment Investment and Management Company)
Commission File Number 0-24497 (AIMCO Properties, L.P.)

Apartment Investment and Management Company
AIMCO Properties, L.P.
(Exact name of registrant as specified in its charter)



Maryland (Apartment Investment and Management Company)		84-1259577
Delaware (AIMCO Properties, L.P.)		84-1275621
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4582 South Ulster Street, Suite 1100
Denver, Colorado		80237
(Address of principal executive offices)		(Zip Code)
(303) 757-8101
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Apartment Investment and Management Company: Yes x No o	AIMCO Properties, L.P.: Yes x No o
Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Apartment Investment and Management Company: Yes x No o	AIMCO Properties, L.P.: Yes x No o



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Apartment Investment and Management Company:
Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
			Emerging growth company	o

AIMCO Properties, L.P.:
Large accelerated filer	o		Accelerated filer	x
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
			Emerging growth company	o



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


				Exchange Act.
Apartment Investment and Management Company:	o	AIMCO Properties, L.P.:	o



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Apartment Investment and Management Company: Yes	o	No	x	AIMCO Properties, L.P.: Yes	o	No	x

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)				Name of each exchange on which registered
Aimco Investment and Management Company Class A Common Stock	AIV				New York Stock Exchange

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The number of shares of Apartment Investment and Management Company Class A Common Stock outstanding as of ~~August 3, 2018: 157,351,428~~May 2, 2019: 148,828,469

The number of AIMCO Properties, L.P. Partnership Common Units outstanding as of ~~August 3, 2018: 166,397,751~~May 2, 2019: 158,492,651

EXPLANATORY NOTE

This filing combines the reports on Form 10-Q for the quarterly period ended ~~June 30, 2018,~~March 31, 2019, of Apartment Investment and Management Company, or Aimco, and AIMCO Properties, L.P., or the Aimco Operating Partnership. Where it is important to distinguish between the two entities, we refer to them specifically. Otherwise, references to “we,” “us” or “our” mean, collectively, Aimco, the Aimco Operating Partnership and their consolidated entities.

Aimco, a Maryland corporation, is a self-administered and self-managed real estate investment trust, or REIT. Aimco, through wholly-owned subsidiaries, is the general and special limited partner of, and as of ~~June 30, 2018,~~March 31, 2019, owned a ~~94.6%~~93.9% ownership interest in the common partnership units of, the Aimco Operating Partnership. The remaining ~~5.4%~~6.1% interest is owned by limited partners. As the sole general partner of the Aimco Operating Partnership, Aimco has exclusive control of the Aimco Operating Partnership’s day-to-day management.

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

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.

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 condensed 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 condensed consolidated financial statements for Aimco and the Aimco Operating Partnership; a single set of condensed consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

This report also includes separate Part I, Item 4. 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.

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

TABLE OF CONTENTS

FORM 10-Q



		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Apartment Investment and Management Company:
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	67
	AIMCO Properties, L.P.:
	Condensed Consolidated Balance Sheets (Unaudited)	78
	Condensed Consolidated Statements of Operations (Unaudited)	89
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	910
	Condensed Consolidated Statements of Partners’ Capital (Unaudited)	11
	Condensed Consolidated Statements of Cash Flows (Unaudited)	1012
	Notes to the Condensed Consolidated Financial Statements of Apartment Investment and Management Company and AIMCO Properties, L.P. (Unaudited)	1113
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2322
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	4441
ITEM 4.	Controls and Procedures	4441
	PART II. OTHER INFORMATION
ITEM 1A.	Risk Factors	4543
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4543
ITEM 6.	Exhibits	4645
Signatures	.	4846

PART I. FINANCIAL INFORMATION


ITEM 1.	Financial Statements

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Buildings and improvements	$	6,407,863		$	6,174,149		$	6,493,539		$	6,552,065
Land	1,763,788			1,753,604			1,731,980			1,756,525
Total real estate	8,171,651			7,927,753			8,225,519			8,308,590
Accumulated depreciation	(2,452,947		)	(2,522,358		)	(2,581,666		)	(2,585,115		)
Net real estate	5,718,704			5,405,395			5,643,853			5,723,475
Cash and cash equivalents	46,703			60,498			162,286			36,858
Restricted cash	41,117			34,827			36,103			35,737
Other assets	365,564			272,739			441,527			351,541
Assets held for sale	94,314			17,959			—			42,393
Assets of partnerships served by Asset Management business held for sale at June 30, 2018:
Real estate, net	216,875			224,873
Cash and cash equivalents	20,696			16,288
Restricted cash	30,055			30,928
Other assets	10,328			15,533
Total assets	$	6,544,356		$	6,079,040		$	6,283,769		$	6,190,004

LIABILITIES AND EQUITY
Non-recourse property debt secured by Real Estate communities, net	$	3,791,238		$	3,545,109
Term loan, net	249,801			249,501
Non-recourse property debt, net							$	3,859,023		$	3,915,305
Revolving credit facility borrowings	220,170			67,160			70,000			160,360
Total indebtedness associated with Real Estate portfolio	4,261,209			3,861,770
Total indebtedness							3,929,023			4,075,665
Accrued liabilities and other	216,789			213,027			293,279			226,230
Liabilities related to assets held for sale	68,610			—			—			23,177
Liabilities of partnerships served by Asset Management business held for sale at June 30, 2018:
Non-recourse property debt, net	224,112			227,141
Accrued liabilities and other	17,519			19,812
Total liabilities	4,788,239			4,321,750			4,222,302			4,325,072
Preferred noncontrolling interests in Aimco Operating Partnership	101,332			101,537			101,195			101,291
Commitments and contingencies (Note 4)
Commitments and contingencies (Note 5)
Equity:
Perpetual Preferred Stock	125,000			125,000			125,000			125,000
Common Stock, $0.01 par value, 500,787,260 shares authorized, 157,351,428 and 157,189,447 shares issued/outstanding at June 30, 2018 and December 31, 2017, respectively	1,574			1,572
Common Stock, $0.01 par value, 500,787,260 shares authorized, 148,758,031 and 144,623,034 shares issued/outstanding at March 31, 2019 and December 31, 2018, respectively							1,488			1,446
Additional paid-in capital	3,887,260			3,900,042			3,495,295			3,515,686
Accumulated other comprehensive income	3,208			3,603			4,851			4,794
Distributions in excess of earnings	(2,402,101		)	(2,367,073		)	(1,742,998		)	(1,947,507		)
Total Aimco equity	1,614,941			1,663,144			1,883,636			1,699,419
Noncontrolling interests in consolidated real estate partnerships	(2,984		)	(1,716		)	(2,857		)	(2,967		)
Common noncontrolling interests in Aimco Operating Partnership	42,828			(5,675		)	79,493			67,189
Total equity	1,654,785			1,655,753			1,960,272			1,763,641
Total liabilities and equity	$	6,544,356		$	6,079,040		$	6,283,769		$	6,190,004

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2018			2017			2018			2017			2019			2018
REVENUES
Rental and other property revenues attributable to Real Estate	$	231,130		$	227,703		$	456,523		$	452,931
Rental and other property revenues of partnerships served by Asset Management business	19,000			18,533			37,808			37,095
Tax credit and transaction revenues	57			2,856			3,576			5,547
Rental and other property revenues attributable to real estate													$	230,235		$	225,393
Asset Management business rental and tax credit revenues													—			22,327
Total revenues	250,187			249,092			497,907			495,573			230,235			247,720

OPERATING EXPENSES
Property operating expenses attributable to Real Estate	76,031			79,082			154,318			158,708
Property operating expenses attributable to real estate													79,184			78,287
Property operating expenses of partnerships served by Asset Management business	9,062			8,391			18,257			17,587			—			9,195
Depreciation and amortization	97,485			89,155			190,033			176,323			93,565			92,548
General and administrative expenses	13,882			10,108			25,237			21,071			10,369			11,355
Other expenses, net	4,366			2,650			7,324			4,389			5,703			2,958
Total operating expenses	200,826			189,386			395,169			378,078			188,821			194,343
Operating income	49,361			59,706			102,738			117,495

Interest income	2,884			2,012			5,056			4,204			2,726			2,172
Interest expense	(49,906		)	(46,858		)	(97,701		)	(94,740		)	(41,409		)	(47,795		)
Gain on dispositions of real estate													291,473			53,195
Other, net	200			200			424			665			72			224
Income before income taxes and gain on dispositions	2,539			15,060			10,517			27,624
Income tax benefit	4,395			5,023			41,783			10,008
Income before gain on dispositions	6,934			20,083			52,300			37,632
Gain on dispositions of real estate, inclusive of related income tax	222			1,508			50,546			1,114
Income before income tax (expense) benefit													294,276			61,173
Income tax (expense) benefit													(2,981		)	34,517
Net income	7,156			21,591			102,846			38,746			291,295			95,690
Noncontrolling interests:
Net income attributable to noncontrolling interests in consolidated real estate partnerships	(45		)	(813		)	(6,251		)	(1,764		)	(91		)	(6,206		)
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership	(1,934		)	(1,939		)	(3,871		)	(3,888		)	(1,934		)	(1,937		)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership	(140		)	(787		)	(3,895		)	(1,344		)	(15,137		)	(3,755		)
Net income attributable to noncontrolling interests	(2,119		)	(3,539		)	(14,017		)	(6,996		)	(17,162		)	(11,898		)
Net income attributable to Aimco	5,037			18,052			88,829			31,750			274,133			83,792
Net income attributable to Aimco preferred stockholders	(2,149		)	(2,149		)	(4,297		)	(4,297		)	(2,148		)	(2,148		)
Net income attributable to participating securities	(71		)	(60		)	(190		)	(119		)	(417		)	(119		)
Net income attributable to Aimco common stockholders	$	2,817		$	15,843		$	84,342		$	27,334		$	271,568		$	81,525

Net income attributable to Aimco per common share – basic and diluted	$	0.02		$	0.10		$	0.54		$	0.17		$	1.88		$	0.54
Dividends declared per common share	$	0.38		$	0.36		$	0.76		$	0.72

Weighted average common shares outstanding – basic	156,703			156,305			156,656			156,282			144,232			151,872
Weighted average common shares outstanding – diluted	156,833			156,715			156,786			156,735			144,445			152,000

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net income $ 7,156
$ 21,591
$ 102,846
$ 38,746
Other comprehensive loss:
Unrealized (losses) gains on interest rate swaps (4 ) (345 ) 415
(355 )
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss 100
369
219
755
Unrealized (losses) gains on available for sale debt securities (451 ) 1,080
(1,051 ) (421 )
Other comprehensive (loss) gain (355 ) 1,104
(417 ) (21 )
Comprehensive income 6,801
22,695
102,429
38,725
Comprehensive income attributable to noncontrolling interests (2,100 ) (3,630 ) (13,995 ) (7,090 )
Comprehensive income attributable to Aimco $ 4,701
$ 19,065
$ 88,434
$ 31,635



	Three Months Ended
	March 31,
	2019			2018
Net income	$	291,295		$	95,690
Other comprehensive gain (loss):
Unrealized gains (losses) on available for sale debt securities	61			(600		)
Unrealized gains on interest rate swaps	—			419
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss	—			119
Other comprehensive gain (loss)	61			(62		)
Comprehensive income	291,356			95,628
Comprehensive income attributable to noncontrolling interests	(17,166		)	(11,895		)
Comprehensive income attributable to Aimco	$	274,190		$	83,733

See notes to condensed consolidated financial statements.

Table of Contents

5APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)



	Preferred Stock			Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Earnings			Total Aimco Equity			Common Noncontrolling interests in Aimco Operating Partnerships			Noncontrolling interests in consolidated real estate partnerships			Total Equity
	Shares Issued	Amount		Shares Issued		Amount			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Distributions in Excess of Earnings			Total Aimco Equity									Total Equity
Balances at December 31, 2017	5,000	$	125,000	152,435		$	1,524		$	3,900,090		$	3,603		$	(2,367,073	)	$	1,663,144		$	(5,675	)	$	(1,716	)	$	1,655,753
Redemption of Aimco Operating Partnership Units	—	—		—		—			—			—			—			—			(6,963		)	—			(6,963		)
Amortization of share-based compensation cost	—	—		19		—			2,631			—			—			2,631			357			—			2,988
Effect in changes in ownership for consolidated entities	—	—		—		—			(17,486		)	—			—			(17,486		)	6,579			—			(10,907		)
Change in accumulated other comprehensive income	—	—		—		—			—			(59		)	—			(59		)	(3		)	—			(62		)
Other, net	—	—		114		1			92			—			—			93			—			—			93
Net income	—	—		—		—			—			—			83,792			83,792			3,755			6,206			93,753
Distributions to noncontrolling interests	—	—		—		—			—			—			—			—			—			(7,245		)	(7,245		)
Cash dividends paid to Common Stock holders	—	—		—		—			—			—			(59,777		)	(59,777		)	(2,838		)	—			(62,615		)
Cash dividends paid to Preferred Stock holders	—	—		—		—			—			—			(2,148		)	(2,148		)	—			—			(2,148		)
Balances at March 31, 2018	5,000	$	125,000	152,568		$	1,525		$	3,885,327		$	3,544		$	(2,345,206	)	$	1,670,190		$	(4,788	)	$	(2,755	)	$	1,662,647

Balances at December 31, 2018	5,000	$	125,000	144,623		$	1,446		$	3,515,686		$	4,794		$	(1,947,507	)	$	1,699,419		$	67,189		$	(2,967	)	$	1,763,641
Repurchases of Common Stock	—	—		(461	)	(5		)	(20,677		)	—			—			(20,682		)	—			—			(20,682		)
Redemption of Aimco Operating Partnership Units	—	—		—		—			—			—			—			—			(2,557		)	—			(2,557		)
Amortization of share-based compensation cost	—	—		22		—			2,442			—			—			2,442			796			—			3,238
Effect in changes in ownership for consolidated entities	—	—		—		—			(2,168		)	—			—			(2,168		)	2,168			—			—
Change in accumulated other comprehensive income	—	—		—		—			—			57			—			57			4			—			61
Other, net	—	—		82		2			57			—			—			59			—			19			78
Net income	—	—		—		—			—			—			274,133			274,133			15,137			91			289,361
Distributions to noncontrolling interests	—	—		—		—			—			—			—			—			(3,244		)	—			(3,244		)
Cash dividends paid to Common Stock holders	—	—		—		—			—			—			(67,476		)	(67,476		)	—			—			(67,476		)
Common Stock issued in special dividend	—	—		4,492		45			(45		)	—			—			—			—			—			—
Cash dividends paid to Preferred Stock holders	—	—		—		—			—			—			(2,148		)	(2,148		)	—			—			(2,148		)
Balances at March 31, 2019	5,000	$	125,000	148,758		$	1,488		$	3,495,295		$	4,851		$	(1,742,998	)	$	1,883,636		$	79,493		$	(2,857	)	$	1,960,272

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2018			2017			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	102,846		$	38,746		$	291,295		$	95,690
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	190,033			176,323			93,565			92,548
Gain on dispositions of real estate, inclusive of related income tax	(50,546		)	(1,114		)
Income tax benefit	(41,783		)	(10,008		)
Gain on dispositions of real estate							(291,473		)	(53,195		)
Income tax expense (benefit)							2,981			(34,517		)
Other adjustments	2,307			4,706			3,201			284
Net changes in operating assets and operating liabilities	(17,231		)	(31,147		)	(17,952		)	(19,487		)
Net cash provided by operating activities	185,626			177,506			81,617			81,323
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate	(205,318		)	(8,189		)	(2,236		)	(164,650		)
Capital expenditures	(164,116		)	(176,388		)	(85,546		)	(75,601		)
Proceeds from dispositions of real estate	76,317			10,915			342,083			69,788
Purchases of corporate assets	(2,649		)	(6,005		)	(3,319		)	(947		)
Other investing activities	2,079			733			1,422			(218		)
Net cash used in investing activities	(293,687		)	(178,934		)
Net cash provided by (used in) investing activities							252,404			(171,628		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse property debt	360,613			68,535			—			360,613
Principal repayments on non-recourse property debt	(257,144		)	(91,420		)
Proceeds from term loan	—			250,000
Net borrowings on revolving credit facility	153,010			227,790
Principal repayments of non-recourse property debt							(19,580		)	(206,262		)
Net (repayments of) borrowings on revolving credit facility							(90,360		)	11,475
Repurchases of Common Stock							(20,682		)	—
Payment of dividends to holders of Common Stock							(67,405		)	(59,652		)
Payment of dividends to holders of Preferred Stock	(4,297		)	(4,297		)	(2,148		)	(2,148		)
Payment of dividends to holders of Common Stock	(119,288		)	(112,661		)
Payment of distributions to noncontrolling interests	(16,998		)	(11,176		)	(5,701		)	(11,902		)
Redemptions of noncontrolling interests in the Aimco Operating Partnership							(2,653		)	(7,122		)
Purchases and redemptions of noncontrolling interests	(11,395		)	(323,165		)	—			(1,219		)
Other financing activities	(41		)	53			302			3,012
Net cash provided by financing activities	104,460			3,659
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(3,601		)	2,231
Net cash (used in) provided by financing activities							(208,227		)	86,795
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH							125,794			(3,510		)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	142,541			131,150			72,595			142,541
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	138,940		$	133,381		$	198,389		$	139,031

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Buildings and improvements	$	6,407,863		$	6,174,149		$	6,493,539		$	6,552,065
Land	1,763,788			1,753,604			1,731,980			1,756,525
Total real estate	8,171,651			7,927,753			8,225,519			8,308,590
Accumulated depreciation	(2,452,947		)	(2,522,358		)	(2,581,666		)	(2,585,115		)
Net real estate	5,718,704			5,405,395			5,643,853			5,723,475
Cash and cash equivalents	46,703			60,498			162,286			36,858
Restricted cash	41,117			34,827			36,103			35,737
Other assets	365,564			272,739			441,527			351,541
Assets held for sale	94,314			17,959			—			42,393
Assets of partnerships served by Asset Management business held for sale at June 30, 2018:
Real estate, net	216,875			224,873
Cash and cash equivalents	20,696			16,288
Restricted cash	30,055			30,928
Other assets	10,328			15,533
Total assets	$	6,544,356		$	6,079,040		$	6,283,769		$	6,190,004

LIABILITIES AND EQUITY
Non-recourse property debt secured by Real Estate communities, net	$	3,791,238		$	3,545,109
Term loan, net	249,801			249,501
Non-recourse property debt, net							$	3,859,023		$	3,915,305
Revolving credit facility borrowings	220,170			67,160			70,000			160,360
Total indebtedness associated with Real Estate portfolio	4,261,209			3,861,770
Total indebtedness							3,929,023			4,075,665
Accrued liabilities and other	216,789			213,027			293,279			226,230
Liabilities related to assets held for sale	68,610			—			—			23,177
Liabilities of partnerships served by Asset Management business held for sale at June 30, 2018:
Non-recourse property debt, net	224,112			227,141
Accrued liabilities and other	17,519			19,812
Total liabilities	4,788,239			4,321,750			4,222,302			4,325,072
Redeemable preferred units	101,332			101,537			101,195			101,291
Commitments and contingencies (Note 4)
Commitments and contingencies (Note 5)
Partners’ capital:
Preferred units	125,000			125,000			125,000			125,000
General Partner and Special Limited Partner	1,489,941			1,538,144			1,758,636			1,574,419
Limited Partners	42,828			(5,675		)	79,493			67,189
Partners’ capital attributable to the Aimco Operating Partnership	1,657,769			1,657,469			1,963,129			1,766,608
Noncontrolling interests in consolidated real estate partnerships	(2,984		)	(1,716		)	(2,857		)	(2,967		)
Total partners’ capital	1,654,785			1,655,753			1,960,272			1,763,641
Total liabilities and partners’ capital	$	6,544,356		$	6,079,040		$	6,283,769		$	6,190,004

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2018			2017			2018			2017			2019			2018
REVENUES
Rental and other property revenues attributable to Real Estate	$	231,130		$	227,703		$	456,523		$	452,931
Rental and other property revenues of partnerships served by Asset Management business	19,000			18,533			37,808			37,095
Tax credit and transaction revenues	57			2,856			3,576			5,547
Rental and other property revenues attributable to real estate													$	230,235		$	225,393
Asset Management business rental and tax credit revenues													—			22,327
Total revenues	250,187			249,092			497,907			495,573			230,235			247,720

OPERATING EXPENSES
Property operating expenses attributable to Real Estate	76,031			79,082			154,318			158,694
Property operating expenses attributable to real estate													79,184			78,287
Property operating expenses of partnerships served by Asset Management business	9,062			8,391			18,257			17,601			—			9,195
Depreciation and amortization	97,485			89,155			190,033			176,323			93,565			92,548
General and administrative expenses	13,882			10,108			25,237			21,071			10,369			11,355
Other expenses, net	4,366			2,650			7,324			4,389			5,703			2,958
Total operating expenses	200,826			189,386			395,169			378,078			188,821			194,343
Operating income	49,361			59,706			102,738			117,495

Interest income	2,884			2,012			5,056			4,204			2,726			2,172
Interest expense	(49,906		)	(46,858		)	(97,701		)	(94,740		)	(41,409		)	(47,795		)
Gain on dispositions of real estate													291,473			53,195
Other, net	200			200			424			665			72			224
Income before income taxes and gain on dispositions	2,539			15,060			10,517			27,624
Income tax benefit	4,395			5,023			41,783			10,008
Income before gain on dispositions	6,934			20,083			52,300			37,632
Gain on dispositions of real estate, inclusive of related income tax	222			1,508			50,546			1,114
Income before income tax (expense) benefit													294,276			61,173
Income tax (expense) benefit													(2,981		)	34,517
Net income	7,156			21,591			102,846			38,746			291,295			95,690
Net income attributable to noncontrolling interests in consolidated real estate partnerships	(45		)	(813		)	(6,251		)	(1,764		)	(91		)	(6,206		)
Net income attributable to the Aimco Operating Partnership	7,111			20,778			96,595			36,982			291,204			89,484
Net income attributable to the Aimco Operating Partnership’s preferred unitholders	(4,083		)	(4,088		)	(8,168		)	(8,185		)	(4,082		)	(4,085		)
Net income attributable to participating securities	(79		)	(63		)	(204		)	(123		)	(483		)	(125		)
Net income attributable to the Aimco Operating Partnership’s common unitholders	$	2,949		$	16,627		$	88,223		$	28,674		$	286,639		$	85,274

Net income attributable to the Aimco Operating Partnership per common unit – basic	$	0.02		$	0.10		$	0.54		$	0.18
Net income attributable to the Aimco Operating Partnership per common unit – diluted	$	0.02		$	0.10		$	0.54		$	0.17
Distributions declared per common unit	$	0.38		$	0.36		$	0.76		$	0.72
Net income attributable to the Aimco Operating Partnership per common unit – basic and diluted													$	1.88		$	0.54

Weighted average common units outstanding – basic	164,685			163,740			164,138			163,777			152,303			158,875
Weighted average common units outstanding – diluted	164,815			164,150			164,268			164,230			152,632			159,006

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Net income $ 7,156
$ 21,591
$ 102,846
$ 38,746
Other comprehensive loss:
Unrealized (losses) gains on interest rate swaps (4 ) (345 ) 415
(355 )
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss 100
369
219
755
Unrealized (losses) gains on available for sale debt securities (451 ) 1,080
(1,051 ) (421 )
Other comprehensive (loss) gain (355 ) 1,104
(417 ) (21 )
Comprehensive income 6,801
22,695
102,429
38,725
Comprehensive income attributable to noncontrolling interests (45 ) (856 ) (6,251 ) (1,865 )
Comprehensive income attributable to the Aimco Operating Partnership $ 6,756
$ 21,839
$ 96,178
$ 36,860



	Three Months Ended
	March 31,
	2019			2018
Net income	$	291,295		$	95,690
Other comprehensive gain (loss):
Unrealized gains (losses) on available for sale debt securities	61			(600		)
Unrealized gains on interest rate swaps	—			419
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss	—			119
Other comprehensive gain (loss)	61			(62		)
Comprehensive income	291,356			95,628
Comprehensive income attributable to noncontrolling interests	(91		)	(6,206		)
Comprehensive income attributable to the Aimco Operating Partnership	$	291,265		$	89,422

See notes to condensed consolidated financial statements.

Table of Contents

9AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(In thousands)

(Unaudited)



	Preferred Units		General Partner and Special Limited Partner			Limited Partners			Partners’ capital attributable to the Aimco Operating Partnership			Noncontrolling interests			Total Partners’ capital
Balances at December 31, 2017	$	125,000	$	1,538,144		$	(5,675	)	$	1,657,469		$	(1,716	)	$	1,655,753
Redemption of partnership units held by non-Aimco partners	—		—			(6,963		)	(6,963		)	—			(6,963		)
Amortization of share-based compensation	—		2,631			357			2,988			—			2,988
Effect of changes in ownership for consolidated entities	—		(17,486		)	6,579			(10,907		)	—			(10,907		)
Change in accumulated other comprehensive income	—		(59		)	(3		)	(62		)	—			(62		)
Other, net	—		93			—			93			—			93
Net income	—		83,792			3,755			87,547			6,206			93,753
Distributions to noncontrolling interests	—		—			—			—			(7,245		)	(7,245		)
Distributions to common unitholders	—		(59,777		)	(2,838		)	(62,615		)	—			(62,615		)
Distributions to preferred unitholders	—		(2,148		)	—			(2,148		)	—			(2,148		)
Balances at March 31, 2018	$	125,000	$	1,545,190		$	(4,788	)	$	1,665,402		$	(2,755	)	$	1,662,647

Balance at December 31, 2018	$	125,000	$	1,574,419		$	67,189		$	1,766,608		$	(2,967	)	$	1,763,641
Repurchases of common partnership units	—		(20,682		)	—			(20,682		)	—			(20,682		)
Redemption of partnership units held by non-Aimco partners	—		—			(2,557		)	(2,557		)	—			(2,557		)
Amortization of share-based compensation	—		2,442			796			3,238			—			3,238
Effect of changes in ownership for consolidated entities	—		(2,168		)	2,168			—			—			—
Change in accumulated other comprehensive income	—		57			4			61			—			61
Other, net	—		59			—			59			19			78
Net income	—		274,133			15,137			289,270			91			289,361
Distributions to common unitholders	—		(67,476		)	(3,244		)	(70,720		)	—			(70,720		)
Distributions to preferred unitholders	—		(2,148		)	—			(2,148		)	—			(2,148		)
Balances at March 31, 2019	$	125,000	$	1,758,636		$	79,493		$	1,963,129		$	(2,857	)	$	1,960,272

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2018			2017			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	102,846		$	38,746		$	291,295		$	95,690
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	190,033			176,323			93,565			92,548
Gain on dispositions of real estate, inclusive of related income tax	(50,546		)	(1,114		)
Income tax benefit	(41,783		)	(10,008		)
Gain on dispositions of real estate							(291,473		)	(53,195		)
Income tax expense (benefit)							2,981			(34,517		)
Other adjustments	2,307			4,706			3,201			284
Net changes in operating assets and operating liabilities	(17,231		)	(31,147		)	(17,952		)	(19,487		)
Net cash provided by operating activities	185,626			177,506			81,617			81,323
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate	(205,318		)	(8,189		)	(2,236		)	(164,650		)
Capital expenditures	(164,116		)	(176,388		)	(85,546		)	(75,601		)
Proceeds from dispositions of real estate	76,317			10,915			342,083			69,788
Purchases of corporate assets	(2,649		)	(6,005		)	(3,319		)	(947		)
Other investing activities	2,079			733			1,422			(218		)
Net cash used in investing activities	(293,687		)	(178,934		)
Net cash provided by (used in) investing activities							252,404			(171,628		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse property debt	360,613			68,535			—			360,613
Principal repayments on non-recourse property debt	(257,144		)	(91,420		)
Proceeds from term loan	—			250,000
Net borrowings on revolving credit facility	153,010			227,790
Principal repayments of non-recourse property debt							(19,580		)	(206,262		)
Net (repayments of) borrowings on revolving credit facility							(90,360		)	11,475
Repurchases of common partnership units held by General Partner and Special Limited Partner							(20,682		)	—
Payment of distributions to holders of Preferred Units	(8,168		)	(8,185		)	(4,082		)	(4,085		)
Payment of distributions to General Partner and Special Limited Partner	(119,288		)	(112,661		)	(67,405		)	(59,652		)
Payment of distributions to Limited Partners	(5,625		)	(5,408		)	(3,767		)	(2,737		)
Payment of distributions to noncontrolling interests	(7,502		)	(1,880		)	—			(7,228		)
Purchases and redemptions of noncontrolling interests in the Aimco Operating Partnership							(2,653		)	(7,122		)
Purchases of noncontrolling interests in consolidated real estate partnerships	(3,581		)	(311,055		)	—			(1,219		)
Other financing activities	(7,855		)	(12,057		)	302			3,012
Net cash provided by financing activities	104,460			3,659
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(3,601		)	2,231
Net cash (used in) provided by financing activities							(208,227		)	86,795
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH							125,794			(3,510		)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	142,541			131,150			72,595			142,541
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	138,940		$	133,381		$	198,389		$	139,031

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 2018~~March 31, 2019

(Unaudited)

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 ~~limited~~some 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, owns 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 partnership preferred units, which we refer to as preferred OP Units. As of ~~June 30, 2018,~~March 31, 2019, after eliminations for units held by consolidated subsidiaries, the Aimco Operating Partnership had ~~166,403,852~~158,435,979 common partnership units outstanding. As of ~~June 30, 2018,~~March 31, 2019, Aimco owned ~~157,351,428~~148,758,031 of the common partnership units ~~(94.6%~~(93.9% of the common partnership units) of the Aimco Operating Partnership and Aimco had outstanding an equal number of shares of its Class A Common Stock, 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.

As of ~~June 30, 2018,~~March 31, 2019, we owned an equity interest in ~~138~~128 apartment ~~communiti~~escommunities with ~~37,897~~34,349 apartment homes in our ~~Real Estate~~ portfolio. Our ~~Real Estate~~ portfolio is diversified by both price point and geography and consists primarily of market rate apartment communities in which we own a substantial interest. We consolidated ~~134~~124 of these apartment communities with ~~37,755~~34,207 apartment homes and these communities comprise our ~~reportable segment.~~

As of June 30, 2018, we also held nominal ownership positions in partnerships that own 46 low-income housing tax credit apartment communities with 6,898 apartment homes. We provide services to these partnerships and receive fees and other payments in return. Our relationship with these partnerships is different than real estate ownership and is better described as an asset management business, or Asset Management. In accordance with accounting principles generally accepted in the United States of America, or GAAP, we are required to consolidate partnerships owning an aggregate of 39 apartment communities with 6,211 apartment homes. We completed the sale of our Asset Management business on July 25, 2018.segments.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three ~~and six~~ months ended ~~June 30, 2018,~~March 31, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2018.~~2019.

The balance sheets of Aimco and the Aimco Operating Partnership at December 31, ~~2017,~~2018, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. Except where indicated, the footnotes refer to both Aimco and the Aimco Operating Partnership.

Principles of Consolidation

Aimco’s accompanying condensed consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership, and their consolidated subsidiaries. The Aimco Operating Partnership’s condensed consolidated financial statements

include the accounts of the Aimco Operating Partnership and its consolidated subsidiaries ~~including partnerships served by our Asset Management business~~ (see Note 89). All significant intercompany balances and transactions have been eliminated in consolidation.

Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are reflected in Aimco’s accompanying condensed consolidated balance sheets as noncontrolling interests in the Aimco Operating Partnership. Interests in partnerships consolidated by the Aimco Operating Partnership that are held by third parties are reflected in our accompanying condensed consolidated balance sheets as noncontrolling interests in consolidated real estate partnerships.

Temporary Equity and Partners’ Capital

The following table presents a reconciliation of the Aimco Operating Partnership’s preferred OP Units from December 31, ~~2017~~2018 to ~~June 30, 2018.~~March 31, 2019. The preferred OP Units may be redeemed at the holders’ option (as further discussed in Note 56), and are therefore presented within temporary equity in Aimco’s condensed consolidated balance sheets and within temporary capital in the Aimco Operating Partnership’s condensed consolidated balance sheets (in thousands).

Balance, December 31, 2017 $ 101,537
Distributions to holders of preferred OP Units (3,871 )
Redemption of preferred OP Units and other (205 )
Net income attributable to preferred OP Units 3,871
Balance, June 30, 2018 $ 101,332

~~Aimco Equity (including Noncontrolling Interests)~~

~~The following table presents a reconciliation of Aimco’s consolidated permanent equity accounts from December 31, 2017 to June 30, 2018 (in thousands):~~

Aimco
Equity

Noncontrolling
interests in
consolidated real estate
partnerships

Common
noncontrolling
interests in
Aimco Operating
Partnership

Total
Equity
Balance, December 31, 2017 $ 1,663,144
$ (1,716 ) $ (5,675 ) $ 1,655,753
Contributions —
(20 ) —
(20 )
Issuance of common OP Units —
—
50,151
50,151
Dividends on Preferred Stock (4,297 ) —
—
(4,297 )
Dividends and distributions on Common Stock and common OP Units (119,558 ) (7,499 ) (5,973 ) (133,030 )
Redemptions of common OP Units —
—
(7,611 ) (7,611 )
Amortization of stock-based compensation cost 4,481
—
780
5,261
Effect of changes in ownership for consolidated entities (17,385 ) —
7,283
(10,102 )
Change in accumulated other comprehensive loss (395 ) —
(22 ) (417 )
Other 122
—
—
122
Net income 88,829
6,251
3,895
98,975
Balance, June 30, 2018 $ 1,614,941
$ (2,984 ) $ 42,828
$ 1,654,785

~~Partners’ Capital attributable to the Aimco Operating Partnership~~

The following table presents a reconciliation of the consolidated partners’ capital balances in permanent capital that are attributable to the Aimco Operating Partnership from December 31, 2017 to June 30, 2018 (in thousands):

Partners’ capital
attributable to
the Aimco Operating Partnership
Balance, December 31, 2017 $ 1,657,469
Issuance of common OP Units 50,151
Distributions to preferred units held by Aimco (4,297 )
Distributions to common units held by Aimco (119,558 )
Distributions to common units held by Limited Partners (5,973 )
Redemption of common OP Units (7,611 )
Amortization of Aimco stock-based compensation cost 5,261
Effect of changes in ownership for consolidated entities (10,102 )
Change in accumulated other comprehensive loss (417 )
Other 122
Net income 92,724
Balance, June 30, 2018 $ 1,657,769

A separate reconciliation of noncontrolling interests in consolidated real estate partnerships and total partners’ capital for the Aimco Operating Partnership is not presented as these amounts are identical to the corresponding noncontrolling interests in consolidated real estate partnerships and total equity for Aimco, which are presented above.



Balance, December 31, 2018	$	101,291
Distributions to holders of preferred OP Units	(1,934		)
Redemption of preferred OP Units and other	(96		)
Net income attributable to preferred OP Units	1,934
Balance, March 31, 2019	$	101,195

Use of Estimates

The preparation of our condensed 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 and Revisions

Certain items ~~included~~ in the ~~2017~~2018 condensed consolidated financial statements have been reclassified to conform to the current presentation. We have also reclassified gain on dispositions of real estate and related income taxes, which were previously reported net on our condensed consolidated statements of operations, to now present gain on dispositions of real estate as a component of income before income taxes in our condensed consolidated statements of operations, as follows (in thousands):

~~Income Taxes~~



	March 31, 2018
	As Previously Reported		Adjustments			As Revised
Income tax benefit	$	37,388	$	(2,871	)	$	34,517
Gain on dispositions of real estate	50,324		2,871			53,195

During the three months ended March 31, 2019, Aimco and the Aimco Operating Partnership effected a reverse split of share of common shares and common partnership units, respectively, at a ratio of 1 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 ~~discussed in Note 9 to~~such, we have revised the ~~consolidated financial statements in Item 8~~outstanding share and unit counts, presentation of ~~our Form 10-K for~~share and unit activity, and earnings per share and unit, as if the ~~year ended~~reverse split had occurred on December 31, ~~2017, we have not completed our accounting for the tax effects of the enactment of the Tax Cuts and Jobs Act in late December~~ 2017. During the six months ended June 30, 2018, we recognized a measurement period adjustment to reduce by $11.3 million an estimated valuation allowance recognized as of December 31, 2017. During the six months ended June 30, 2018, we also recognized an offsetting valuation allowance resulting from an intercompany transfer of assets related to our Asset Management business. These adjustments had no net effect on our results of operations or effective tax rate.

Accounting Pronouncements Adopted in the Current Year

Effective January 1, ~~2018,~~2019, we adopted ~~a new~~the lease accounting standard 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 services~~FASB. We elected to a customer for an amount reflecting the consideration to which the entity expects to be entitled for such exchange. In evaluating the contracts we enter into in the ordinary course of business, substantially all of our revenue is generated by lease agreements, which will continue to be subject to existing GAAP until 2019, when we will adopt ~~the new lease accounting standard.~~

~~The new revenue standard also introduced new guidance for accounting for other income, including how we measure gains or losses on the sale of real estate. We adopted~~ the new standard using practical expedients that: do not require a look back to expired or existing contracts for embedded leases; allow us to retain the ~~modified retrospective~~classification of existing leases; and allow us to retain the previous accounting for the initial direct costs of existing leases. Under the new standard, a contract is or contains a lease when it provides the right to control the use of an asset for a period of time in exchange for consideration.

Lessor accounting remains largely unchanged. In our position as a lessor, we have elected the practical expedient that allows us to combine revenue attributable to nonlease components with associated lease components where the timing and pattern of transfer of the components are the same. As a result, 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 that allows for prior reporting periods to remain as originally presented. Please refer to Note 4.

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. The amendments created a requirement to report changes in equity and dividends per share in interim periods on a comparative basis for both quarter-to-date and year-to-date periods presented. We have presented

comparative interim statements of stockholders’ and partners’ equity in our condensed consolidated financial statements for the three months ended March 31, 2019 and 2018.

Recent Accounting Pronouncements

In June 2016, the FASB issued a new standard for accounting for financial instruments and credit losses thereon, 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 receivable at its inception. We have limited loans receivable and we invest in debt securities, which are subject to the new standard. Receivables related to operating leases are excluded from the new standard as they are subject to the lease accounting standard. This standard is required to be applied using a modified-retrospective approach and requires a cumulative-effect adjustment to retained earnings be recorded as of the date of adoption. The new standard is effective for us on January 1, ~~2018, with no~~2020. We are currently in the process of completing our analysis of the impact of the standard and do not expect it to have a material effect on our financial position or results of ~~operations or financial position.~~

Effective January 1, 2018, we also adopted new standards issued by the FASB that affect the presentation and disclosure of the statements of cash flows. We are now required to present combined inflows and outflows of cash, cash equivalents, and

restricted cash in the consolidated statement of cash flows. Previously our consolidated statements of cash flows presented transfers between restricted and unrestricted cash accounts as operating, financing, and investing cash activities depending upon the required or intended purpose for the restricted funds. The new guidance also requires debt prepayment and other extinguishment related payments to be classified as financing activities. We previously classified such payments as operating activities. We have revised our condensed consolidated statements of cash flows for the six months ended June 30, 2017 to conform to this presentation, and the effect of the revisions to net cash flows from operating and investing activities as previously reported for the six months ended June 30, 2017 are summarized in the following table (in thousands):

As Previously Reported Adjustments As Revised
Net cash flows from operating activities $ 176,013
$ 1,493
$ 177,506
Net cash flows from investing activities (177,154 ) (1,780 ) (178,934 )

As of June 30, 2018, in addition to the balances presented as cash, cash equivalents and restricted cash on the condensed consolidated balance sheets, there is $0.4 million of cash, cash equivalents and restricted cash included in assets held for sale.operations.

Note 3 — Significant Transactions ~~Dispositions of Apartment Communities and Assets Held for Sale~~

~~Acquisition~~Dispositions of Apartment Communities

During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, we purchased for $160.0 million Bent Tree Apartments, a 748-apartment home community in Fairfax County, Virginia. The purchase price, plus $1.0 million of capitalized transaction costs, was allocated as follows: $47.0 million to land; $113.0 million to buildings and improvements; and $1.0 million to other items.

~~During the six months ended June 30, 2018, we agreed to acquire six~~sold apartment communities as summarized below (dollars in ~~the Philadelphia area for a stated purchase price of $445.0 million.~~ thousands):



Apartment communities sold	7
Apartment homes sold	2,206
Gain on dispositions of real estate	$	291,473

The ~~portfolio includes 1,006 existing apartment homes, 110 apartment homes under construction, and 185,000 square feet of office and retail space. On May 1, 2018, we purchased four of the six~~ apartment communities ~~including 665~~sold were predominantly located outside of our primary markets or in lower-rated locations within our primary markets, and had average revenues per apartment ~~homes and 153,000 square feet~~home significantly below those of office and retail space. The gross purchase price consisted of $208.9 million of assumed property-level debt and the issuance of 1.2 million OP Units. In accordance with GAAP, the OP Units were valued at $41.08 per unit, the closing price of Aimco’s common share on May 1, 2018. Total consideration, plus $6.4 million of capitalized transaction costs, was allocated as follows: $14.1 million to land; $282.5 million to buildings and improvements; $6.3 million to intangible assets; and $3.1 millionto intangible liabilities. The purchase of the fifth apartment community is conditioned upon the City of Camden’s approval of the transfer of the existing PILOT tax agreement, which has not yet been received. The purchase of the sixth apartment community is expected upon completion of the construction in the first half of 2019.

~~Dispositions of Apartment Communities and Assets Held for Sale~~

During the six months ended June 30, 2018, we sold three apartment communities with 513 apartment homes for a gain on disposition of $50.6 million, net of income tax, and gross proceeds of $71.9 million resulting in $64.6 million in net proceeds to us. Two of these communities are located in southern Virginia and one is located in suburban Maryland.

~~During the six months ended June 30, 2018, we sold~~ 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. We provided seller financing with a stated value of $48.6 million and received net cash proceeds of approximately $5.0 million in the sale.retained portfolio.

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.

~~On July 25, 2018, we sold for $590.0 million our Asset Management business and our four affordable~~ As of March 31, 2019, no apartment communities located in Hunters Point. After payment of transaction costs and repayment of property-level debt encumbering the Hunters Point apartment communities, net proceeds were approximately $512.0 million. The related assets and liabilities were classified as held for ~~sale~~sale.

Note 4 — Leases

The majority of payments that we receive for our residential and commercial leases are fixed. We receive variable payments from our residents and commercial tenants primarily for utility and other expense reimbursements. For the three months ended March 31, 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):



Fixed lease income	$	215,581
Variable lease income	14,144
Total lease income	$	229,725

In general, our leases have options to extend for a certain period of time at the lessee’s option. Future minimum annual rental payments we will receive under commercial operating leases are as follows (in thousands). We do not include our residential operating leases due to their shorter duration.



April 1, 2019 to December 31, 2019	$	13,431
2020	16,103
2021	13,736
2022	13,246
2023	12,394
Thereafter	57,942
Total	$	126,852

Beginning in 2019, we are required to recognize right of ~~June 30, 2018.~~

Asuse assets and related lease liabilities on our consolidated balance sheets when we are the lessee. Upon adoption of ~~June 30, 2018,~~the standard, we recognized right of use assets of $87.5 million, which is presented in the Other assets line item on our condensed consolidated balance sheets, net of accumulated amortization. We also classified Chestnut Hill Village, an 821-apartment home community located in north Philadelphia, as held for sale. On July 27, 2018, we sold this community for gross proceeds of $170.4 million, resulting in $165.5 million of net proceeds to us.recognized

the related lease liabilities of $79.7 million, which are presented in the Accrued liabilities and other line item on our condensed consolidated balance sheets. We estimated the value of the lease liabilities using a discount rate equivalent to an incremental borrowing rate, or the rate Aimco would pay on a secured borrowing with similar terms to the lease, based on Aimco’s borrowing profile and the term of the underlying lease.

Substantially all of the payments under our ground and office leases are fixed. Rents for extension periods, when provided for in the lease, are generally determined based on a fair value factor at the time the option is exercised; therefore, these extension periods are not included in our determination of the right of use asset and lease liability. For the three months ended March 31, 2019, our total lease cost for ground and office leases was $3.2 million and $0.7 million, respectively.

The ground and office leases have weighted average remaining terms of 79.4 years and 9.5 years, respectively, and weighted average discount rates of 4.12% and 3.65%, respectively. Minimum annual rental payments under operating leases, reconciled to the lease liabilities recognized on our condensed consolidated balance sheets are as follows (in thousands):



	Office Lease Obligations			Ground Lease Obligations			Total Operating Lease Obligations
April 1, 2019 to December 31, 2019	$	1,957		$	1,586		$	3,543
2020	2,806			2,350			5,156
2021	2,704			2,439			5,143
2022	2,561			2,492			5,053
2023	1,871			2,492			4,363
Thereafter	10,644			422,169			432,813
Total	$	22,543		$	433,528		$	456,071
Less: Discount	(17,891		)	(357,386		)
Total lease liability	$	4,652		$	76,142

Note 45 — Commitments and Contingencies

Commitments

In connection with our redevelopment, development and 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 ~~June 30, 2018,~~March 31, 2019, our commitments related to these capital activities totaled approximately ~~$118.0~~$184.7 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.

~~Tax Credit Arrangements~~

For various consolidated partnerships served by our Asset Management business, we are required to manage the partnerships and related apartment communities in compliance with various laws, regulations and contractual provisions that apply to historic and low-income housing tax credit syndication arrangements. In some instances, noncompliance with applicable requirements could result in projected tax benefits not being realized by the limited partners in these partnerships and would require a refund or reduction of investor capital contributions, which are reported as deferred income in our condensed consolidated balance sheets, until such time as our obligation to deliver tax benefits is relieved. In connection with the July 25, 2018, sale of our Asset Management business, the performance obligation related to continuing compliance was assumed by the purchaser.

Income Taxes

In 2014, the Internal Revenue Service initiated an audit of the Aimco Operating Partnership’s 2011 and 2012 tax years. We do not believe the audit will have any material effect on our unrecognized tax benefits, financial condition or results of operations.

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 or costs associated with our current apartment communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or apartment communities we no longer own or operate.

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 in the vicinity of~~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 ~~have undertaken~~undertook a voluntary remediation of the dry cleaner contamination under IDEM’s ~~oversight, and in previous years accrued our share of the then-estimated cleanup and abatement costs.~~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. 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. 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 of~~a contingent liability stemming from a property in Lake Tahoe, California, regarding environmental ~~issues allegedly stemming~~contamination 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. 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 four ~~potentially-~~

~~responsible~~potentially-responsible parties, acknowledges that there may be additional responsible parties, and requires the named parties to perform additional groundwater 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 in 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 ~~June 30, 2018,~~March 31, 2019, are immaterial to our consolidated financial condition, results of operations and cash flows.

Note 56 — Earnings and Dividends per Share and Unit

Aimco and the Aimco Operating Partnership calculate basic earnings per common share and basic earnings per common unit based on the weighted average number of shares of Common Stock and common partnership units and participating securities outstanding, and 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 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 total stockholder return, or TSR, restricted stock awards that do not meet the definition of participating securities, which would result in an increase in the number of ~~common~~ shares of Common Stock and common partnership units outstanding equal to the number of shares that vest. The dilutive effect ~~of 0.1 million and 0.4 million~~ of these securities was ~~dilutive~~0.2 million and 0.1 million shares and 0.3 million and 0.1 million units for the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017, respectively. The effect of 0.1 million and 0.5 million of these securities was dilutive for the six months ended June 30, 2018 and 2017,~~ respectively. Securities with dilutive effect are included in the denominator for calculating diluted earnings per share and per unit during these periods. There were no shares and 0.2 million potential shares, and 0.4 million and 0.2 million potential units not dilutive and excluded from the denominator for calculating diluted earnings per share and per unit, respectively, for both the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 and ~~2017.~~2018.

Our time-based restricted stock awards receive dividends similar to shares of Common Stock and common partnership units prior to vesting, and our TSR long-term incentive partnership units receive a percentage of the distributions paid to common partnership units prior to vesting. These dividends and distributions are not forfeited if the awards fail to vest. Therefore, the unvested shares and units related to these awards are participating securities. 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 method. There were 0.2 million and 0.3 million unvested restricted participating shares and 0.2 million and 0.3 million unvested restricted participating ~~securities as of June 30,~~units, for the three months ended March 31, 2019 and 2018, ~~and 2017,~~ respectively.

The Aimco Operating Partnership has various classes of preferred OP Units, which may be redeemed at the holders’ option. The Aimco Operating Partnership may redeem these units for cash, or at its option, shares of Common Stock. As of ~~June 30, 2018,~~March 31, 2019, these preferred OP Units were potentially redeemable for approximately ~~2.4~~2.0 million shares of Common Stock (based on the period end market price), or cash. The Aimco Operating Partnership has a redemption policy that requires cash settlement of redemption requests for the preferred OP Units, subject to limited exceptions. Accordingly, we have excluded these securities from earnings per share and unit computations and we expect to exclude them in future periods.

During the three months ended March 31, 2019 and 2018, we paid $2.02 and $0.38, respectively, in dividends and distributions per share and per unit. The $2.02 paid during the three months ended March 31, 2019 represents the per share and unit value of the special dividend and special distribution. The special dividend consisted of $67.1 million in cash, 4.5 million shares of Common Stock and $0.4 million of cash in paid lieu of issuing fractional shares. The special distribution consisted of $72.7 million in cash, 4.8 million common partnership units and $0.4 million of cash paid in lieu of issuing fractional units.

Note 67 — Fair Value Measurements

Recurring Fair Value Measurements

We measure at fair value on a recurring basis our investments in the securitization trust that holds certain of our property debt, which we classify as available for sale, or AFS, debt ~~securities, and our interest rate swaps, both of which~~securities.

These investments are ~~classified within Level 2 of the GAAP fair value hierarchy.~~

~~Our investments~~included in ~~debt securities classified as AFS are presented within other~~Other assets in the accompanying condensed consolidated balance sheets. We hold several positions in the securitization trust that pay interest currently and we also hold the first loss position in the securitization trust, which accrues interest over the term of the investment. WeThese investments were acquired at a discount to face value and we are accreting the discount to the $100.9 million face value of the investments ~~into~~through interest income using the effective interest method over the remaining expected term of the investments, which, as of ~~June 30, 2018,~~March 31, 2019, was approximately ~~2.9~~2.2 years. Our amortized cost basis for these investments, which represents the original cost adjusted for interest accretion less interest payments received, was ~~$80.6~~$85.1 million and ~~$77.7~~

$83.6 million at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. We estimated the fair value of these investments to be ~~$84.6~~$90.1 million and ~~$82.8~~$88.5 million at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

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.

Certain consolidated partnerships served by our Asset Management business entered into interest rate swap agreements, which limited exposure to interest rate risk on the partnerships’ debt by effectively converting the interest from a variable rate to a fixed rate. We estimated the fair value of interest rate swaps using an income approach with primarily observable inputs, including information regarding the hedged variable cash flows and forward yield curves relating to the variable interest rates on which the hedged cash flows are based.

~~The following table sets forth a summary of the changes in fair value of these interest rate swaps (in thousands):~~

Six Months Ended June 30,
2018 2017
Beginning balance $ (1,795 ) $ (3,175 )
Unrealized losses included in interest expense —
(23 )
Losses on interest rate swaps reclassified into interest expense from accumulated other comprehensive loss 219
755
Unrealized gains (losses) included in equity and partners’ capital 415
(355 )
Ending balance $ (1,161 ) $ (2,798 )

As of June 30, 2018 and December 31, 2017, the interest rate swaps had aggregate notional amounts of $21.7 million and $22.0 million, respectively. We designated these interest rate swaps as cash flow hedges. As of June 30, 2018, the fair value of these swaps is presented within liabilities held for sale in our condensed consolidated balance sheets, and we recognized any changes in the fair value as an adjustment of accumulated other comprehensive loss within equity and partners’ capital to the extent of their effectiveness. Effective July 25, 2018, in connection with the sale of our Asset Management business, these obligations were derecognized.

Fair Value Disclosures

We believe that the carrying ~~values~~value of the consolidated amounts of cash and cash equivalents, receivables and payables ~~approximate~~approximated their fair ~~values~~value at ~~June 30, 2018,~~March 31, 2019, and December 31, ~~2017,~~2018, due to their relatively short-term nature and high probability of realization. The carrying amounts of longer term seller financing notes receivable approximated their estimated fair value ~~of the total indebtedness associated with our Real Estate portfolio was approximately $4.2 billion~~ at ~~June 30, 2018, as compared to a~~March 31, 2019 and December 31, 2018. The carrying amount of ~~$4.3 billion at June 30, 2018. The carrying value of the~~our total indebtedness ~~associated with our Real Estate portfolio~~ approximated its estimated fair value at March 31, 2019 and December 31, ~~2017.~~2018. We estimate the fair value of our seller financing notes and our consolidated 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 debt and seller financing notes within Level 3 of the GAAP valuation hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.

Note 78 — Business Segments

~~Our~~During the three months ended March 31, 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 four 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 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 apartment communities that we have acquired since the beginning of a two-year comparable period. Our Other Real Estate segment primarily includes apartment communities that are subject to limitations on rent increases and communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale.

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 revenue less our share of property operating expenses ~~including real estate taxes,~~ for consolidated apartment ~~communities we own and manage. Beginning in 2018, we~~communities. We exclude from rental and other property revenues the amount of ~~utilities cost~~utility costs 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. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP. ~~The tables below have been revised to conform to this presentation.~~

~~Apartment communities are classified as either part of our Real Estate portfolio or those owned through partnerships served by our Asset Management business.~~ As of ~~June 30, 2018, for~~March 31, 2019, our Same-Store segment ~~performance evaluation,~~included 96 consolidated apartment communities with 28,039 apartment homes; our Redevelopment and Development segment included seven consolidated apartment communities with 3,373 apartment homes; our Acquisition segment included six consolidated apartment communities with 1,480 apartment homes; and our Other Real Estate segment included ~~134 consolidated~~15 apartment communities with ~~37,755~~1,315 apartment ~~homes and excluded four apartment communities with 142 apartment homes that we neither manage nor consolidate.~~

As of June 30, 2018, through our Asset Management business we also held nominal ownership positions in consolidated partnerships that own 39 low-income housing tax credit apartment communities with 6,211 apartment homes. ~~Neither the results of operations nor the assets of these partnerships and apartment communities are quantitatively material; therefore, we have one reportable segment, Real Estate.~~

The following tables present the revenues, proportionate property net operating income and income before ~~gain on dispositions~~income tax (expense) benefit of our ~~Real Estate segment~~segments on a proportionate basis and excluding our proportionate share of four communities with 142 apartment homes, which we do not consolidate, and amounts related to apartment communities sold ~~or held for sale~~ as of ~~June 30, 2018~~March 31, 2019 for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~ (in thousands):

Real Estate
Proportionate and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Three months ended June 30, 2018:
Rental and other property revenues attributable to Real Estate $ 214,478
$ 8,192
$ 8,460
$ 231,130
Rental and other property revenues of partnerships served by Asset Management business —
—
19,000
19,000
Tax credit and transaction revenues —
—
57
57
Total revenues 214,478
8,192
27,517
250,187
Property operating expenses attributable to Real Estate 60,930
7,655
7,446
76,031
Property operating expenses of partnerships served by Asset Management business —
—
9,062
9,062
Other operating expenses not allocated to reportable
segment (3)
—
—
115,733
115,733
Total operating expenses 60,930
7,655
132,241
200,826
Operating income 153,548
537
(104,724 ) 49,361
Other items included in income before gain on
dispositions (4)
—
—
(42,427 ) (42,427 )
Income before gain on dispositions $ 153,548
$ 537
$ (147,151 ) $ 6,934



	Same Store		Redevelopment and Development		Acquisition		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended March 31, 2019:
Total revenues	$	175,719	$	20,350	$	9,993	$	9,467	$	8,747	$	5,959		$	230,235
Property operating expenses attributable to real estate	47,137		7,290		2,855		3,883		8,189		9,830			79,184
Other operating expenses not allocated to segments (3)	—		—		—		—		—		109,637			109,637
Total operating expenses	47,137		7,290		2,855		3,883		8,189		119,467			188,821
Proportionate property net operating income	128,582		13,060		7,138		5,584		558		(113,508		)	41,414
Other items included in income before income tax expense (4)	—		—		—		—		—		252,862			252,862
Income before income tax expense	$	128,582	$	13,060	$	7,138	$	5,584	$	558	$	139,354		$	294,276

Real Estate
Proportionate and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Three months ended June 30, 2017:
Rental and other property revenues attributable to Real Estate $ 193,908
$ 13,547
$ 20,248
$ 227,703
Rental and other property revenues of partnerships served by Asset Management business —
—
18,533
18,533
Tax credit and transaction revenues —
—
2,856
2,856
Total revenues 193,908
13,547
41,637
249,092
Property operating expenses attributable to Real Estate 55,559
8,870
14,653
79,082
Property operating expenses of partnerships served by Asset Management business —
—
8,391
8,391
Other operating expenses not allocated to reportable
segment (3)
—
—
101,913
101,913
Total operating expenses 55,559
8,870
124,957
189,386
Operating income 138,349
4,677
(83,320 ) 59,706
Other items included in income before gain on
dispositions (4)
—
—
(39,623 ) (39,623 )
Income before gain on dispositions $ 138,349
$ 4,677
$ (122,943 ) $ 20,083

Real Estate
Proportionate and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Six months ended June 30, 2018:
Rental and other property revenues attributable to Real Estate $ 420,800
$ 16,978
$ 18,745
$ 456,523
Rental and other property revenues of partnerships served by Asset Management business —
—
37,808
37,808
Tax credit and transaction revenues —
—
3,576
3,576
Total revenues 420,800
16,978
60,129
497,907
Property operating expenses attributable to Real Estate 120,273
15,914
18,131
154,318
Property operating expenses of partnerships served by Asset Management business —
—
18,257
18,257
Other operating expenses not allocated to reportable
segment (3)
—
—
222,594
222,594
Total operating expenses 120,273
15,914
258,982
395,169
Operating income 300,527
1,064
(198,853 ) 102,738
Other items included in income before gain on
dispositions (4)
—
—
(50,438 ) (50,438 )
Income before gain on dispositions $ 300,527
$ 1,064
$ (249,291 ) $ 52,300

Real Estate
Proportionate and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to Reportable
Segment (2)
Consolidated
Six months ended June 30, 2017:
Rental and other property revenues attributable to Real Estate $ 385,414
$ 27,388
$ 40,129
$ 452,931
Rental and other property revenues of partnerships served by Asset Management business —
—
37,095
37,095
Tax credit and transaction revenues —
—
5,547
5,547
Total revenues 385,414
27,388
82,771
495,573
Property operating expenses attributable to Real Estate 111,734
17,880
29,094
158,708
Property operating expenses of partnerships served by Asset Management business —
—
17,587
17,587
Other operating expenses not allocated to reportable
segment (3)
—
—
201,783
201,783
Total operating expenses 111,734
17,880
248,464
378,078
Operating income 273,680
9,508
(165,693 ) 117,495
Other items included in income before gain on
dispositions (4)
—
—
(79,863 ) (79,863 )
Income before gain on dispositions $ 273,680
$ 9,508
$ (245,556 ) $ 37,632



	Same Store		Redevelopment and Development		Acquisition		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended March 31, 2018:
Rental and other property revenues attributable to real estate	$	168,606	$	18,077	$	1,580	$	9,312	$	8,236	$	19,582		$	225,393
Asset Management business rental and tax credit revenues	—		—		—		—		—		22,327			22,327
Total revenues	168,606		18,077		1,580		9,312		8,236		41,909			247,720
Property operating expenses attributable to real estate	46,755		6,499		523		3,839		7,726		12,945			78,287
Property operating expenses of partnerships served by Asset Management business	—		—		—		—		—		9,195			9,195
Other operating expenses not allocated to segments (3)	—		—		—		—		—		106,861			106,861
Total operating expenses	46,755		6,499		523		3,839		7,726		129,001			194,343
Proportionate property net operating income	121,851		11,578		1,057		5,473		510		(87,092		)	53,377
Other items included in income before income tax benefit (4)	—		—		—		—		—		7,796			7,796
Income before income tax benefit	$	121,851	$	11,578	$	1,057	$	5,473	$	510	$	(79,296	)	$	61,173

(1)

Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of consolidated apartment communities in our ~~Real Estate segment,~~segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP.

(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 apartment communities owned by consolidated partnerships served by our Asset Management ~~business.~~business prior to its sale in July 2018. Corporate and Amounts Not Allocated to ~~Reportable Segment~~Segments also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.


(3)	Other operating expenses not allocated to ~~reportable segment~~segments consists of depreciation and amortization, general and administrative expenses and other operating expenses, which are not included in our measure of segment performance.


(4)	Other items included in income before income tax (expense) benefit primarily consists of gain on dispositions ~~primarily consists~~ of real estate and interest ~~and income tax benefit.~~expense.

The assets of our ~~reportable segment~~segments and the consolidated assets not allocated to our ~~segment are~~segments were as follows (in thousands):


	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Real Estate	$	5,853,287	$	5,391,816
Same Store					$	4,148,435	$	4,148,787
Redevelopment and Development					822,348		792,126
Acquisition					546,467		507,190
Other Real Estate					326,241		327,099
Corporate and other assets (1)	691,069		687,224		440,278		414,802
Total consolidated assets	$	6,544,356	$	6,079,040	$	6,283,769	$	6,190,004


(1)	Includes the assets not allocated to our ~~reportable segment,~~segments, primarily ~~the~~corporate assets and assets of ~~consolidated partnerships served by our Asset Management business and~~ apartment communities sold ~~or held for sale~~ as of ~~June 30, 2018.~~March 31, 2019.

For the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ capital additions related to our ~~Real Estate segment totaled $158.4 million and $163.2 million, respectively.~~segments were as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Same Store	$	30,211	$	27,522
Redevelopment and Development	39,048		43,481
Acquisition	3,868		483
Other Real Estate	2,771		2,141
Total capital additions	$	75,898	$	73,627

Note 89 — Variable Interest Entities

Generally, a variable interest entity, or VIE, is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most

significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

Aimco consolidates the Aimco Operating Partnership, which is a VIE for which Aimco is the primary beneficiary. Aimco, through the Aimco Operating Partnership, consolidates all VIEs for which the Aimco Operating Partnership is the primary beneficiary.

All of the VIEs ~~we consolidate~~the Aimco Operating Partnership consolidates own interests in one or more apartment ~~communities. VIEs that own apartment~~ communities ~~we classify as part of our Real Estate segment~~and are typically structured to generate a return for their partners through the operation and ultimate sale of the communities. ~~We are~~The Aimco Operating Partnership is the primary beneficiary in the limited partnerships in which ~~we are~~it is the sole decision maker and ~~have~~has a substantial economic interest.

Certain partnerships served by our Asset Management business own interests in low-income housing tax credit apartment communities that are structured to provide for the pass-through of tax credits and tax deductions to their partners and are VIEs. We held a nominal ownership position in these partnerships, generally one percent or less. As general partner in these partnerships, we were the sole decision maker and we received fees and other payments in return for the asset management and other services we provided and thus shared in the economics of the partnerships, and as such, we were the primary beneficiary of these partnerships. On July 25, 2018, we completed the sale of our Asset Management business. The table below summarizes information regarding VIEs consolidated by the Aimco Operating Partnership:


	June 30, 2018	December 31, 2017	March 31, 2019	December 31, 2018
Real Estate portfolio:
VIEs with interests in apartment communities	13	14	9	9
Apartment communities owned by VIEs	13	14	9	9
Apartment homes in communities owned by VIEs	4,196	4,321	3,592	3,592
Consolidated partnerships served by Asset Management business:
VIEs with interests in apartment communities	41	49
Apartment communities owned by VIEs	31	37
Apartment homes in communities owned by VIEs	4,879	5,893

Assets of the Aimco Operating Partnership’s consolidated VIEs must first be used to settle the liabilities of such consolidated VIEs. These consolidated VIEs’ creditors do not have recourse to the general credit of the Aimco Operating Partnership. Assets and liabilities of consolidated VIEs are summarized in the table below (in thousands):


	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Real Estate portfolio:
Assets
Net real estate	$	478,774	$	529,898	$	494,193	$	488,127
Cash and cash equivalents	13,776		16,111		17,508		15,416
Restricted cash	6,302		4,798		4,868		4,461
Assets held for sale	57,596		—
Other assets					28,500		3,973
Liabilities
Non-recourse property debt secured by Real Estate communities, net	340,874		412,205
Non-recourse property debt secured by Aimco communities, net					320,995		322,685
Accrued liabilities and other	12,204		10,623		39,639		13,576
Liabilities related to assets held for sale	68,443		—
Consolidated partnerships served by Asset Management business:
Assets held for sale at June 30, 2018
Real estate, net	171,281		215,580
Cash and cash equivalents	14,366		15,931
Restricted cash	22,691		30,107
Liabilities related to assets held for sale at June 30, 2018
Non-recourse property debt	183,188		220,356
Accrued liabilities and other	15,118		20,241


ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report 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 Apartment Investment and Management Company’s and AIMCO Properties, L.P.’s combined Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, 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” 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, Economic Income, and the measures used to compute our leverage ratios.

Executive Overview

We are focused on the ownership, management, redevelopment and ~~limited~~some 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 ~~current~~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, or FFO. Our disclosure of AFFO, a measure of current return,

complements our ~~long-term total return using~~focus on Economic Income. We also use Pro forma Funds From Operations, or Pro forma FFO, as a secondary measure of operational performance.

Our business plan to achieve ~~this~~our 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 Free Cash Flow;

improve our portfolio of apartment communities, which is diversified both by geography and price point, by selling apartment communities with lower projected Free Cash Flow 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 Free Cash Flow 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 ~~which~~that reduces our refunding and re-pricing risk and ~~which~~ 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.

Our business is organized around five areas of strategic focus: operational excellence; ~~redevelopment;~~redevelopment and development; portfolio management; balance sheet; and team and culture.

The results from the execution of our business plan during the three months ended ~~June 30, 2018,~~March 31, 2019, are further described below.

Net income attributable to common stockholders per common share decreased by $0.08 during the three months ended June 30, 2018 compared to 2017, due to higher depreciation from redevelopments placed into service and from apartment communities acquired during 2018 and to lower gains on sale of real estate.

~~Pro forma FFO per share was flat for the three months ended June 30, 2018, as compared to the same period in 2017. The following items contributed to Pro forma FFO:~~

~~$0.02 from Same Store property net operating income growth of 3.2%, driven by a 3.2% increase in revenue offset by a 3.3% increase in expenses; and~~

$0.03 from leasing activity related to renovated homes at Redevelopment communities, 2018 acquisitions and the second quarter 2017 reacquisition of a 47% interest in the Palazzo communities, offset in part by lower property net operating income from apartment communities sold in 2017 and 2018.

As compared to 2017, this increase of $0.05 to Pro forma FFO per share was offset primarily by increased interest expense on corporate borrowings, primarily related to acquisitions, increased personnel costs, primarily due to the timing of incentive compensation costs, and lower tax benefits.

AFFO per share increased 6% during the three months ended June 30, 2018, as compared to the same period in 2017, as a result of of lower Capital Replacement spending. Approximately one-third of the decrease in Capital Replacement spending was due to our paired trade activity, including the sale of 2,300 apartment homes in 2017 and an additional 513 apartment homes through June 30, 2018, and the remaining decrease is due to the timing of 2018 capital spending. As we concentrate our investment capital in higher quality, higher price point communities, Free Cash Flow margin is increasing as Capital Replacements decline as a percentage of net operating income.

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~~point. At March 31, 2019, our ~~Real Estate portfolio. At June 30, 2018, our Real Estate~~ portfolio included ~~138~~128 apartment communities with ~~37,897~~34,349 apartment homes in which we held an average ownership of approximately 99%. This portfolio was divided about two thirds by value 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 three months ended ~~June 30, 2018.~~March 31, 2019. Highlights include:

Same Store portfolio maintained average daily occupancy of 97.0% throughout the three months ended March 31, 2019, a 90 basis point increase over the same period in 2018;

Same Store net operating income ~~growth~~increased 5.5% with net operating income margins of ~~3.2% for~~73.2%, a 90 basis point increase over the three months ended ~~June 30, 2018 compared to 2017;~~March 31, 2018; and

Same Store rent increases on renewals and new leases averaged ~~4.8%~~5.2% and ~~1.9%~~0.8%, respectively, for a weighted average increase of ~~3.4%;~~2.9%.

Our focus on efficient operations through productivity initiatives such as centralization of administrative tasks, optimization of economies of scale at the corporate level, and investment in more durable, longer-lived materials has helped us control operating expenses. These and other innovations contributed to limiting growth in controllable operating expense (defined as property expenses less taxes, insurance and utility expenses).

~~Average daily occupancy of 96.3%, 40 basis points higher than the same period in 2017.~~

Redevelopment and Development

Our second line of business is the redevelopment and some development of apartment ~~communities, where~~communities. Through these activities, we expect to create value ~~of at least 25% to 35% of our incremental investment~~ by repositioning communities within our portfolio. We measure the rate and quality of financial returns by ~~net asset value~~NAV creation, an important component of Economic Income, our primary measure of long-term financial performance. We ~~also~~ undertake ground-up development when warranted by risk-adjusted investment returns, either directly or in connection with the redevelopment of an existing apartment ~~community or, on a more limited basis, at a new location.~~community. When warranted, we rely on the expertise and credit of a third-party developer familiar with the local market to limit our exposure to construction risk.

We invest to earn leverage-neutral risk-adjusted returns in excess of those expected from the apartment communities sold in ~~paired trades~~“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 three months ended ~~June 30, 2018,~~March 31, 2019, we invested ~~$42.2~~$45.1 million in redevelopment and development. ~~In Center City, Philadelphia, we~~We continued ~~construction on the fourth and final tower of Park Towne Place; lease-up is underway. At June 30, 2018, 90% of the redeveloped apartment homes~~phased redevelopment activities in ~~the community were leased and 28 of the 136 homes still under renovation were pre-leased.~~

During the three months ended June 30, 2018, we invested $9.8 million in the development of our Parc Mosaic community in Boulder, Colorado. We expect completion of construction in late 2019 and initial occupancy in the summer of 2019.

Our total potential net investment in our current redevelopments and developments is $519.8 million with a projected weighted average net operating income yield on these investments of 6.1%, assuming untrended rents. Of this total, $313.6 million has been funded. Our funding needs for 2018 for our remaining redevelopment and development investment will be satisfied through a combination of leverage and community sales, including proceeds from the July 25, 2018 sale of our Asset Management business and our four affordable communities located in Hunters Point included in our Real Estate portfolio, discussed below.

~~During the three months ended June 30, 2018, we leased 181 apartment homes~~Miami at our ~~redevelopment communities. As of June 30, 2018, our exposure to lease-up at active redevelopment~~Flamingo South Beach and ~~development projects was approximately 419 apartment homes, of which 108 were in the fourth tower of Park Towne Place~~Bay Parc communities, and ~~215 were being constructed~~ ground-up construction

at Parc Mosaic ~~and 96 were located~~ in ~~three active redevelopments.~~

We also began a $23.7 million full redevelopment of 707 Leahy in Redwood City, California. This 110-home community is located in one of the development of an apartment community. Over the next two years, we expect to invest approximately $87.0 million to construct 253 apartment homes and 4,600 square feet of retail space. We anticipate a stabilized net operating income yieldmost dynamic job markets in the ~~low 6% range, driven by an 80% net operating income margin due~~world and benefits from higher density than permitted under the current zoning code. We expect this investment to ~~operational efficiencies from owning the adjacent property, and~~generate a Free Cash Flow internal rate of return ~~greater than 10% resulting in value creation~~ of ~~at least 35%~~approximately 9%. Upon completion of the project, we will own and operate 853 apartment homes on the campus. Employment on the campus has grown by 9% annually from 2015 to 2017, and exceeds 25,000 jobs today. This number is expected to grow to 46,000 jobs over the next 12 years. We have multi-year options to acquire the balance of the land on the campus that is zoned for multifamily, enough for an additional 600 apartment homes.

Please see below under the Liquidity and Capital Resources – Redevelopment and Development heading for additional information regarding our redevelopment and development investment during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019.

Portfolio Management

Our portfolio of apartment communities is diversified across “A,” “B,” and “C+” price points, averaging “B/B+” in quality, and is ~~also~~geographically diversified across several of the largest markets in the 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 ~~the~~ local market average; and as “C” quality apartment communities those earning rents less than $1,100 per month and lower than 90% of ~~the~~ 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 ~~the~~ local market rent averages, the metrics used to classify apartment community quality as well as the period for which ~~the~~ 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.

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 development,~~some 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, ~~since 2011,~~ we ~~have sold $4.2 billion in lower-rated apartment communities and we have significantly increased~~increase the quality and expected growth rate of our portfolio.

Three Months Ended
June 30,
2018 2017
Average revenue per Aimco apartment home (1) $ 2,090
$ 1,950
Portfolio average rents as a percentage of local market average rents 112 % 113 %
Percentage A (2Q 2018 average revenue per Aimco apartment home $2,770) 50 % 53 %
Percentage B (2Q 2018 average revenue per Aimco apartment home $1,839) 35 % 33 %
Percentage C+ (2Q 2018 average revenue per Aimco apartment home $1,669) 15 % 14 %
(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 current period.



	Three Months Ended
	March 31,
	2019			2018
Average Revenue per Aimco apartment home (1)	$	2,181		$	2,052
Portfolio average rents as a percentage of local market average rents	113		%	113		%
Percentage A (1Q 2019 average revenue per Aimco apartment home $2,839)	52		%	49		%
Percentage B (1Q 2019 average revenue per Aimco apartment home $1,918)	32		%	35		%
Percentage C+ (1Q 2019 average revenue per Aimco apartment home $1,727)	16		%	16		%
(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 ~~$2,090~~$2,181 for the three months ended ~~June 30, 2018,~~March 31, 2019, a 7%6% increase compared to ~~2017.~~2018. This increase is due to year-over-year growth in Same Store revenue as well as our acquisition activities, lease-up of redevelopment ~~and acquisition properties,~~communities, and the sale of communities with average monthly revenues per apartment home lower than those of the retained 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; increase Free Cash Flow margins; and maintain sufficient geographic and price point diversification to limit volatility and concentration risk.

Apartment Community Acquisitions

We evaluate potential acquisitions with an eye for unique and opportunistic investments and fund acquisitions pursuant to our strict ~~paired trade~~“paired trade” discipline.

During the three months ended ~~June 30, 2018,~~March 31, 2019, we ~~agreed to acquire six communities~~made no acquisitions. In April 2019, we closed the $65.0 million acquisition of One Ardmore, the fifth and final community included in the Philadelphia ~~area. On May 1, 2018, we purchased four communities including 665 apartment homes and 153,000 square feet of office and retail space for $307.9 million. The purchase of the fifth~~portfolio acquisition announced in 2018. This 110-home apartment community is ~~conditioned upon~~located in the ~~City~~heart of ~~Camden’s approval~~one of Philadelphia’s Main Line suburbs and most desirable submarkets. We acquired One Ardmore at the ~~transfer of the existing PILOT tax agreement, which has not yet been received. The purchase of the sixth apartment community is expected upon~~ completion of construction inand expect the first half of 2019. We anticipate our operation of the five operating communities will generate a year one net operating income yield of 5.3%, and for all six communities, average revenue per apartment home of $2,200 and a ten-year expected free cash flow internal rate of return of about 8%.community to be fully occupied before year-end.

Dispositions

During the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019, we sold seven apartment communities with 2,206 apartment homes for gross proceeds of $408.6 million. Proceeds, net of debt repayment and transaction costs, were $340.2 million,. ~~we purchased for $160 million Bent Tree Apartments, a 748-apartment home community~~Three communities are located in ~~Fairfax County, Virginia. This community is expected to achieve a 5.6% year~~suburban Chicago, one ~~net operating income capitalization rate. Since acquisition, results have exceeded underwriting, with new lease rates increasing by 8% overall~~in Alexandria, Virginia, one in Virginia Beach, Virginia, and ~~5% before taking into consideration rate increases following capital investments. Occupancy has increased by approximately 300 basis points~~two in Nashville, Tennessee. Proceeds from the ~~date of acquisition,~~sales were used to ~~97%.~~

~~Dispositions~~

~~On July 25, 2018, we sold~~complete the leverage-neutral, “paired trade” funding for ~~$590 million our Asset Management business and our four affordable apartment communities located in Hunters Point. After payment of transaction costs and repayment of property-level debt encumbering~~ the ~~Hunters Point apartment communities, net proceeds to us were approximately $512 million.~~

~~On July 27, 2018, we sold for $170 million Chestnut Hill Village, an 821-apartment home community located in north Philadelphia.~~

~~We used~~Common Stock repurchases made during the proceeds from the two sales to fund 2018 acquisitions, completing the paired trades. The sale of Chestnut Hill Village rebalanced our capital allocation to Philadelphia from a lower-rated apartment community in north Philadelphia to

communities in the more desirable Center City and University City submarkets. We used the proceeds from these sales to repay in full our our revolving credit facility and our term loan. We plan to use the remaining proceeds to reduce property-level borrowings and to fund an expected increase in 2018 redevelopment activity.three months ended December 31, 2018.

Balance Sheet

Our leverage includes our share of long-term, non-recourse property debt encumbering apartment communities in our Real Estate portfolio, outstanding borrowings under our revolving credit facility and term loan, and outstanding preferred equity. In our calculation of leverage, we exclude the non-recourse property debt obligations of consolidated partnerships served by our Asset Management business, as these were not our obligations and they had a limited effect on the amount of fees and other amounts we expected to receive in our role as asset manager for these partnerships. These obligations were derecognized in connection with the sale of our Asset Management business on July 25, 2018.Leverage

Our leverage strategy seeks to increase financial returns while using leverage with appropriate caution. We limit risk through 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.

WeOur 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 under the Liquidity and Capital Resources heading.

Leverage Ratios

Our target ~~the ratio of~~ratios are Proportionate Debt and Preferred Equity to Adjusted ~~EBITDA to be~~EBITDAre below 7.0x and ~~we target the ratio of~~ Adjusted ~~EBITDA~~EBITDAre to Adjusted Interest Expense and Preferred Dividends ~~to be~~ greater than 2.5x. Our leverage ratios for the three months ended ~~June 30, 2018,~~March 31, 2019, are presented below:



	Leverage Ratios (1)		Pro forma Leverage Ratios (2)
Proportionate Debt to ~~Pro forma EBITDA (1)~~Adjusted EBITDAre	6.8x	~~6.5x~~	7.0x
Proportionate Debt and Preferred Equity to ~~Pro forma EBITDA (1)~~Adjusted EBITDAre	7.2x	~~6.9x~~	7.2x
Adjusted ~~EBITDA~~EBITDAre to Adjusted Interest Expense	3.4x		3.3x
Adjusted ~~EBITDA~~EBITDAre to Adjusted Interest Expense and Preferred Dividends	3.1x		3.2x


(1)	Adjusted EBITDAre has been calculated on a pro forma basis to reflect the disposition of seven apartment communities during the period as if the transactions had closed on January 1, 2019.

(2)

Our ~~Proportionate Debt to~~ratio of Pro forma ~~EBITDA and~~ Proportionate Debt and Preferred Equity to Adjusted EBITDAre has been calculated on a pro forma basis to reflect the redemption of our Class A Perpetual Preferred Stock as if it had occurred using cash on hand on March 31, 2019. Our Pro forma ~~EBITDA~~coverage ratios have been calculated on a pro forma basis to reflect the ~~impact of the July 2018 dispositions~~redemption of our Asset Management business, our four affordable apartment communities located in Hunters Point and Chestnut Hill Village, described above. Pro forma EBITDA has also been adjusted to reflect our acquisition of the four Philadelphia apartment communitiesClass A Perpetual Preferred Stock as if ~~the transaction~~it had ~~closed~~occurred on ~~April~~January 1, ~~2018. These adjustments reduced the ratios of Proportionate Debt to Adjusted EBITDA and Proportionate Debt and Preferred Equity to Adjusted EBITDA by 0.7x.~~2019.

We calculate ~~Pro forma EBITDA,~~ Adjusted ~~EBITDA~~EBITDAre and Adjusted Interest Expense used in our leverage ratios based on the most recent three month amounts, annualized. ~~As used in the ratios above, Preferred Equity represents Aimco’s preferred stock and the Aimco Operating Partnership’s preferred OP Units.~~

~~We expect~~In 2019, we retitled our ~~Proportionate Debt~~Adjusted EBITDA measure to Adjusted ~~EBITDA~~EBITDAre in our calculation of leverage ratios. The computation of Adjusted EBITDAre has been modified from our prior measure to include amortization of debt issuance costs as a component of interest expense in both the computation of Adjusted Interest Expense and ~~Proportionate Debt~~EBITDAre. The impact of this change is less than 0.1x to each ratio. We also began including a reconciliation of net income to earnings before interest, taxes, depreciation and ~~Preferred Equity~~amortization for real estate, or EBITDAre, as defined by Nareit. Please refer to ~~Adjusted EBITDA ratios to decrease to 6.3x and 6.7x, respectively, before year-end.~~the Leverage Ratios section below.

Liquidity

Our liquidity consists of cash balances and available capacity on our revolving line of credit. As of ~~June 30, 2018,~~March 31, 2019, we had ~~on hand $455.3 million in~~ cash and restricted cash ~~plus available capacity on our revolving line~~ of ~~credit. After the completion of the July dispositions, we used the proceeds to repay the term loan~~$198.4 million and ~~outstanding borrowings on our revolving line of credit. On a pro forma basis, we would have~~ had the capacity to borrow ~~$592.9~~up to $723.1 million ~~under~~on our revolving ~~line~~credit facility, after consideration of $6.9 million of letters of credit backed by the facility. We use our credit facility primarily for working capital and ~~additional cash~~other short-term purposes and to secure letters of ~~approximately $207 million.~~credit.

We ~~also~~ manage our financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt. At ~~June 30, 2018,~~March 31, 2019, we held unencumbered apartment communities with an estimated fair market value of approximately ~~$2.0~~$2.5 billion. In April 2019, we repaid, at par, $167.5 million of property-level debt maturing during the

three months ended September 30, 2019, increasing the estimated value of our pool of unencumbered apartment communities to by $740.0 million to $3.3 billion.

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 ~~may~~are not be indicative of the ratios that may be calculated by these agencies.

~~For additional information regarding~~Equity Capital Activities

On February 3, 2019, our ~~leverage, please see~~Board of Directors declared a special dividend valued at $2.02 per share of Common Stock that consisted of $67.1 million in cash and 4.5 million shares of Common Stock, which was distributed on March 22, 2019. In order to facilitate comparisons with previous periods, our Board of Directors authorized a reverse split to neutralize the ~~discussion under~~effect of the ~~Liquidity~~stock dividend. Taken together, the total number of shares outstanding after the stock dividend and ~~Capital Resources heading.~~reverse split was unchanged by the two actions.

On April 29, 2019, our Board of Directors declared a quarterly cash dividend of $0.39 per share of Class A Common Stock for the quarter ended March 31, 2019, representing an increase of 3% compared to the dividends paid during the three months ended June 30, 2018. This dividend is payable on May 31, 2019 to stockholders of record on May 17, 2019.

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~~within based 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 by the Denver Post as a Top Work Place for the sixth consecutive year, an accomplishment shared with only seven other companies in Colorado.

Key Financial Indicators

The key financial indicators that we use in managing our business and in evaluating our operating performance are Economic Income, our measure of long-term total return, and ~~Adjusted Funds From Operations,~~AFFO, our measure of current return. In addition to these indicators, we evaluate our operating performance and financial condition using: Pro forma FFO; Free Cash Flow; ~~same store~~Same Store property net operating income; proportionate property net operating income; average revenue per effective apartment home; leverage ratios; and net leverage.

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 condensed consolidated financial statements included in Item 1.

~~Three~~Financial Highlights

Net income attributable to common stockholders per common share increased by $1.34 during the three months ended March 31, 2019 compared to 2018, primarily due to gains on the sale of apartment communities in 2019.

Pro forma FFO per share increased $0.02 for the three months ended March 31, 2019 compared to 2018 due to the following items:

$0.04 from Same Store property net operating income growth of 5.5%, driven by a 4.2% increase in revenue, offset by a 0.8% increase in expenses;

$0.05 from net operating income contributions from redevelopment communities and ~~Six~~2018 property acquisitions; and

$0.01 lower interest expense; offset by

($0.08) contribution eliminated following the 2018 sale of the Asset Management business and sales in 2018 and 2019 of apartment communities to fund our investment activities.

AFFO per share increased $0.01 year-over-year due to the $0.02 increase in Pro forma FFO, offset $0.01 by an acceleration of capital replacement spending as compared to the previous year. For the year ended December 31, 2019, we expect total capital replacement spending to decline year-over-year as our portfolio continues to be upgraded with our capital invested in fewer, but more valuable, properties.

Detailed Results of Operations for the Three Months Ended ~~June 30, 2018~~March 31, 2019 compared to ~~June 30, 2017~~March 31, 2018

Net income attributable to Aimco ~~decreased by $13.0 million and~~ increased by ~~$57.1~~$190.3 million ~~respectively,~~ during the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 as compared to ~~2017.~~2018. Net income attributable to the Aimco Operating Partnership ~~decreased by $13.7 million and~~ increased by ~~$59.6~~$201.7 million ~~respectively,~~ during the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 as compared to ~~2017. The following discussion describes~~2018. Details regarding the ~~primary drivers of the changes~~increases in ~~the~~ net income ~~attributable to Aimco and the Aimco Operating Partnership for the three and six months ended June 30, 2018 compared to 2017.~~are described more fully below.

Property Operations

As further described ~~under the preceding Executive Overview heading, our Real Estate portfolio consists primarily of market rate apartment communities in which~~below, we ~~hold a substantial equity ownership interest.~~

We use proportionate property net operating income to assess the operating performance of our Real Estate Portfolio. Proportionate property net operating income reflects our share of rental and other property revenues less direct property operating expenses, including real estate taxes, for consolidated apartment communities we manage. Accordingly, the results of operations of our Real Estate segment discussed below are presented on a proportionate basis and exclude the results ofhave four ~~apartment communities with 142 apartment homes that we neither manage nor consolidate.~~

Additionally, we evaluate the revenue and expense performance of our segment as adjusted for utility reimbursements. Nearly two-thirds of our utility costs are reimbursed by residents. These reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP, but beginning in 2018, our segment results below reflect utility reimbursements as a reduction of the corresponding expense. We have revised the 2017 amounts to conform to this presentation.

We do not include offsite costs associated with property management or casualty-related amounts in our assessment of segment performance. Accordingly, these items are not allocated to our segment results discussed below.

~~Refer to~~ ~~Note 7~~ in the condensed consolidated financial statements in Item 1 for further discussion regarding our reportable segments including a reconciliation of these proportionate amounts to the corresponding amounts in our condensed consolidated statements of operations.

~~Real Estate Proportionate Property Net Operating Income~~

~~We classify apartment communities within our Real Estate segment as~~segments: Same Store, Redevelopment and Development, Acquisition and Other Real Estate. Our Same Store segment includes Same Store communities, which are those 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 ~~periods,~~year, and are not expected to be sold within 12 months. ~~Other Real~~

~~Estate~~Our Redevelopment and Development segment includes apartment communities that ~~do not meet the Same Store definition, including, but not limited to: redevelopment and development apartment communities, which~~ are ~~those~~ 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; acquisition~~year. Our Acquisition segment includes those apartment communities which ~~are those~~ we have acquired since the beginning of a two-year comparable ~~period;~~period. Our Other Real Estate segment primarily includes apartment communities that are subject to limitations on rent increases and communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale.

As of ~~June 30, 2018,~~March 31, 2019, our ~~Real Estate~~Same Store segment ~~consisted of 95~~included 96 Same Store apartment communities with ~~26,367 apartment homes and 34 Other Real Estate communities with 9,963~~28,039 apartment homes.

From December 31, ~~2017~~2018 to ~~June 30, 2018,~~March 31, 2019, on a net basis, our Same Store ~~portfolio~~segment increased by three apartment communities and ~~decreased by 19~~2,134 apartment homes. These changes consisted of:

the addition of seven redeveloped apartment communities with 2,698 apartment homes and one developed apartment community with 91310 apartment homes, previously classified in the Redevelopment and ~~one redeveloped apartment community with 104 apartment homes that were~~Development segment, now classified as Same Store upon maintaining stabilized operations for the entirety of the periods presented;

the addition of one ~~acquired~~ apartment community with ~~115~~463 apartment homes, ~~that was~~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 ~~492~~246 apartments 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 ~~longer expect~~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 ~~sell within 12 months;~~the Redevelopment and Development segment;

the reduction of one apartment community with ~~821~~78 apartment homes ~~which was~~that we expect to sell within 12 months that is now classified ~~as held for sale~~in the Other Real Estate segment; and

the reduction of five apartment communities with 1,424 apartment homes that were sold as of ~~June 30, 2018.~~March 31, 2019.

AsAlso as of ~~June 30, 2018,~~March 31, 2019, our Redevelopment and Development segment included seven apartment communities with 3,373 apartment homes; our Acquisition segment included six apartment communities with 1,480 apartment homes; and our Other Real Estate ~~communities included:~~

~~13 apartment communities with 6,284 apartment homes in redevelopment or development;~~

~~6 apartment communities with 1,876 apartment homes recently acquired; and~~

segment included 15 apartment communities with ~~1,803~~1,315 apartment homes.

We use proportionate property net operating income to assess the operating performance of our apartment 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 apartment communities. Accordingly, the results of operations of our segments discussed below are presented on a proportionate basis and exclude the results of four apartment communities with 142 apartment homes that we do not ~~meet~~consolidate.

Refer to Note 8 in the ~~definition~~condensed consolidated financial statements in Item 1 for further discussion regarding our segments, including a reconciliation of ~~Same Store because they are either subject~~these proportionate amounts to ~~agreements that limit the amount by which we may increase rents or have not reached or maintained a stabilized level~~consolidated rental and other property revenues and property operating expense.

The results of ~~occupancy as of the beginning of a two-year comparable period, often due to a casualty event.~~

~~Our Real Estate segment results~~our segments for the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ as presented below, are based on the apartment community populations as of ~~June 30, 2018.~~March 31, 2019.

Three Months Ended June 30,
(in thousands) 2018 2017 $ Change % Change
Rental and other property revenues before utility reimbursements:
Same Store communities $ 146,950
$ 142,372
$ 4,578
3.2 %
Other Real Estate Communities 67,528
51,536
15,992
31.0 %
Total 214,478
193,908
20,570
10.6 %
Property operating expenses, net of utility reimbursements:
Same Store communities 38,496
37,261
1,235
3.3 %
Other Real Estate Communities 22,434
18,298
4,136
22.6 %
Total 60,930
55,559
5,371
9.7 %
Proportionate property net operating income:
Same Store communities 108,454
105,111
3,343
3.2 %
Other Real Estate Communities 45,094
33,238
11,856
35.7 %
Total $ 153,548
$ 138,349
$ 15,199
11.0 %



	Three Months Ended March 31,
(in thousands)	2019		2018		$ Change		% Change
Rental and other property revenues, before utility reimbursements:
Same Store	$	175,719	$	168,606	$	7,113	4.2	%
Redevelopment and Development	20,350		18,077		2,273		12.6	%
Acquisition	9,993		1,580		8,413		532.5	%
Other Real Estate	9,467		9,312		155		1.7	%
Total	215,529		197,575		17,954		9.1	%
Property operating expenses, net of utility reimbursements:
Same Store	47,137		46,755		382		0.8	%
Redevelopment and Development	7,290		6,499		791		12.2	%
Acquisition	2,855		523		2,332		445.9	%
Other Real Estate	3,883		3,839		44		1.1	%
Total	61,165		57,616		3,549		6.2	%
Proportionate property net operating income:
Same Store	128,582		121,851		6,731		5.5	%
Redevelopment and Development	13,060		11,578		1,482		12.8	%
Acquisition	7,138		1,057		6,081		575.3	%
Other Real Estate	5,584		5,473		111		2.0	%
Total	$	154,364	$	139,959	$	14,405	10.3	%

For the three months ended ~~June 30, 2018~~March 31, 2019 compared to ~~2017,~~2018, our ~~Real Estate segment’s proportionate property net operating income increased $15.2 million, or 11.0%.~~

Same Store proportionate property net operating income increased by ~~$3.3~~$6.7 million, or ~~3.2%~~5.5%. This increase was primarily attributable to a ~~$4.6~~$7.1 million, or ~~3.2%~~4.2%, increase in rental and other property revenues due to higher average revenues of ~~$53~~$68 per Aimco apartment home comprised of increases in rental rates and a 4090 basis point increase in average daily occupancy. Renewal

rents, which is the rent paid by an existing resident who renewed ~~her~~a lease compared to the rent ~~she previously~~ paid prior to renewal, were up ~~4.8% for the three months ended June 30, 2018,~~5.2%, and new lease rents, which is the rent paid by a new resident compared to the rent paid by the previous resident of the same apartment home, were up ~~1.9%~~0.8%, resulting in a weighted average increase of ~~3.4%~~2.9%. The increase in Same Store rental and other property revenues was partially offset by a ~~$1.2~~$0.4 million, or ~~3.3%~~0.8%, increase in property operating expenses primarily due to ~~repairs and maintenance costs and increases in insurance and~~higher real estate ~~taxes.~~taxes partially offset by a decrease in utility expenses. During the three months ended ~~June 30, 2018~~March 31, 2019 compared to ~~2017,~~2018, controllable operating expenses, which exclude utility costs, real estate taxes and insurance, ~~increased~~decreased by $0.5 million, or ~~2.6%~~2.1%.

~~The proportionate property net operating income of Other Real Estate communities increased by $11.9 million, or 35.7%, for the three months ended June 30, 2018 compared to 2017 due to:~~

~~a $5.4 million increase in property net operating income due to the 2018 acquisition of Bent Tree Apartments~~Redevelopment and ~~the four Philadelphia properties as well as the lease-up of Indigo located in Redwood City, California;~~

a $0.9 million increase in property net operating income due to leasing activities at redevelopment and development communities, partially offset by decreases due to apartment homes taken out of service for development; and

higher property net operating income of $5.6 million from other communities, primarily the effect of our increased ownership interest in the Palazzo communities from our June 2017 reacquisition of a 47% limited partner interest in the related joint venture.

Six Months Ended June 30,
(in thousands) 2018 2017 $ Change % Change
Rental and other property revenues before utility reimbursements:
Same Store communities $ 291,804
$ 283,582
$ 8,222
2.9 %
Other Real Estate Communities 128,996
101,832
27,164
26.7 %
Total 420,800
385,414
35,386
9.2 %
Property operating expenses, net of utility reimbursements:
Same Store communities 77,419
75,375
2,044
2.7 %
Other Real Estate Communities 42,854
36,359
6,495
17.9 %
Total 120,273
111,734
8,539
7.6 %
Proportionate property net operating income:
Same Store communities 214,385
208,207
6,178
3.0 %
Other Real Estate Communities 86,142
65,473
20,669
31.6 %
Total $ 300,527
$ 273,680
$ 26,847
9.8 %

~~For the six months ended June 30, 2018 compared to 2017, our Real Estate segment’s proportionate property net operating income increased $26.8 million, or 9.8%.~~

~~Same Store~~Development proportionate property net operating income increased by ~~$6.2~~$1.5 million or ~~3.0%~~12.8%. This increase was primarily attributable to ~~an $8.2 million, or 2.9%, increase in rental and other property revenues due to higher average revenues~~increased occupancy as redevelopments reach further stages of approximately $48 per effective home, comprised primarily of increases in rental rates and a 40 basis point increase in average daily occupancy. Renewal rents, which is the rent paid by an existing resident who renewed her lease compared to the rent she previously paid, were up 4.8% for the six months ended June 30, 2018, and new lease rents, which is the rent paid by a new resident compared to the rent paid by the previous resident of the same apartment home, were up 1.3%, resulting in a weighted average increase of 3.1%. The increase in Same Store rental and other property revenues wascompletion, partially offset by ~~a $2.0 million, or 2.7%, increase in property~~reduced net operating ~~expenses, primarily~~income due to ~~increase~~de-leasing communities in real estate taxes, repairs and maintenance costs and insurance. During the six months ended June 30, 2018 compared to 2017, controllable operating expenses, which exclude utility costs, real estate taxes and insurance, increased by $0.8 million, or 2.0%.preparation for redevelopment.

~~The~~Acquisition proportionate property net operating income increased by $6.1 million or 575.3%. This increase was primarily attributable to a full period of ~~our~~ operating activity at communities acquired in 2018, compared to a partial quarter of one community’s operations during the three months ended March 31, 2018.

Other Real Estate ~~communities increased by $20.7 million, or 31.6% for the six months ended June 30, 2018 compared to 2017, due to:~~

~~a $7.9 million increase in~~proportionate property net operating income increased by $0.1 million, or 2.0%, for the three months ended March 31, 2019 compared to 2018 primarily due to ~~the 2018 acquisition of Bent Tree Apartments and the four Philadelphia properties as well as the lease-up of Indigo;~~

a $2.8 million increase in property net operating income due to leasing activities at redevelopment and development communities, partially offset by decreases due to apartment homes taken out of service for redevelopment; and

~~higher property net operating income of $10.0 million from other communities, primarily the effect of our~~ increased ~~ownership interest in the Palazzo communities from our June 2017 reacquisition of a 47% limited partner interest in the related joint venture.~~lease rates.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our ~~Real Estate segment~~segments include offsite costs associated with property management, casualty losses, and the results of apartment communities sold, reported in consolidated amounts, which we do not allocate to our ~~Real Estate segment~~segments for purposes of evaluating segment performance, ~~(see~~please see Note 78 to the condensed consolidated financial statements in Item ~~1).~~1.

For the three months ended ~~June 30, 2018,~~March 31, 2019, casualty losses totaled ~~$0.6~~$2.1 million and included ~~a large claim due~~five claims related to fires and water and winter storm ~~damage.~~damage, with expected losses between $0.2 million and $0.4 million, and several minor claims. For the three months ended ~~June 30, 2017,~~March 31, 2018, casualty losses totaled ~~$2.4~~$1.1 million and included several ~~large~~ claims primarily related to ~~fire damage.~~

~~For the six months ended June 30, 2018, casualty losses totaled $1.6 million~~water and ~~included several large claims primarily related to~~ winter storm damage, partially offset by recovery from insurance carriers for insured losses in excess of policy limits. ~~For the six months ended June 30, 2017, casualty losses totaled $4.3 million and included several large claims primarily related to fire damage.~~

Net operating income also decreased for the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 compared to ~~2017,~~2018, by ~~$6.9~~$8.5 million ~~and $13.5 million, respectively,~~primarily due to ~~apartment communities previously in our Real Estate portfolio that were sold as of June 30, 2018.~~

~~Asset Management Results~~

~~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. In July~~ 2018 ~~we completed the~~ sale of our Asset Management business.

Contribution from Asset Management included in our condensed consolidated financial statements included: fees and other amounts paid to us from the net operating income of partnerships served by our Asset Management business, less interest expense incurred on non-recourse property debt obligations of the partnerships; income associated with delivery of tax credits to the third-party investors in the partnerships, which included amounts received during the period and amounts received in previous periods; and transactional revenue and other income less asset management expenses, which included certain allocated offsite costs related to the operation of this business.

~~The contribution from Asset Management for the three and six months ended June 30, 2018 compared to 2017, is presented in the table below.~~

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2018 2017 2018 2017
Net operating income of partnerships served by Asset Management business $ 10,783
$ 11,040
$ 21,201
$ 21,240
Interest expense on non-recourse property debt of partnerships (3,241 ) (3,280 ) (6,527 ) (6,511 )
Amount available for payment of Asset Management fees 7,542
7,760
14,674
14,729
Tax credit income, net (32 ) 2,516
1,785
5,029
Asset management expenses (961 ) (1,005 ) (1,983 ) (2,026 )
Transactional revenue and other income 42
420
1,688
882
Contribution from Asset Management business $ 6,591
$ 9,691
$ 16,164
$ 18,614

For the periods presented above, the contribution from the Asset Management business decreased primarily due to a decrease in tax credit income, net, following our early 2018 acquisition of an investor limited partner’s interest in two of the tax credit partnerships (and their rights to undelivered tax credits) prior to the end of the tax credit delivery period.

Depreciation and Amortization

For the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 compared to ~~2017,~~2018, depreciation and amortization increased ~~$8.3~~by $1.0 million, or ~~9.3%~~1.1%, ~~and $13.7 million, or 7.8%, respectively,~~ primarily due to apartment homes acquired in 2018 and renovated apartment homes placed in service after their completion, partially offset by decreases associated with apartment communities sold.

General and Administrative Expenses

For the three ~~and six~~ months ended ~~June 30, 2018,~~March 31, 2019, compared to ~~the 2017,~~2018, general and administrative expenses ~~increased $3.8~~decreased by $1.0 million, or ~~37.3%, and $4.2 million, or19.8%, respectively, primarily due to the timing of incentive compensation costs.~~8.7%.

Other Expenses, ~~net~~Net

Other expenses, net includes ~~franchise taxes,~~ costs associated with our risk management activities, partnership administration expenses and certain non-recurring items.

For the three ~~and six~~ months ended ~~June 30, 2018~~March 31, 2019 compared to ~~2017,~~2018, other expenses increased by ~~$1.7~~$2.7 million, ~~and $2.9 million, respectively,~~ primarily due to ~~higher legal costs associated with our ongoing litigation against Airbnb to protect our property right to select our residents and their neighbors and severance costs incurred during~~an increase in ground lease rent expense for a ground lease assumed in 2018.

Interest Expense

For the three months ended ~~June 30, 2018, in connection with the July 25, 2018 sale of our Asset Management business, partially offset by a reduction in other legal costs.~~

~~Interest Expense~~

~~For the three and six months ended June 30, 2018~~March 31, 2019 compared to ~~2017,~~2018, interest expense, which includes the amortization of debt issuance costs, ~~increased~~decreased by ~~$3.0~~$6.4 million, or ~~6.5%~~,13.4%. Lower interest on property-level debt following refinancing activity that occurred during 2018 and ~~$3.0 million, or~~ ~~3.1%, respectively. The increases were primarily due to assumption~~interest on corporate-level debt following the 2018 repayment of our term loan, partially offset by an increase in interest on property-level debt ~~associated~~assumed in connection with ~~the~~our 2018 acquisition of ~~four properties in~~the Philadelphia ~~and higher amounts outstanding on corporate borrowings used~~portfolio, contributed $3.1 million to ~~fund~~ the ~~2018 acquisition of Bent Tree Apartments, partially offset by properties refinanced with~~decrease. The remaining $3.3 million decrease was due to lower interest ~~rates.~~from the partnerships served by our Asset Management business, which we sold in 2018.

Income Tax (Expense) 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 are owned through TRS entities.

Our income tax (expense) 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 and four Hunters Point apartment communities 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, ~~(before gains on dispositions)~~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 (expense) benefit in our condensed consolidated statements of operations.

~~For the three and six months ended June 30, 2018 compared to 2017,~~We incurred income tax ~~benefit decreased by $0.6~~expense of $3.0 million ~~and increased $31.8 million, respectively. Income tax benefit decreased~~ during the three months ended ~~primarily due~~March 31, 2019, compared to ~~lower historic tax credits generated through the redevelopment of certain apartment communities. Income~~income tax benefit ~~increased~~of $34.5 million during the ~~six months ended June 30,~~same period in 2018, primarily due to ~~a tax~~the decrease in benefit recognized in 2018 in connection with an intercompany transfer of assets related to ~~our~~the Asset Management business ~~offset slightly~~and an increase in expense related to gains on the sales of apartment communities owned by ~~lower historic tax credits generated.~~the TRS entities.

Gain on Dispositions of Real Estate ~~Inclusive~~

The table below summarizes dispositions of ~~Related Income Tax~~

~~Real Estate~~

~~We did not sell any~~ apartment communities from our ~~Real Estate~~ portfolio during the three months ended ~~June 30, 2018. During the six months ended June 30,~~March 31, 2019 and 2018 ~~we sold three apartment communities with 513 apartment homes for a gain of $50.6 million, net of income tax, and gross proceeds of $71.9 million, resulting~~(dollars in ~~$64.6 million in net proceeds to us.~~millions):

~~We did not sell any apartment communities from our Real Estate portfolio during the three and six months ended June 30, 2017, though we sold a commercial property resulting in a small gain.~~

~~Asset Management~~

~~Consolidated partnerships served by our Asset Management business did not sell any apartment communities during the three and six months ended June 30, 2018.~~

During the three months ended June 30, 2017, a consolidated partnership served by our Asset Management business sold an apartment community with 200 apartment homes for a gain of $1.9 million and gross proceeds of $8.5 million, resulting in $4.5 million in net proceeds to us. During the six months ended June 30, 2017, consolidated partnerships served by our Asset Management business sold two apartment communities with 252 apartment homes for a gain of $2.6 million and gross proceeds of $10.9 million, resulting in $5.0 million in net proceeds to us.



	Three Months Ended March 31,
	2019		2018
Number of apartment communities sold	7		3
Gross proceeds	$	408.6	$	71.9
Net proceeds (1)	$	340.2	$	64.6
Gain on disposition	$	291.5	$	52.6
(1) Net proceeds are after repayment of debt, if any, net working capital settlements, payments of transaction costs and debt prepayment penalties, if applicable.

Noncontrolling Interests in Consolidated Real Estate Partnerships

Noncontrolling interests in consolidated real estate partnerships reflects the results of our consolidated real estate partnerships allocated to the owners who are not affiliated with Aimco. The amounts of income or loss of our consolidated real estate partnerships that we allocate to owners not affiliated with Aimco include their share of property management fees, interest on notes and other amounts that we charge to these partnerships.

The amount of net income allocated to noncontrolling interests was driven by two primary factors: the operations of the consolidated apartment communities and gains on the sale of apartment communities with noncontrolling interest holders, as further discussed below.

For the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~we allocated nominal net income and for the three months ended June 30, 2017,~~ we allocated net income of ~~$0.8 million to noncontrolling interests in consolidated real estate partnerships resulting from operations of the consolidated apartment communities.~~

~~For the six months ended June 30, 2018 and 2017, we allocated net income of $6.3~~$0.1 million and ~~$1.8~~$6.2 million, respectively, to noncontrolling interests in consolidated real estate partnerships.

The ~~amount of net income allocated~~allocation to noncontrolling interests resulting from operations of the consolidated apartment communities was $0.1 million ~~and $1.8 million~~of income for each of the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017, respectively. The decrease was primarily due to the 2017 reacquisition of our limited partner’s interests in the Palazzo joint venture.~~March 31, 2018.

~~Gains~~We allocated gains on the sale of apartment communities to noncontrolling interests totaling $6.1 million for the three months ended March 31, 2018.

Noncontrolling Interests in Aimco Operating Partnership

In Aimco’s consolidated financial statements, noncontrolling interests in the Aimco Operating Partnership reflects the allocation of results to the OP Unit holders. For the three months ended March 31, 2019 compared to 2018, net income allocated to noncontrolling interests ~~totaled $6.2 million~~in the Aimco Operating Partnership increased by $11.4 million. Allocations to noncontrolling interests in the Aimco Operating Partnership fluctuate in proportion to variations in net income, as described above. The overall percentage of net income allocated to noncontrolling interests in the Aimco Operating Partnership increased due to the issuance of OP Units as partial consideration for the ~~six months ended June 30,~~acquisition of apartment communities in May 2018 and ~~there was no such allocation for~~ the ~~six months ended June 30, 2017.~~repurchases of Common Stock completed in 2018. These transactions increased the noncontrolling interests’ share in the Aimco Operating Partnership relative to Aimco’s ownership.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the critical accounting policies that involve our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements relate to the impairment of long-lived assets and capitalized costs.

Our critical accounting policies are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. There have been no significant changes in our critical accounting policies from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Non-GAAP Measures

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 quarterly report, reconciliations of the non-GAAP measures to the most comparable financial measure computed in accordance with GAAP are provided.

~~Funds From Operations, or FFO, Pro forma FFO and AFFO are~~We measure our long-term total return using Economic Income, which is a non-GAAP financial ~~measures, which are defined and further described below under the Funds From Operations, Pro forma Funds From Operations and Adjusted Funds From Operations heading.~~

Free Cash Flow, 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 Funds From Operations, Pro forma Funds From Operations and Adjusted Funds From Operations heading and the Liquidity and Capital Resources heading). Free Cash Flow margin represents an apartment community’s NOI 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 the cost of capital asset usage during the period; therefore, we believe that Free Cash Flow 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.

measure. Economic Income represents stockholder value creation as measured by the per share change in estimated net asset value, ~~per share~~or NAV, plus cash ~~dividends per share.~~dividends. We believe Economic Income is important to investors as it represents a measure of the total return we have earned for our stockholders. We report and reconcile Economic Income annually. Please refer to the section entitled

Management’s Discussion and Analysis of Financial Condition and Results of Operations described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, for more information about Economic Income.

Nareit FFO, Pro forma FFO and AFFO are non-GAAP financial measures, which are defined and further described below under the Nareit Funds From Operations, Pro forma Funds From Operations and Adjusted Funds From Operations heading.

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 NOI 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.

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,~~Nareit, defines FFO as net income ~~or loss~~ computed in accordance with GAAP, ~~excluding gains from sales of, and impairment losses recognized with respect to, depreciable property, plus~~excluding: depreciation and amortization related to real estate; gains and ~~after adjustments for~~losses from sales and impairment of depreciable assets and land used in our primary business; and income taxes directly associated with a gain or loss on 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 FFO. We calculate Nareit FFO attributable to Aimco common stockholders (diluted) by subtracting dividends on preferred stock and amounts allocated from 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-related~~certain amounts ~~and certain litigation costs. Preferred equity redemption-related amounts (gains~~that are unique or ~~losses) are items that periodically affect our operating results and we exclude these items from our calculation of~~occur infrequently.

In computing 2019 Pro forma FFO, ~~because such amounts are not representative~~we made the following adjustments:

Straight-line rent: In 2018, we assumed a 99-year ground lease with scheduled rent increases. Due to the terms of ~~our operating performance.~~the lease, GAAP rent expense will exceed cash rent payments until 2076. We ~~are~~include the cash rent payments for this ground lease in Pro forma FFO, but exclude the incremental straight-line non-cash rent expense.

Litigation: During 2018, we were engaged in litigation with Airbnb, ~~to protect our property right to select our residents and their neighbors.~~which was resolved in December 2018. Due to the unpredictable nature of these ~~cases and associated legal costs, we exclude such costs~~proceedings, related amounts recognized, net of income tax effect, are excluded from Pro forma FFO.

In ~~connection with~~computing 2018 Pro forma FFO, we made the ~~sale of our Asset Management business,~~following adjustments:

Litigation: Adjustment is described above.

Change in lease accounting: Effective January 1, 2019, we ~~incurred severance costs during the three months ended June 30, 2018. We believe these~~adopted accounting guidance that changed how we recognize costs incurred ~~are clearly and closely related~~ to obtain resident leases. For comparability between periods, we have recast 2018 as if the ~~sale of~~new standard was effective January 1, 2018. AFFO is unchanged by the ~~business and exclude such costs from Pro forma FFO.~~new standard.

AFFO represents Pro forma FFO reduced by Capital Replacements, which represents 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~~this criteria, and we classify as Capital Replacements those that do not. AFFO is a ~~key~~ financial indicator ~~that~~ we use to evaluate our short-term operational performance and ~~measure our current return. AFFO~~ 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 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, ~~our~~ 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 three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ Aimco’s Nareit FFO, Pro forma FFO and AFFO are calculated as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Net income attributable to Aimco common stockholders (1)	$	2,817		$	15,843		$	84,342		$	27,334		$	271,568		$	81,525
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest	95,238			84,649			185,632			167,530			91,374			90,394
Gain on dispositions and other, net noncontrolling partners’ interest	(217		)	(1,741		)	(47,240		)	(2,180		)
Income tax adjustments related to gain on dispositions and other items (2)	85			410			(30,635		)	1,442
Gain on dispositions and other, net of noncontrolling partners’ interest													(291,473		)	(47,023		)
Income tax adjustments related to gain on dispositions and tax-related other items (2)													6,526			(30,720		)
Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments	(4,610		)	(3,783		)	(5,167		)	(7,633		)	10,249			(557		)
Amounts allocable to participating securities	(82		)	(41		)	(97		)	(79		)	316			(15		)
FFO attributable to Aimco common stockholders – diluted	$	93,231		$	95,337		$	186,835		$	186,414
Litigation costs, net of common noncontrolling interests in Aimco Operating Partnership and participating securities (3)	1,557			—			1,906			—
Severance costs, net of common noncontrolling interests in Aimco OP and participating securities (4)	1,215			—			1,215			—
Nareit FFO attributable to Aimco common stockholders – diluted													$	88,560		$	93,604
Litigation, net (3)													25			349
Change in lease accounting (4)													—			(707		)
Straight-line rent (5)													2,307			—
Pro forma FFO attributable to Aimco common stockholders – diluted	$	96,003		$	95,337		$	189,956		$	186,414		$	90,892		$	93,246
Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities	(11,710		)	(15,360		)	(21,477		)	(26,306		)	(9,711		)	(9,060		)
AFFO attributable to Aimco common stockholders – diluted	$	84,293		$	79,977		$	168,479		$	160,108		$	81,181		$	84,186

Weighted average common shares outstanding – diluted (FFO, Pro forma FFO and AFFO) (5)	156,833			156,715			156,786			156,735
Total shares and dilutive share equivalents used to calculate Net income and Nareit FFO per share (6)													144,445			152,000
Adjustment to weight reverse stock split (7)													3,888			4,740
Pro forma shares and dilutive share equivalents used to calculate Pro forma FFO and AFFO per share													148,333			156,740

Net income attributable to Aimco per common share – diluted	$	0.02		$	0.10		$	0.54		$	0.17		$	1.88		$	0.54
FFO per share – diluted	$	0.59		$	0.61		$	1.19		$	1.19		$	0.61		$	0.62
Pro forma FFO per share – diluted	$	0.61		$	0.61		$	1.21		$	1.19		$	0.61		$	0.59
AFFO per share – diluted	$	0.54		$	0.51		$	1.07		$	1.02		$	0.55		$	0.54


(1)	Represents the numerator for calculating Aimco’s earnings per common share in accordance with GAAP.

(2)

Income ~~tax adjustments~~taxes related to gain on dispositions and other items for the ~~six~~three months ended ~~June 30,~~March 31, 2018 ~~includes~~included a $33.6 million tax benefit related to an intercompany transfer of assets related to ~~our~~the Asset Management ~~business. On~~business, which was sold in July ~~25, 2018, we completed~~2018. Upon completion of the sale, ~~of this business. In subsequent periods,~~ the ~~related taxes will be reflected within our statement of operations within gain on dispositions of real estate, inclusive of related income tax.~~deferred tax asset that resulted from the intercompany transfer was realized. Accordingly, we ~~have~~ excluded the benefit related to the reorganization from Nareit FFO.

(3)

~~We are~~During 2018, we were engaged in litigation with Airbnb, ~~to protect our property right to select our residents and their neighbors.~~which was resolved in December 2018. Due to the unpredictable nature of these ~~cases and associated legal costs, we exclude such costs~~proceedings, related amounts recognized, net of income tax effect, are excluded from Pro forma ~~FFO and AFFO.~~FFO. These costs are included in other expenses, net, in our condensed consolidated statements of operations.

(4)

~~In connection with the sale~~Effective January 1, 2019, we adopted accounting guidance that changed how we recognize costs incurred to obtain resident leases. For comparability of our Asset Management business, we incurred severance costs of $1.2 million during the three months ended June 30, 2018. We believe these costs are closely related to the sale of the business and have excluded such costs from Pro forma FFO ~~and AFFO.~~between periods, we have recast 2018 as if the new standard was effective January 1, 2018. AFFO is unchanged by the new standard.

(5)

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 payments for this ground lease in Pro forma FFO, but exclude the incremental straight-line non-cash rent expense. The rent expense for this lease is included in other expenses, net, in our condensed consolidated statements of operations.


~~(5)~~(6)	Represents the denominator for Aimco’s earnings per common share – diluted, calculated in accordance with GAAP.

(7)

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 three months ended March 31, 2019 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.

Refer to the ~~Executive Overview~~Results of Operations heading for discussion of our Pro forma FFO and AFFO results for ~~2018~~2019 compared to ~~2017.~~their comparable periods in 2018.

Refer to the Liquidity and Capital Resources section for further information regarding our capital investing activities, including Capital Replacements.

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

~~We target~~Our leverage strategy targets the ratio of Proportionate Debt and Preferred Equity to Adjusted ~~EBITDA~~EBITDAre to be below 7.0x and ~~we target~~ the ratio of Adjusted ~~EBITDA~~EBITDAre to Adjusted Interest Expense and Preferred Dividends to be greater than 2.5x. We believe these ratios, which are ~~important measures as they~~based 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.

~~We calculate Adjusted EBITDA, Pro forma EBITDA~~ EBITDAre and Adjusted ~~Interest used~~EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of performance. There can be no assurance that our ~~leverage ratios based on the most recent three month amounts, annualized.~~method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts.

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 and term loan, 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.

~~In our~~facility. Proportionate Debt ~~computation, we increase our recorded debt by~~excludes unamortized debt issue costs because these amounts represent cash expended in earlier periods and do not reduce our contractual ~~obligations, and we~~obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand, which are primarily restricted under the terms of our property debt agreements, assuming these amounts would be used to reduce our outstanding leverage. We further reduce our recorded debt by the value of our investment in a securitization trust that holds certain of our property debt, as our payments of principal and interest associated with such property debt will ultimately repay our investments in the trust. We exclude from our leverage the non-recourse property debt obligations of consolidated partnerships served by our Asset Management business, as these were not our obligations and they had a limited effect on the amount of fees and other amounts we expected to receive in our role as asset manager for these partnerships. These obligations were derecognized in connection with the sale of our Asset Management business on July 25, 2018.

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, is as follows (in thousands):



	March 31, 2019
Total indebtedness	$	3,929,023
Adjustments:
Debt issue costs related to non-recourse property debt	20,430
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships	(9,529		)
Cash and restricted cash	(198,389		)
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships	891
Securitization trust investment	(90,064		)
Proportionate Debt	$	3,652,362
Pro forma adjustment to cash (1)	125,000
Pro forma Proportionate Debt	$	3,777,362

Preferred stock	$	125,000
Preferred OP Units	101,195
Preferred Equity	$	226,195
Pro forma adjustment to Preferred Stock (1)	(125,000		)
Pro forma Preferred Equity	$	101,195

Proportionate Debt and Preferred Equity	$	3,878,557

(1) Proportionate Debt and Preferred Equity have been adjusted on a pro forma basis to reflect the redemption of the Class A Perpetual Preferred Stock as if it had occurred using cash on hand on March 31, 2019.

We calculate Adjusted ~~EBITDA is~~EBITDAre 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 ~~non-GAAP measure. We believe Adjusted EBITDA provides investors relevant~~supplemental measure of our ability to incur and ~~useful information~~service debt because itthey are recognized measures of performance by the real estate industry and allows ~~investors~~for comparison of our credit strength to ~~view~~different companies. Nareit defines EBITDAre as net income ~~from our operations on an unleveraged basis,~~computed in accordance with GAAP, before ~~the effects of~~interest expense, income taxes, depreciation and amortization expense, further adjusted for:

gains orand losses on ~~sales~~the dispositions of ~~and~~ depreciated property;

impairment ~~losses related~~write-downs of depreciated property;

impairment write-downs of investments in unconsolidated partnerships caused by a decrease in the value of the depreciated property in such partnerships; and

adjustments to ~~real estate, and various other items described below. Adjusted EBITDA represents~~reflect the Aimco’s share of ~~the consolidated amount~~EBITDAre of ~~our net income,~~investments in unconsolidated entities.

We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of the following items for the reasons set forth below:

~~Adjusted Interest Expense, defined below,~~net income attributable to noncontrolling interests 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;

~~preferred dividends,~~the amount of interest income related to ~~allow investors to compare a measure of~~ our ~~performance before the effects of our capital structure (including indebtedness) with that of other companies~~investment in the ~~real estate industry;~~

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 ~~taxes, to allow investors to measure our performance independent of income taxes, which may vary significantly~~received from ~~other companies within our industry due to leverage and tax planning strategies, among other factors;~~

~~depreciation and amortization, gains or losses on dispositions and impairment losses related to real estate, for similar reasons to those set forth in our discussion of FFO, Pro forma FFO and AFFO in~~ the ~~preceding section;~~investment; and

~~other items, including gains on dispositions~~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 ~~non-depreciable assets, as these are items~~the GAAP rent expense over the cash payments for this lease does not reflect a current obligation that ~~periodically affect our operations but that are not necessarily representative of~~affects our ability to service ~~our debt obligations.~~debt.

In ~~addition~~2019, we retitled our Adjusted EBITDA measure to Adjusted ~~EBITDA, from time to time, we compute Pro forma EBITDA, which is also a non-GAAP financial measure that we believe is helpful to investors because it allows investors to view income from~~EBITDAre in our operations after adjustment for significant acquisitions that have occurred during the quarter or dispositions that occurred subsequent to the quarter but for which the proceeds have been reflected in Proportionate Debt, as described above.

~~While Adjusted EBITDA and Pro forma EBITDA are relevant measures~~calculation of ~~performance and are commonly used in~~ leverage ~~ratios, they do not represent net income as defined by GAAP, and should not be considered as alternatives to net income in evaluating our performance. Further, our definition and~~ratios. The computation of Adjusted ~~EBITDA~~EBITDAre has been modified from our prior measure to include amortization of debt issuance costs as a component of interest expense in both the computation of Adjusted Interest Expense and ~~Pro forma EBITDA may not be comparable~~EBITDAre. The impact of this change is less than 0.1x to ~~similar measures reported~~each ratio. We also began including a reconciliation of net income to EBITDAre. EBITDAre is defined by ~~other companies.~~Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate investment trusts. The reconciliation of net income to EBITDAre and Adjusted EBITDAre, as used in our leverage ratios, is as follows (in thousands):



	Three Months Ended March 31, 2019
Net income	$	291,295
Adjustments:
Interest expense	41,409
Income tax expense	2,981
Depreciation and amortization	93,565
Gain on disposition of real estate	(291,473		)
Adjustment related to EBITDAre of unconsolidated partnerships	210
EBITDAre	$	137,987
Net income attributable to noncontrolling interests in Aimco Operating Partnership	(91		)
EBITDAre adjustments attributable to noncontrolling interests	(414		)
Interest income received on securitization investment	(2,002		)
Straight-line rent adjustment	2,460
Pro forma adjustment (1)	(3,651		)
Adjusted EBITDAre	$	134,289
Annualized Adjusted EBITDAre	$	537,156

(1) Adjusted EBITDAre has been calculated on a pro forma basis to reflect the disposition of seven apartment communities during the period as if the transactions had closed on January 1, 2019.

We calculated Adjusted Interest Expense, as ~~calculated~~used 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 ~~operating results~~interest expense but are not representative of our scheduled interest obligations;

~~the amortization of debt issue costs, as these amounts have been expended in previous periods and are not representative of our current or prospective debt service requirements;~~ 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.

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. We add Preferred Dividends to Adjusted Interest Expense for a more complete picture of the interest and dividend requirements of our leverage, inclusive of perpetual preferred equity.

~~Reconciliations~~The reconciliation of ~~the most closely related GAAP measures~~interest expense to ~~our calculations of Proportionate Debt, Preferred Equity, Adjusted EBITDA, Pro forma EBITDA,~~ Adjusted Interest Expense and Preferred Dividends, as used in our leverage ratios, ~~are~~is as follows (in thousands):

June 30, 2018
Total indebtedness associated with Real Estate portfolio $ 4,261,209
Adjustments:
Debt issue costs related to non-recourse property debt 19,586
Debt issue costs related to term loan 199
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships (9,554 )
Cash and restricted cash (87,820 )
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships 1,085
Securitization trust investment and other (84,565 )
Pro forma adjustment (745,000 )
Pro forma Proportionate Debt (1) $ 3,355,140

Preferred stock $ 125,000
Preferred OP Units 101,332
Preferred Equity 226,332
Pro forma Proportionate Debt and Preferred Equity (1) $ 3,581,472

(1) Amounts have been adjusted to reflect proceeds, net of transaction costs, from the July 2018 sales of our Asset Management business, our four affordable apartment communities located in Hunters Point and Chestnut Hill Village.

Three Months Ended June 30, 2018
Net income attributable to Aimco Common Stockholders $ 2,817
Adjustments:
Adjusted Interest Expense 42,425
Income tax benefit (4,395 )
Depreciation and amortization, net of noncontrolling interest 97,561
Gain on disposition and other, inclusive of related income taxes and net of noncontrolling partners’ interests (132 )
Preferred stock dividends 2,149
Net income attributable to noncontrolling interests in Aimco Operating Partnership 2,145
Adjusted EBITDA $ 142,570
Pro forma adjustment (11,517 )
Pro forma EBITDA (1) $ 131,053

Annualized Adjusted EBITDA $ 570,280
Annualized Pro forma EBITDA $ 524,212

(1) Pro forma EBITDA has been adjusted to reflect the impact of the July 2018 dispositions of our Asset Management business, our four affordable apartment communities located in Hunters Point and Chestnut Hill Village. Pro forma EBITDA has also been adjusted to reflect the acquisition of the four Philadelphia apartment communities as if the transaction had closed on April 1, 2018.


				Three Months Ended March 31, 2019
	Three Months Ended June 30, 2018			Adjusted Interest Expense and Preferred Dividends			Pro forma adjustment (1)			Pro forma Adjusted Interest Expense and Preferred Dividends
Interest expense	$	49,906		$	41,409		$	1,125		$	42,534
Interest expense related to non-recourse property debt obligations of consolidated partnerships served by our Asset Management business	(3,241		)
Interest expense attributable to Real Estate portfolio	46,665
Adjustments:
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships	(101		)	(93		)	—			(93		)
Debt prepayment penalties and other non-interest items	(590		)
Amortization of debt issue costs	(1,664		)
Interest income earned on securitization trust investment	(1,885		)	(2,002		)	—			(2,002		)
Adjusted Interest Expense	$	42,425		$	39,314		$	1,125		$	40,439

Preferred stock dividends	2,149			2,148			(2,148		)	—
Preferred OP Unit distributions	1,934			1,934			—			1,934
Preferred Dividends	4,083			4,082			(2,148		)	1,934
Adjusted Interest Expense and Preferred Dividends	$	46,508		$	43,396		$	(1,023	)	$	42,373

Annualized Adjusted Interest Expense	$	169,700		$	157,256					$	161,756
Annualized Adjusted Interest Expense and Preferred Dividends	$	186,032		$	173,584					$	169,492

(1) Pro forma Adjusted Interest Expense and Pro forma Preferred Dividends have been calculated on a pro forma basis to to reflect the redemption of the Class A Perpetual Preferred Stock as if it had occurred on January 1, 2019.				(1) Pro forma Adjusted Interest Expense and Pro forma Preferred Dividends have been calculated on a pro forma basis to to reflect the redemption of the Class A Perpetual Preferred Stock as if it had occurred on January 1, 2019.

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 ~~our~~ operations. Additional sources are proceeds from sales of apartment communities, proceeds from refinancings of existing property debt, borrowings under new property debt, borrowings under ~~our Credit Agreement, as defined below, including~~ our revolving credit facility and proceeds from equity offerings.

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 ~~June 30, 2018,~~March 31, 2019, our primary sources of liquidity were as follows:

$~~46.7~~162.3 million in cash and cash equivalents;

$~~41.1~~36.1 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

$~~367.5~~723.1 million of capacity to borrow under our revolving credit facility after consideration of ~~outstanding borrowings of $220.2 million and $12.3~~$6.9 million of letters of credit backed by the facility. ~~After the completion~~

As of ~~the sale of our Asset Management business, our four affordable apartment communities located in Hunters Point and Chestnut Hill Village in July 2018,~~March 31, 2019, we used the proceeds to repay the outstanding borrowings on our revolving credit facility. On a pro forma basis, giving effect to the application of such proceeds, we would have had the capacity to borrow $592.9 million under our revolving credit facility and additional cash of approximately $207 million.

~~At June 30, 2018, we also~~ held unencumbered apartment communities with an estimated fair market value of approximately ~~$2.0~~$2.5 billion. ~~Each~~In April 2019, we repaid, at par, $167.5 million of property-level debt maturing during the ~~amounts presented above exclude amounts attributable~~three months ended September 30, 2019, increasing the estimated value of our pool of unencumbered apartment communities by $740.0 million to ~~partnerships served by our Asset Management business, which was sold on July 25, 2018.~~$3.3 billion.

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 further debt needs, we may consider alternative sources of liquidity, such as reductions in capital spending or proceeds from apartment community dispositions.

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 ~~June 30, 2018,~~March 31, 2019, approximately ~~84.7%~~92.9% of our leverage consisted of property-level, non-recourse, long-dated, amortizing debt. Approximately ~~96.5%~~93.3% of this property-level debt is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates and inflation. The weighted average maturity of our property-level debt was ~~7.0~~ y~~ears.~~

~~For property-level debt encumbering the communities in our Real Estate portfolio, $6.6 million~~was 7.8 years. On average, 7.4% of our unpaid principal balances ~~mature during the remainder of 2018, and on average, 12.8% of our unpaid principal balance~~ will mature each year from ~~2019~~2020 through ~~2021.~~2022.

While our primary source of leverage is property-level, non-recourse, long-dated, fixed-rate, amortizing debt, we also have a ~~Senior Secured Credit Agreement~~credit facility with a syndicate of financial ~~institutions, which~~institutions. As of March 31, 2019, we ~~refer~~had $70.0 million, or 1.7% of leverage, drawn against our revolving credit facility and the capacity to ~~as our Credit Agreement. Our Credit Agreement provides for $600.0~~borrow an additional $723.1 million after consideration of $6.9 million of ~~revolving loan commitments. As~~letters of ~~June 30, 2018, we had $220.2 million of outstanding borrowings under our revolving loan commitments, representing 4.8% of our total leverage, which we repaid with proceeds from~~credit backed by the ~~sale of our Asset Management business on July 25, 2018. The Credit Agreement~~ ~~provides us with an option to expand the aggregate loan commitments, subject to customary conditions, by up to~~ ~~$200.0 million.~~

The Credit Agreement also provided for a $250.0 million term loan, which represented 5.5% of our total leverage as of June 30, 2018 and was extended to mature on September 30, 2018. Subsequent to the completion of the sale of our Asset Management business, we utilized proceeds from the sale to repay the term loan.facility.

As of ~~June 30, 2018,~~March 31, 2019, our outstanding perpetual preferred equity represented approximately ~~5.0%~~5.4% of ~~our~~ total leverage. ~~Our preferred securities are~~On April 15, 2019, we called our Class A Perpetual Preferred Stock to be redeemed on May 16, 2019. Preferred Equity is perpetual in nature; however, ~~for illustrative purposes,~~ we ~~compute~~have computed the weighted average maturity of our total leverage assuming a ~~40-year~~40 year maturity ~~for~~on our preferred ~~securities.~~

securities other than our Class A Perpetual Preferred Stock.

The combination of non-recourse property-level debt, borrowings under our ~~Credit Agreement~~revolving credit facility and perpetual preferred equity that comprises our total leverage, reduces our refunding and re-pricing risk. The weighted average maturity for our total leverage described above was ~~8.2~~8.5 years as of ~~June 30, 2018. We used these proceeds, net of transaction costs from~~March 31, 2019 excluding the ~~sales of our Asset Management business, our four affordable apartment communities located in Hunters Point and Chestnut Hill Village to repay outstanding borrowings~~Class A Perpetual Preferred Stock, which we called for redemption on May 16, 2019.

Under the revolving credit facility, ~~and the term loan in July 2018, after giving effect to these repayments, on a pro forma basis, the weighted average maturity of our total leverage would be 8.9 years.~~

~~Under the Credit Agreement,~~ we have agreed to maintain a Fixed Charge Coverage ratio of 1.40x, as well as comply with other covenants customary for similar revolving credit arrangements. For the trailing twelve month period ended ~~June 30, 2018,~~March 31, 2019, our Fixed Charge Coverage ratio was ~~2.00x,~~2.05x, compared to a ratio of ~~1.97x~~2.02x for the trailing twelve month period ended ~~June 30, 2017.~~March 31, 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 condensed consolidated statements of cash flows included in Item 1 of this report.

Operating Activities

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, net cash provided by operating activities was ~~$185.6~~$81.6 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 ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 increased by ~~$8.1~~$0.3 million compared to ~~2017,~~2018, due to improved operating results of our Same Store communities and increased contribution from our redevelopment and lease-up communities, ~~partially~~ offset by lower net operating income associated with apartment communities and the Asset Management business sold in ~~2017.~~2018.

Investing Activities

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, net cash ~~used in~~provided by investing activities of ~~$293.7~~$252.4 million consisted primarily of ~~the acquisitions of Bent Tree Apartments and four apartment communities in Philadelphia and capital expenditures, partially offset by~~ proceeds from the disposition of seven apartment ~~communities.~~communities, partially offset by capital expenditures. Capital expenditures totaled ~~$164.1~~$85.5 million and ~~$176.4~~$75.6 million during the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. We generally fund capital expenditures with cash provided by operating activities and cash proceeds from apartment community sales.

Further information about the ~~acquisitions of Bent Tree Apartments and the four apartment communities in Philadelphia, and sales of the three apartment communities~~dispositions completed during the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 is included in Note 3 to the condensed consolidated financial statements in Item 1.

Capital additions for our Real Estate segment totaled ~~$158.4~~$75.9 million and ~~$163.2~~$73.6 million during the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.

We categorize capital spending for communities in our ~~Real Estate~~ portfolio broadly into ~~six~~seven 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 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 our period of ~~ownership;~~ownership, and not contemplated in our underwriting of an acquisition;

capital enhancements, which may include kitchen and bath remodeling, energy conservation projects and investments in longer-lived materials designed to reduce turnover costs and maintenance, all of which are generally lesser in scope than redevelopment additions 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 development of apartment communities; and

casualty capital additions, which represent ~~construction and related~~ capitalized costs incurred in connection with the restoration of an apartment community after a casualty event such as a severe snow storm, hurricane, tornado, flood or fire.

We exclude ~~from these measures~~ the amounts of capital spending related to apartment communities sold or classified as held for sale at the end of the period ~~as well as amounts expended by consolidated partnerships served by our Asset Management business as such amounts did not affect the amount of proceeds we received~~ from the ~~sale of our Asset Management business in July 2018.~~foregoing measures. We have also excluded from these measures indirect capitalized costs, which are not yet allocated ~~later in the year~~ to apartment communities with capital additions, and their related capital spending categories.

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 condensed consolidated statements of cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ are presented below (in thousands):


	Six Months Ended June 30,					Three Months Ended March 31,
	2018			2017		2019		2018
Real Estate
Capital replacements	$	14,569		$	19,363	$	8,104	$	6,136
Capital improvements	5,600			7,985		2,311		1,763
Capital enhancements	45,927			44,481		15,828		17,796
Redevelopment additions	70,692			84,665		18,918		40,181
Development additions	17,416			3,137		26,211		5,720
Initial capital expenditures						2,705		159
Casualty capital additions	4,149			3,566		1,821		1,872
Real Estate capital additions	158,353			163,197		75,898		73,627
Plus: additions related to apartment communities sold or held for sale and unallocated indirect capitalized costs	7,412			12,149
Plus: additions related to consolidated asset managed communities	1,720			814
Plus: additions related to consolidated Asset Management communities and apartment communities sold or held for sale						1,755		6,273
Consolidated capital additions	167,485			176,160		77,653		79,900
Plus: net change in accrued capital spending	(3,369		)	228		7,893		(4,299		)
Capital expenditures per condensed consolidated statement of cash flows	$	164,116		$	176,388	$	85,546	$	75,601

For the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ we capitalized ~~$3.9~~$2.1 million and ~~$4.2~~$2.0 million of interest costs, respectively, and ~~$17.7 million and $17.4~~$8.9 million of other direct and indirect costs ~~respectively.~~for both periods.

We invested ~~$45.9~~$15.8 million in capital enhancements during the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, and we anticipate a full year investment ranging from $80 million to $100 million.

Redevelopment and Development

We execute redevelopments using a range of approaches. We prefer to limit risk by executing redevelopments using a phased approach, in which we renovate an apartment community in stages. Smaller phases provide us the flexibility to maintain current earnings while aligning the timing of the completed apartment homes with market demand. The following table summarizes ~~value-creating investments related to~~ongoing redevelopments of this nature at ~~June 30, 2018~~March 31, 2019 (dollars in millions):

Location Apartment Homes Approved for Redevelopment Estimated/Potential Net Investment Inception-to-Date Net Investment
Bay Parc Miami, FL 15
$ 20.0
$ 19.4
Calhoun Beach Club Minneapolis, MN 275
28.7
10.5
Flamingo South Beach Miami, FL —
9.7
8.8
Palazzo West at The Grove Los Angeles, CA 389
24.5
18.3
Saybrook Pointe San Jose, CA 324
18.3
16.5
Yorktown Lombard, IL 292
25.7
19.4
Other Various 92
12.9
10.5
Total 1,387
$ 139.8
$ 103.4



	Location	Apartment Homes Approved for Redevelopment	Estimated Net Investment		Inception-to-Date Net Investment
Bay Parc	Miami, FL	60	$	24.1	$	21.8
Flamingo South Beach	Miami Beach, FL	—	39.7		21.3
Total		60	$	63.8	$	43.1

~~We also~~When smaller redevelopment phases are not possible, we may engage in redevelopment activities where an entire building or community is vacated. Additionally, we undertake ground-up development when warranted by risk-adjusted investment returns, either directly or in connection with the redevelopment of an existing apartment community or, on a more limited basis, at a new location. When smaller redevelopment phases are not possible, we may engage in redevelopment activities where an entire building or community is vacated.community. The following table summarizes our ~~value-creating~~ investments related to these developments and redevelopments at ~~June 30, 2018~~March 31, 2019 (dollars in millions):


	Location	Apartment Homes Approved for Redevelopment or Development	Estimated/Potential Net Investment		Inception-to-Date Net Investment		Stabilized Occupancy	NOI Stabilization	Location	Apartment Homes Approved for Redevelopment or Development	Estimated Net Investment		Inception-to-Date Net Investment		Stabilized Occupancy	NOI Stabilization
Anschutz Expansion	Aurora, CO	253	$	87.0	$	3.2	3Q 2021	4Q 2022
707 Leahy									Redwood City, CA	110	$	23.7	$	2.0	3Q 2020	4Q 2021
The Fremont									Denver, CO (MSA)	253	87.0		18.7		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		39.8		4Q 2020	1Q 2022	Boulder, CO	226	117.0		86.9		4Q 2020	1Q 2022
Park Towne Place	Philadelphia, PA	940	176.0		167.2		1Q 2019	2Q 2020
Total		1,419	$	380.0	$	210.2				647	$	262.8	$	118.9

Net 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. For phased redevelopments, potential net investment relates to the current phase of the redevelopment.

Stabilized Occupancy represents the period in which we expect to achieve stabilized occupancy, generally greater than 90%.

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 six months ended June 30, 2018, we invested $88.1 million in redevelopment and development. In Center City, Philadelphia, we continued construction on the fourth and final tower of Park Towne Place; lease-up is underway. At June 30, 2018, 90% of the redeveloped homes in the community were leased and 28 of the 136 homes still under renovation were pre-leased.

During the six months ended June 30, 2018, we invested $12.8 million in the development of our Parc Mosaic community in Boulder, Colorado. We expect completion of construction in late 2019 and initial occupancy in the summer of 2019.

Our total estimated ~~or potential~~ net investment in redevelopment and development is ~~$519.8~~$326.6 million with a projected weighted average net operating income yield on these investments of ~~6.1%~~5.9%, assuming untrended rents. Of this total, ~~$313.6~~$162.0 million has been funded. We expect to fund the remaining redevelopment and development investment through a combination of leverage and ~~community sales, including the~~ proceeds from ~~the July 25, 2018 sale of our Asset Management business and our four affordable apartment communities located in Hunters Point.~~community sales.

During the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, we ~~leased 181 apartment homes~~invested $45.1 million in redevelopment and development. We continued phased redevelopment activities in Miami at our ~~redevelopment communities. As of June 30, 2018, our exposure to lease-up at active redevelopment~~Flamingo South Beach and ~~development projects was approximately 419 apartment homes, of which 108 were in the fourth tower of Park Towne Place~~Bay Parc communities, and ~~215 were being constructed~~ground-up construction at Parc Mosaic ~~and 96 were located~~ in ~~three other active redevelopments.~~

~~During the third quarter, we expect to exercise our option to acquire approximately two acres of land adjacent to our 21 Fitzsimons apartment community, located~~Boulder, Colorado, The Fremont on the ~~University of Colorado~~ Anschutz Medical Campus ~~for the development of an apartment community. Over the next two years, we expect to invest approximately $87 million to construct 253 apartment homes~~in Denver, Colorado, and ~~4,600 square feet of retail space. Upon completion, we will own and operate 853 apartment homes on the campus.~~Elm Creek Townhomes in Elmhurst, Illinois.

We also began a $23.7 million full redevelopment of 707 Leahy in Redwood City, California. This 110-home community is well positioned, surrounded by one of the most dynamic job markets in the world, and has higher density than could be built in this location under current zoning code. We expect ~~our total development and redevelopment spending~~this investment to ~~range from $120 million to $200 million for the year ending December 31, 2018.~~generate a Free Cash Flow internal rate of return of approximately 9%.

Financing Activities

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, net cash ~~provided by~~used in financing activities of ~~$104.5~~$208.2 million was ~~primarily~~ attributed to proceeds from non-recourse property debt and net borrowings on our revolving credit facility, partially offset by principal payments on property loans, dividends paid to common security holders, and distributions paid to noncontrolling interests.the items discussed below.

Net borrowings on our revolving credit facility primarily relate to the timing of apartment community acquisitions and dispositions and of property debt financing activities.

Proceeds from non-recourse property debt borrowings during the period consisted of the closing of two fixed-rate, amortizing, non-recourse property loans totaling $242.0 million. These loans have 10-year terms and a weighted average interest rate of 3.48%, 126 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 12 basis points since December 31, 2017, to 4.52%, reducing prospective interest expense by more than $4.3 million.

Proceeds from non-recourse property debt borrowing during the period also included the closing of two non-recourse, variable-rate property loans totaling $118.6 million. These loans each have a five-year term and bear interest at 30-day LIBOR plus 1.25%. The five-year terms fill a hole in our laddered maturities and, taken together with the planned repayment of the variable term loan, reduce our exposure to increasing short-term interest rates to less than 8% of our leverage.

Principal payments on property loans during the period totaled ~~$257.1~~$19.6 million ~~consisting~~ of scheduled principal ~~amortization of $42.1 million and repayments of $215.0 million.~~amortization.

Net cash used in financing activities also includes ~~$140.6~~$75.3 million of payments to equity holders, as further detailed in the table below.

Equity and Partners’ Capital Transactions

The following table presents the Aimco Operating Partnership’s distribution activity (including distributions paid to Aimco) during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 (in thousands):


Cash distributions paid by the Aimco Operating Partnership to holders of noncontrolling interests in consolidated real estate partnerships	$	7,502
Cash distributions paid by the Aimco Operating Partnership to preferred unitholders (1)	8,168		$	4,082
Cash distributions paid by the Aimco Operating Partnership to common unitholders (2)	124,913		71,172
Total cash distributions paid by the Aimco Operating Partnership	$	140,583	$	75,254


(1)	$~~4.3~~2.1 million represented distributions to Aimco, and ~~$3.9~~$1.9 million represented distributions paid to holders of OP Units.


(2)	$~~119.3~~67.4 million represented distributions to Aimco, and ~~$5.6~~$3.8 million represented distributions paid to holders of OP Units.

The following table presents Aimco’s ~~dividend activity~~dividends paid to outside stock or OP Unit holders during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 (in thousands):

Cash distributions paid by Aimco to holders of noncontrolling interests in consolidated real estate partnerships $ 7,502
Cash distributions paid by Aimco to holders of OP Units 9,496
Cash dividends paid by Aimco to preferred stockholders 4,297
Cash dividends paid by Aimco to common stockholders 119,288
Total cash dividends and distributions paid by Aimco $ 140,583

~~During the six months ended June 30, 2018, we repurchased $7.6 million of OP Units at an average discount of 20% to our published net asset value.~~



Cash distributions paid to holders of OP Units	$	5,701
Cash dividends paid by Aimco to preferred stockholders	2,148
Cash dividends paid by Aimco to common stockholders	67,405
Total cash dividends and distributions paid by Aimco	$	75,254

Future Capital Needs

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.


ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk

As of ~~June 30, 2018, on a consolidated basis, we had approximately $133.1 million~~the date of ~~variable-rate property debt outstanding, and $470.2 million of variable-rate borrowings under our Credit Agreement, including a $250.0 million term loan. We estimate that a change~~this report, there have been no material changes from the market risk information provided in ~~30-day LIBOR of 100 basis points with constant credit risk spreads would reduce or increase net income attributable to Aimco common stockholders~~Aimco’s and the Aimco Operating Partnership’s ~~common unitholders by approximately $3.5 million~~combined Annual Report on ~~an annual basis. The term loan was excluded from this estimation as it was repaid in July 2018.~~

At June 30, 2018, our Real Estate segment had approximately $87.8 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.

~~We estimate~~Form 10-K for the ~~fair value for debt instruments as described in~~ ~~Note 6~~ to the condensed consolidated financial statements in Item 1. The estimated fair value of total indebtedness associated with the Real Estate portfolio was approximately $4.2 billion at June 30, 2018, inclusive of a $68.2 million mark-to-market asset. The mark-to-market liability atyear ended December 31, ~~2017 was $55.1 million.~~

If market rates for consolidated fixed-rate debt in our Real Estate segment were higher by 100 basis points with constant credit risk spreads, the estimated fair value of consolidated debt discussed above would decrease from $4.3 billion in the aggregate to $4.2 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 $4.3 billion in the aggregate to $4.4 billion.2018.


ITEM 4.	Controls and Procedures

Aimco

Disclosure Controls and Procedures

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

Changes in 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 ~~second~~first quarter of ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.

The Aimco Operating Partnership

Disclosure Controls and Procedures

The Aimco Operating Partnership’s management, with the participation of the chief executive officer and chief financial officer of both Aimco and AIMCO-GP, Inc., the Aimco Operating Partnership’s general partner, 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) 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-GP, Inc. have concluded that, as of the end of such period, the Aimco Operating Partnership’s disclosure controls and procedures are effective.

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 ~~second~~first quarter of ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, the Aimco Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION


ITEM 1A.	Risk Factors

As of the date of this report, there have been no material changes from the risk factors in Aimco’s and the Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.


ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Aimco

(a) Unregistered Sales of Equity Securities. Aimco did not issue any unregistered shares of Common Stock during the three months ended ~~June 30, 2018.~~March 31, 2019.

(c) Repurchases of Equity ~~Securities.~~ Securities~~There were no~~. The following table summarizes Aimco’s share repurchases ~~by Aimco of its common equity securities during~~(in thousands, except for per share data) for the three months ended June 30, 2018. Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding capital stock. As of June 30, 2018, Aimco was authorized to repurchase approximately 19.3 million additional shares. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.March 31, 2019.



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)
January 1 - January 31, 2019	475	$	43.54	475	10,630
February 1 - February 28, 2019	—	—		—	10,630
March 1 - March 31, 2019	—	—		—	10,630
Total	475	$	43.54	475


(1)	Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding capital stock. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.

The Aimco Operating Partnership

(a) Unregistered Sales of Equity Securities. ~~On May 1, 2018, the~~The Aimco Operating Partnership ~~issued 1.2 million~~did not issue any unregistered OP Units ~~as partial consideration for~~during the acquisition of four apartment communities in the Philadelphia area. Such OP Units were issued in private placement transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. three months ended March 31, 2019.

(c) Repurchases of Equity Securities. The Aimco Operating Partnership’s Partnership Agreement generally provides that after holding the common OP Units for one year, limited partners have the right to redeem their common OP Units for cash, subject to the Aimco Operating Partnership’s prior right to cause Aimco to acquire some or all of the common OP Units tendered for redemption in exchange for shares of Common Stock. Common OP Units redeemed for Common Stock are exchanged on a one-for-one basis (subject to antidilution adjustments). During the three months ended ~~June 30, 2018,~~March 31, 2019, no common OP Units were redeemed in exchange for shares of Common Stock. The following table summarizes repurchases, or redemptions in exchange for cash, of the Aimco Operating Partnership’s equity securities for the three months ended ~~June 30, 2018.~~March 31, 2019.

Period
Total
Number
of Units
Purchased

Average
Price
Paid
per Unit

Total Number of
Units Purchased
as Part of
Publicly
Announced
Plans or
Programs (1)

Maximum Number
of Units that
May Yet Be
Purchased Under the Plans or Programs (1)
April 1 - April 30, 2018 4,185
$ 39.89
N/A N/A
May 1 - May 31, 2018 1,951
40.56
N/A N/A
June 1 - June 30, 2018 10,150
39.62
N/A N/A
Total 16,286
$ 39.80



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 (1)	Maximum Number of Units That May Yet Be Purchased Under the Plans or Programs (1)
January 1 - January 31, 2019	319	$	45.46	N/A	N/A
February 1 - February 28, 2019	17,373	48.62		N/A	N/A
March 1 - March 31, 2019	34,400	49.34		N/A	N/A
Total	52,092	$	49.08

(1)

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

Aimco and the Aimco Operating Partnership

Dividend and Distribution Payments. Our ~~Credit Agreement~~revolving credit facility includes customary covenants, including a restriction on dividends and distributions and other restricted payments, but permits dividends and distributions during any 12-month period in an aggregate amount of up to 95% of Aimco’s Funds From Operations, subject to certain non-cash adjustments, for such period or such amount as may be necessary for Aimco to maintain its REIT status.


ITEM 6.	Exhibits

The following exhibits are filed with this report:



EXHIBIT NO. (1)			DESCRIPTION
3.1			Charter (Exhibit 3.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, is incorporated herein by this reference)
3.2			Charter - Articles of Amendment (Exhibit 3.1 to Aimco’s Current Report on Form 8-K dated February 20, 2019, is incorporated herein by this reference)
3.3			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)
10.1			~~Fourth~~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 ~~February 28, 2007~~April 5, 2019 (Exhibit 10.1 to Aimco’s Annual Report on Form ~~10-K for the year ended December 31, 2006, is~~8-K dated April 9, 2019, in incorporated herein by this reference)
~~10.2~~			First Amendment to Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of December 31, 2007 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 31, 2007, is incorporated herein by this reference)
~~10.3~~			Second Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of July 30, 2009 (Exhibit 10.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, is incorporated herein by this reference)
~~10.4~~			Third Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of September 2, 2010 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated September 3, 2010, is incorporated herein by this reference)
~~10.5~~			Fourth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of July 26, 2011 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated July 26, 2011, is incorporated herein by this reference)
~~10.6~~			Fifth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of August 24, 2011 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated August 24, 2011, is incorporated herein by this reference)
~~10.7~~			Sixth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of December 31, 2011 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 31, 2011, is incorporated herein by this reference)
~~10.8~~			Seventh Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of May 13, 2014 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated May 13, 2014, is incorporated herein by this reference)
~~10.9~~			Eighth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of October 31, 2014 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated November 4, 2014, is incorporated herein by this reference)
~~10.10~~			Ninth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of August 16, 2016 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated August 16, 2016, is incorporated herein by this reference)
~~10.11~~			Tenth Amendment to the Fourth Amended and Restated Agreement of Limited Partnership of the Aimco Operating Partnership, dated as of January 31, 2017 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated January 31, 2017, is incorporated herein by this reference)
~~10.12~~			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 and KeyBank N. A., as administrative agent, swing line lender and 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)
~~10.13~~			Aimco Executive Severance Policy (Exhibit 10.1 to Aimco’s Current Report on Form 8-K dated February 22, 2018, is incorporated herein by this reference)*
~~10.14~~			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 this reference)*
~~10.15~~			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)*
31.1			Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco
31.2			Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco
31.3			Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – the Aimco Operating Partnership
31.4			Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – the Aimco Operating Partnership



~~EXHIBIT NO. (1)~~		~~DESCRIPTION~~
32.1		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Aimco
32.2		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – the Aimco Operating Partnership
99.1		Agreement Regarding Disclosure of Long-Term Debt Instruments – Aimco
99.2		Agreement Regarding Disclosure of Long-Term Debt Instruments – the Aimco Operating Partnership
101		XBRL (Extensible Business Reporting Language). The following materials from Aimco’s and the Aimco Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended ~~June 30, 2018,~~March 31, 2019, tagged in XBRL: (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of comprehensive income; (iv) condensed consolidated statements of cash flows; and (v) notes to condensed consolidated financial statements.

(1)	Schedules and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.
*	Management contract or compensatory plan or arrangement

SIGNATURES

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



	APARTMENT INVESTMENT AND MANAGEMENT COMPANY

	By:	/s/ PAUL BELDIN
		Paul Beldin
		Executive Vice President and Chief Financial Officer
		(duly authorized officer and
		principal financial officer)



	AIMCO PROPERTIES, L.P.

	By:	AIMCO-GP, Inc., its general partner

	By:	/s/ PAUL BELDIN
		Paul Beldin
		Executive Vice President and Chief Financial Officer
		(duly authorized officer and
		principal financial officer)

Date: ~~August 6, 2018~~May 3, 2019

4846



Balance, December 31, 2017	$	101,537
Distributions to holders of preferred OP Units	(3,871		)
Redemption of preferred OP Units and other	(205		)
Net income attributable to preferred OP Units	3,871
Balance, June 30, 2018	$	101,332



	Aimco Equity			Noncontrolling interests in consolidated real estate partnerships			Common noncontrolling interests in Aimco Operating Partnership			Total Equity
Balance, December 31, 2017	$	1,663,144		$	(1,716	)	$	(5,675	)	$	1,655,753
Contributions	—			(20		)	—			(20		)
Issuance of common OP Units	—			—			50,151			50,151
Dividends on Preferred Stock	(4,297		)	—			—			(4,297		)
Dividends and distributions on Common Stock and common OP Units	(119,558		)	(7,499		)	(5,973		)	(133,030		)
Redemptions of common OP Units	—			—			(7,611		)	(7,611		)
Amortization of stock-based compensation cost	4,481			—			780			5,261
Effect of changes in ownership for consolidated entities	(17,385		)	—			7,283			(10,102		)
Change in accumulated other comprehensive loss	(395		)	—			(22		)	(417		)
Other	122			—			—			122
Net income	88,829			6,251			3,895			98,975
Balance, June 30, 2018	$	1,614,941		$	(2,984	)	$	42,828		$	1,654,785



	Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Reportable Segment (2)			Consolidated
Three months ended June 30, 2018:
Rental and other property revenues attributable to Real Estate	$	214,478	$	8,192	$	8,460		$	231,130
Rental and other property revenues of partnerships served by Asset Management business	—		—		19,000			19,000
Tax credit and transaction revenues	—		—		57			57
Total revenues	214,478		8,192		27,517			250,187
Property operating expenses attributable to Real Estate	60,930		7,655		7,446			76,031
Property operating expenses of partnerships served by Asset Management business	—		—		9,062			9,062
Other operating expenses not allocated to reportable segment (3)	—		—		115,733			115,733
Total operating expenses	60,930		7,655		132,241			200,826
Operating income	153,548		537		(104,724		)	49,361
Other items included in income before gain on dispositions (4)	—		—		(42,427		)	(42,427		)
Income before gain on dispositions	$	153,548	$	537	$	(147,151	)	$	6,934



Period	Total Number of Units Purchased	Average Price Paid per Unit		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs (1)
April 1 - April 30, 2018	4,185	$	39.89	N/A	N/A
May 1 - May 31, 2018	1,951	40.56		N/A	N/A
June 1 - June 30, 2018	10,150	39.62		N/A	N/A
Total	16,286	$	39.80