UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended ~~June 30, 2019~~March 31, 2020

☐	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~~Number: 1-13232 (Apartment Investment and Management Company)

Commission File ~~Number~~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		(I.R.S. Employer
incorporation or organization)		Identification No.)

4582 South Ulster Street, Suite ~~1100~~1700
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)

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

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

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

Apartment Investment and Management Company: Yes ☒ No ☐

AIMCO Properties, L.P.: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐

AIMCO Properties, L.P.: Yes ☒ No ☐

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

Apartment Investment and Management Company:

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
			Emerging growth company	☐

AIMCO Properties, L.P.:

Large accelerated filer	☐		Accelerated filer	☒
Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
			Emerging growth company	☐

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

Apartment Investment and Management Company:

☐

AIMCO Properties, L.P.:

☐

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

Apartment Investment and Management Company: Yes ☐ No ☒

AIMCO Properties, L.P.: Yes ☐ No ☒

~~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 8, 2019: 148,884,199~~

~~The number of AIMCO Properties, L.P. Partnership Common Units outstanding as of August 8, 2019: 158,452,309~~

May 6, 2020: 148,864,145

Table of Contents

EXPLANATORY NOTE

This filing combines the reports on Form 10-Q for the quarterly period ended ~~June 30, 2019,~~March 31, 2020, 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”~~“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~~the Aimco Operating Partnership. As of ~~June 30, 2019,~~March 31, 2020, Aimco owned ~~a 93.9% ownership~~approximately 93.4% of the legal interest in the common partnership units of the Aimco Operating Partnership and 94.8% of the economic interest in the Aimco Operating Partnership. The remaining ~~6.1%~~6.6% legal interest and 5.2% economic 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 all proceeds from the offerings of its securities. In exchange for the contribution of 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.~~Partnership’s general partner.

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

Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the 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~~earnings per share or ~~partners’ capital,~~earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

This report also includes separate Part 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.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

TABLE OF CONTENTS

FORM 10-Q

		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	~~Financial Statements~~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)	87
	AIMCO Properties, L.P.:
	Condensed Consolidated Balance Sheets (Unaudited)	98
	Condensed Consolidated Statements of Operations (Unaudited)	109
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	1110
	Condensed Consolidated Statements of Partners’ Capital (Unaudited)	1211
	Condensed Consolidated Statements of Cash Flows (Unaudited)	1412
	Notes to the Condensed Consolidated Financial Statements of Apartment Investment and Management Company and AIMCO Properties, L.P. (Unaudited)	1513
ITEM 2.	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2521
ITEM 3.	~~Quantitative and Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4640
ITEM 4.	~~Controls and Procedures~~CONTROLS AND PROCEDURES	4640
	PART II. OTHER INFORMATION
ITEM 1A.	~~Risk Factors~~RISK FACTORS	4741
ITEM 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4741
ITEM 6.	~~Exhibits~~EXHIBITS	4943
Signatures		5044

Table of Contents

PART I. FINANCIAL INFORMATION

~~ITEM 1.~~

ITEM 1. FINANCIAL STATEMENTS

~~Financial Statements~~

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Buildings and improvements	$	6,570,710		$	6,552,065		$	6,967,143		$	6,868,543
Land		1,741,531			1,756,525			1,869,465			1,869,048
Total real estate		8,312,241			8,308,590			8,836,608			8,737,591
Accumulated depreciation		(2,593,241	)		(2,585,115	)		(2,810,949	)		(2,718,284	)
Net real estate		5,719,000			5,723,475			6,025,659			6,019,307
Cash and cash equivalents		33,958			36,858			340,883			142,902
Restricted cash		31,949			35,737			33,933			34,800
Mezzanine investment								286,472			280,258
Other assets		455,897			351,541			361,298			351,472
Assets held for sale		—			42,393
Total assets	$	6,240,804		$	6,190,004		$	7,048,245		$	6,828,739

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	3,702,487		$	3,915,305		$	4,208,687		$	4,230,590
Revolving credit facility borrowings		294,960			160,360			593,845			275,000
Total indebtedness		3,997,447			4,075,665			4,802,532			4,505,590
Accrued liabilities and other		299,313			226,230			349,099			360,574
Liabilities related to assets held for sale		—			23,177
Total liabilities		4,296,760			4,325,072			5,151,631			4,866,164
Preferred noncontrolling interests in Aimco Operating Partnership		101,178			101,291
Commitments and contingencies (Note 5)

Redeemable preferred OP Units								96,449			97,064
Redeemable noncontrolling interests in consolidated real estate partnership								4,617			4,716
Commitments and contingencies (Note 4)
Equity:
Perpetual Preferred Stock		—			125,000
Common Stock, $0.01 par value, 500,787,260 shares authorized, 148,827,363 and 144,623,034 shares issued/outstanding at June 30, 2019 and December 31, 2018, respectively		1,488			1,446
Common Stock, $0.01 par value, 510,587,500 shares authorized, 148,700,407 and 148,885,197 shares issued/outstanding at March 31, 2020 and December 31, 2019, respectively								1,487			1,489
Additional paid-in capital		3,498,629			3,515,686			3,488,611			3,497,367
Accumulated other comprehensive income		4,866			4,794			4,139			4,195
Distributions in excess of earnings		(1,741,765	)		(1,947,507	)		(1,776,782	)		(1,722,402	)
Total Aimco equity		1,763,218			1,699,419			1,717,455			1,780,649
Noncontrolling interests in consolidated real estate partnerships		(2,718	)		(2,967	)		(3,409	)		(3,296	)
Common noncontrolling interests in Aimco Operating Partnership		82,366			67,189			81,502			83,442
Total equity		1,842,866			1,763,641			1,795,548			1,860,795
Total liabilities and equity	$	6,240,804		$	6,190,004		$	7,048,245		$	6,828,739

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
	June 30,						June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
REVENUES
Rental and other property revenues attributable to real estate	$	224,200		$	231,130		$	454,435		$	456,523
Asset Management business rental and tax credit revenues		—			19,057			—			41,384
Total revenues		224,200			250,187			454,435			497,907
Rental and other property revenues													$	224,552		$	230,235

OPERATING EXPENSES
Property operating expenses attributable to real estate		75,839			76,031			155,023			154,318
Property operating expenses of partnerships served by Asset Management business		—			9,062			—			18,257
Property operating expenses														75,480			78,959
Depreciation and amortization		91,924			97,485			185,489			190,033			100,476			93,565
General and administrative expenses		12,124			13,882			22,493			25,237			10,108			9,829
Investment management expenses														1,184			1,332
Other expenses, net		4,209			4,366			9,912			7,324			1,642			5,136
Total operating expenses		184,096			200,826			372,917			395,169			188,890			188,821

Interest income		3,065			2,884			5,791			5,056			4,523			2,726
Interest expense		(39,541	)		(49,906	)		(80,950	)		(97,701	)		(41,336	)		(41,409	)
Gain on dispositions of real estate		64,310			310			355,783			53,505
Other, net		231			200			303			424
(Loss) gain on dispositions of real estate														(34	)		291,473
Mezzanine investment income, net														6,747			—
Income from unconsolidated real estate partnerships														182			72
Income before income tax benefit (expense)		68,169			2,849			362,445			64,022			5,744			294,276
Income tax benefit (expense)		1,827			4,307			(1,154	)		38,824			3,233			(2,981	)
Net income		69,996			7,156			361,291			102,846			8,977			291,295
Noncontrolling interests:
Net income attributable to noncontrolling interests in consolidated real estate partnerships		(70	)		(45	)		(161	)		(6,251	)		(18	)		(91	)
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership		(1,933	)		(1,934	)		(3,867	)		(3,871	)		(1,869	)		(1,934	)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership		(3,534	)		(140	)		(18,671	)		(3,895	)		(368	)		(15,137	)
Net income attributable to noncontrolling interests		(5,537	)		(2,119	)		(22,699	)		(14,017	)		(2,255	)		(17,162	)
Net income attributable to Aimco		64,459			5,037			338,592			88,829			6,722			274,133
Net income attributable to Aimco preferred stockholders		(5,187	)		(2,149	)		(7,335	)		(4,297	)		—			(2,148	)
Net income attributable to participating securities		(38	)		(71	)		(455	)		(190	)		(43	)		(417	)
Net income attributable to Aimco common stockholders	$	59,234		$	2,817		$	330,802		$	84,342		$	6,679		$	271,568
Net income attributable to Aimco per common share – basic	$	0.40		$	0.02		$	2.25		$	0.56
Net income attributable to Aimco per common share – diluted	$	0.40		$	0.02		$	2.25		$	0.55

Net income attributable to Aimco per common share – basic and diluted													$	0.04		$	1.88

Weighted average common shares outstanding – basic		148,367			151,963			146,994			151,918			148,518			144,232
Weighted average common shares outstanding – diluted		148,599			152,093			147,220			152,048			148,786			144,445

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
June 30,

Six Months Ended
June 30,

2019

2018

2019

2018

Net income

$
69,996

$
7,156

$
361,291

$
102,846

Other comprehensive income (loss):

Unrealized gains (losses) on available for sale debt securities

16

(451
)

77

(1,051
)
Unrealized (losses) gains on interest rate swaps

—

(4
)

—

415

Losses on interest rate swaps reclassified into earnings from
accumulated other comprehensive loss

—

100

—

219

Other comprehensive income (loss)

16

(355
)

77

(417
)
Comprehensive income

70,012

6,801

361,368

102,429

Comprehensive income attributable to noncontrolling interests

(5,538
)

(2,100
)

(22,704
)

(13,995
)
Comprehensive income attributable to Aimco

$
64,474

$
4,701

$
338,664

$
88,434

	Three Months Ended March 31,
	2020			2019
Net income	$	8,977		$	291,295
Unrealized (losses) gains on available for sale debt securities		(60	)		61
Comprehensive income		8,917			291,356
Comprehensive income attributable to noncontrolling interests		(2,251	)		(17,166	)
Comprehensive income attributable to Aimco	$	6,666		$	274,190

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~

(In thousands)

(Unaudited)

Preferred Stock

Common Stock

Accumulated

Noncontrolling
Interests in

Common
Noncontrolling
Interests in

Shares
Issued

Amount

Shares
Issued

Amount

Additional
Paid-in
Capital

Other
Comprehensive
Income (Loss)

Distributions
in Excess of
Earnings

Total
Aimco
Equity

Consolidated
Real Estate
Partnerships

Aimco
Operating
Partnerships

Total Equity

Balances at March 31, 2018

5,000

$
125,000

152,568

$
1,525

$
3,885,327

$
3,544

$
(2,345,206
)

$
1,670,190

$
(2,755
)

$
(4,788
)

$
1,662,647

Issuance of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

50,151

50,151

Redemption of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

(648
)

(648
)
Amortization of share-based
     compensation cost

—

—

2

—

1,850

—

—

1,850

—

423

2,273

Effect of changes in ownership of
     consolidated entities

—

—

—

—

101

—

—

101

—

704

805

Other, net

—

—

22

1

30

—

(2
)

29

—

—

29

Net income

—

—

—

—

—

—

5,037

5,037

45

140

5,222

Change in accumulated other
     comprehensive income

—

—

—

—

—

(336
)

—

(336
)

—

(19
)

(355
)
Cash dividends paid to Common
     Stockholders

—

—

—

—

—

—

(59,781
)

(59,781
)

—

—

(59,781
)
Cash dividends paid to Preferred
     Stockholders

—

—

—

—

—

—

(2,149
)

(2,149
)

—

—

(2,149
)
Distributions to noncontrolling
     interests

—

—

—

—

—

—

—

—

(274
)

(3,135
)

(3,409
)
Balances at June 30, 2018

5,000

$
125,000

152,592

$
1,526

$
3,887,308

$
3,208

$
(2,402,101
)

$
1,614,941

$
(2,984
)

$
42,828

$
1,654,785

Balances at March 31, 2019

5,000

$
125,000

148,758

$
1,488

$
3,495,295

$
4,851

$
(1,742,998
)

$
1,883,636

$
(2,857
)

$
79,493

$
1,960,272

Redemption of Preferred Stock

(5,000
)

(125,000
)

—

—

4,089

—

(4,089
)

(125,000
)

—

—

(125,000
)
Issuance of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

3,034

3,034

Redemption of Aimco Operating
     Partnership Units

—

—

70

1

3,422

—

—

3,423

—

(4,998
)

(1,575
)
Amortization of share-based
     compensation cost

—

—

—

—

1,190

—

—

1,190

—

796

1,986

Effect of changes in ownership of
     consolidated entities

—

—

—

—

(4,851
)

—

—

(4,851
)

1,042

3,809

—

Purchase of noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

—

—

—

—

(917
)

—

(917
)
Other, net

—

—

(1
)

(1
)

—

—

—

(1
)

—

(1
)
Net income

—

—

—

—

—

—

64,459

64,459

70

3,534

68,063

Change in accumulated other
     comprehensive income

—

—

—

—

—

15

—

15

—

1

16

Cash dividends paid to Common
   Stockholders

—

—

—

—

—

—

(58,039
)

(58,039
)

—

—

(58,039
)
Common Stock issued to Common
   Stockholders in special dividend

—

—

—

—

(516
)

—

—

(516
)

—

—

(516
)
Cash dividends paid to Preferred
     Stockholders

—

—

—

—

—

—

(1,098
)

(1,098
)

—

—

(1,098
)
Distributions to noncontrolling
      interests

—

—

—

—

—

—

—

—

(56
)

(3,303
)

(3,359
)
Balances at June 30, 2019

—

$
—

148,827

$
1,488

$
3,498,629

$
4,866

$
(1,741,765
)

$
1,763,218

$
(2,718
)

$
82,366

$
1,842,866

~~See notes to condensed consolidated financial statements.~~

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

Balances at December 31, 2019		—	$	—		148,885		$	1,489		$	3,497,367		$	4,195		$	(1,722,402	)	$	1,780,649		$	(3,296	)	$	83,442		$	1,860,795
Repurchases of Common Stock		—		—		(234	)		(2	)		(10,002	)		—			—			(10,004	)		—			—			(10,004	)
Redemption of Aimco Operating Partnership units		—		—		—			—			—			—			—			—			—			(969	)		(969	)
Amortization of share-based compensation cost		—		—		20			—			1,929			—			—			1,929			—			1,051			2,980
Effect of changes in ownership of consolidated entities		—		—		—			—			(769	)		—			—			(769	)		—			769			—
Cumulative effect of a change in accounting principle		—		—		—			—			—			—			(277	)		(277	)		—			—			(277	)
Change in accumulated other comprehensive income		—		—		—			—			—			(56	)		—			(56	)		—			(4	)		(60	)
Net income		—		—		—			—			—			—			6,722			6,722			118			368			7,208
Common Stock dividends		—		—		—			—			—			—			(60,825	)		(60,825	)		—			—			(60,825	)
Distributions to noncontrolling interests		—		—		—			—			—			—			—			—			(73	)		(3,155	)		(3,228	)
Other, net		—		—		29			—			86			—			—			86			(158	)		—			(72	)
Balances at March 31, 2020		—	$	—		148,700		$	1,487		$	3,488,611		$	4,139		$	(1,776,782	)	$	1,717,455		$	(3,409	)	$	81,502		$	1,795,548

~~Table of Contents~~

~~APARTMENT INVESTMENT AND MANAGEMENT COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~For the Six Months Ended June 30, 2019 and 2018~~

~~(In thousands)~~

~~(Unaudited)~~

Preferred Stock

Common Stock

Accumulated

Noncontrolling
Interests in

Common
Noncontrolling
Interests in

Shares
Issued

Amount

Shares
Issued

Amount

Additional
Paid-in
Capital

Other
Comprehensive
Income (Loss)

Distributions
in Excess of
Earnings

Total
Aimco
Equity

Consolidated
Real Estate
Partnerships

Aimco
Operating
Partnerships

Total Equity

Balances at December 31, 2017

5,000

$
125,000

152,435

$
1,524

$
3,900,090

$
3,603

$
(2,367,073
)

$
1,663,144

$
(1,716
)

$
(5,675
)

$
1,655,753

Issuance of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

50,151

50,151

Redemption of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

(7,611
)

(7,611
)
Amortization of share-based
     compensation cost

—

—

21

—

4,481

—

—

4,481

—

780

5,261

Effect of changes in ownership of
      consolidated entities

—

—

—

—

(17,385
)

—

—

(17,385
)

—

7,283

(10,102
)
Other, net

—

—

136

2

122

—

(2
)

122

—

—

122

Net income

—

—

—

—

—

—

88,829

88,829

6,251

3,895

98,975

Change in accumulated other
     comprehensive income

—

—

—

—

—

(395
)

—

(395
)

—

(22
)

(417
)
Cash dividends paid to Common
      Stockholders

—

—

—

—

—

—

(119,558
)

(119,558
)

—

—

(119,558
)
Cash dividends paid to Preferred
      Stockholders

—

—

—

—

—

—

(4,297
)

(4,297
)

—

—

(4,297
)
Distributions to noncontrolling
     interests

—

—

—

—

—

—

—

—

(7,519
)

(5,973
)

(13,492
)
Balances at June 30, 2018

5,000

$
125,000

152,592

$
1,526

$
3,887,308

$
3,208

$
(2,402,101
)

$
1,614,941

$
(2,984
)

$
42,828

$
1,654,785

Balances at December 31, 2018

5,000

$
125,000

144,623

$
1,446

$
3,515,686

$
4,794

$
(1,947,507
)

$
1,699,419

$
(2,967
)

$
67,189

$
1,763,641

Repurchases of Common Stock

—

—

(461
)

(5
)

(20,677
)

—

—

(20,682
)

—

—

(20,682
)
Redemption of Preferred Stock

(5,000
)

(125,000
)

—

—

4,089

—

(4,089
)

(125,000
)

—

—

(125,000
)
Issuance of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

3,034

3,034

Redemption of Aimco Operating
     Partnership Units

—

—

70

1

3,422

—

—

3,423

—

(7,555
)

(4,132
)
Amortization of share-based
     compensation cost

—

—

22

—

3,632

—

—

3,632

—

1,592

5,224

Effect of changes in ownership of
      consolidated entities

—

—

—

—

(7,019
)

—

—

(7,019
)

1,042

5,977

—

Purchase of noncontrolling interest
      in consolidated real estate
      partnerships

—

—

—

—

—

—

—

—

(917
)

—

(917
)
Other, net

—

—

81

1

57

—

—

58

19

—

77

Net income

—

—

—

—

—

—

338,592

338,592

161

18,671

357,424

Change in accumulated other
     comprehensive income

—

—

—

—

—

72

—

72

—

5

77

Cash dividends paid to Common
      Stockholders

—

—

—

—

—

—

(125,514
)

(125,514
)

—

—

(125,514
)
Common Stock issued to Common
     Stockholders in special dividend

—

—

4,492

45

(561
)

—

—

(516
)

—

—

(516
)
Cash dividends paid to Preferred
      Stockholders

—

—

—

—

—

—

(3,247
)

(3,247
)

—

—

(3,247
)
Distributions to noncontrolling
     interests

—

—

—

—

—

—

—

—

(56
)

(6,547
)

(6,603
)
Balances at June 30, 2019

—

$
—

148,827

$
1,488

$
3,498,629

$
4,866

$
(1,741,765
)

$
1,763,218

$
(2,718
)

$
82,366

$
1,842,866

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
	June 30,						Three Months Ended March 31,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	361,291		$	102,846		$	8,977		$	291,295
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		185,489			190,033			100,476			93,565
Gain on dispositions of real estate		(355,783	)		(53,505	)
Income tax expense (benefit)		1,154			(38,824	)
Loss (gain) on dispositions of real estate								34			(291,473	)
Income tax (benefit) expense								(3,233	)		2,981
Other adjustments		6,443			2,307			3,157			3,201
Net changes in operating assets and operating liabilities		(28,555	)		(17,231	)		(31,995	)		(17,952	)
Net cash provided by operating activities		170,039			185,626			77,416			81,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate		(43,743	)		(205,318	)		(2,733	)		(2,236	)
Capital expenditures		(176,488	)		(164,116	)		(94,842	)		(85,546	)
Proceeds from dispositions of real estate		422,456			76,317			—			342,083
Purchases of corporate assets		(7,186	)		(2,649	)		(5,104	)		(3,319	)
Other investing activities		2,486			2,079			4,665			1,422
Net cash provided by (used in) investing activities		197,525			(293,687	)
Net cash (used in) provided by investing activities								(98,014	)		252,404
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of non-recourse property debt		—			360,613
Principal repayments of non-recourse property debt		(207,790	)		(257,144	)
Net borrowings on revolving credit facility		134,600			153,010
Principal repayments on non-recourse property debt								(22,622	)		(19,580	)
Net borrowings on (repayments of) revolving credit facility								318,845			(90,360	)
Repurchases of Common Stock		(20,682	)		—			(10,004	)		(20,682	)
Redemption of Preferred Stock		(125,000	)		—
Payment of dividends to Common Stockholders		(125,350	)		(119,288	)
Payment of dividends to Preferred Stockholders		(3,247	)		(4,297	)
Payment of dividends to holders of Preferred Stock								—			(2,148	)
Payment of dividends to holders of Common Stock								(61,116	)		(67,405	)
Payment of distributions to noncontrolling interests		(10,937	)		(16,998	)		(5,442	)		(5,701	)
Redemption of noncontrolling interests in the Aimco Operating Partnership		(4,244	)		(7,816	)
Purchases of noncontrolling interests in consolidated real estate partnerships		(917	)		(3,579	)
Redemptions of noncontrolling interests in the Aimco Operating Partnership								(1,584	)		(2,653	)
Other financing activities		(10,685	)		(41	)		(365	)		302
Net cash (used in) provided by financing activities		(374,252	)		104,460
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(6,688	)		(3,601	)
Net cash provided by (used in) financing activities								217,712			(208,227	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH								197,114			125,794
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		72,595			142,541			177,702			72,595
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	65,907		$	138,940		$	374,816		$	198,389

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Buildings and improvements	$	6,570,710		$	6,552,065		$	6,967,143		$	6,868,543
Land		1,741,531			1,756,525			1,869,465			1,869,048
Total real estate		8,312,241			8,308,590			8,836,608			8,737,591
Accumulated depreciation		(2,593,241	)		(2,585,115	)		(2,810,949	)		(2,718,284	)
Net real estate		5,719,000			5,723,475			6,025,659			6,019,307
Cash and cash equivalents		33,958			36,858			340,883			142,902
Restricted cash		31,949			35,737			33,933			34,800
Mezzanine investment								286,472			280,258
Other assets		455,897			351,541			361,298			351,472
Assets held for sale		—			42,393
Total assets	$	6,240,804		$	6,190,004		$	7,048,245		$	6,828,739

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	3,702,487		$	3,915,305		$	4,208,687		$	4,230,590
Revolving credit facility borrowings		294,960			160,360			593,845			275,000
Total indebtedness		3,997,447			4,075,665			4,802,532			4,505,590
Accrued liabilities and other		299,313			226,230			349,099			360,574
Liabilities related to assets held for sale		—			23,177
Total liabilities		4,296,760			4,325,072			5,151,631			4,866,164
Redeemable preferred units		101,178			101,291
Commitments and contingencies (Note 5)

Redeemable preferred OP Units								96,449			97,064
Redeemable noncontrolling interests in consolidated real estate partnership								4,617			4,716
Commitments and contingencies (Note 4)
Partners’ capital:
Preferred units		—			125,000
General Partner and Special Limited Partner		1,763,218			1,574,419			1,717,455			1,780,649
Limited Partners		82,366			67,189			81,502			83,442
Partners’ capital attributable to the Aimco Operating Partnership		1,845,584			1,766,608			1,798,957			1,864,091
Noncontrolling interests in consolidated real estate partnerships		(2,718	)		(2,967	)		(3,409	)		(3,296	)
Total partners’ capital		1,842,866			1,763,641			1,795,548			1,860,795
Total liabilities and partners’ capital	$	6,240,804		$	6,190,004		$	7,048,245		$	6,828,739

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

June 30,

June 30,

2019

2018

2019

2018

REVENUES

Rental and other property revenues attributable to real estate

$
224,200

$
231,130

$
454,435

$
456,523

Asset Management business rental and tax credit revenues

—

19,057

—

41,384

Total revenues

224,200

250,187

454,435

497,907

OPERATING EXPENSES

Property operating expenses attributable to real estate

75,839

76,031

155,023

154,318

Property operating expenses of partnerships served by Asset
   Management business

—

9,062

—

18,257

Depreciation and amortization

91,924

97,485

185,489

190,033

General and administrative expenses

12,124

13,882

22,493

25,237

Other expenses, net

4,209

4,366

9,912

7,324

Total operating expenses

184,096

200,826

372,917

395,169

a

Interest income

3,065

2,884

5,791

5,056

Interest expense

(39,541
)

(49,906
)

(80,950
)

(97,701
)
Gain on dispositions of real estate

64,310

310

355,783

53,505

Other, net

231

200

303

424

Income before income tax benefit (expense)

68,169

2,849

362,445

64,022

Income tax benefit (expense)

1,827

4,307

(1,154
)

38,824

Net income

69,996

7,156

361,291

102,846

Net income attributable to noncontrolling interests in consolidated real
   estate partnerships

(70
)

(45
)

(161
)

(6,251
)
Net income attributable to the Aimco Operating Partnership

69,926

7,111

361,130

96,595

Net income attributable to the Aimco Operating Partnership’s preferred
   unitholders

(7,120
)

(4,083
)

(11,202
)

(8,168
)
Net income attributable to participating securities

11

(79
)

(472
)

(204
)
Net income attributable to the Aimco Operating Partnership’s common
   unitholders

$
62,817

$
2,949

$
349,456

$
88,223

Net income attributable to the Aimco Operating Partnership per
   common unit – basic and diluted

$
0.40

$
0.02

$
2.25

$
0.55

Weighted average common units outstanding – basic

156,637

159,709

155,158

159,289

Weighted average common units outstanding – diluted

157,018

159,835

155,517

159,418

	Three Months Ended March 31,
	2020			2019
REVENUES
Rental and other property revenues	$	224,552		$	230,235

OPERATING EXPENSES
Property operating expenses		75,480			78,959
Depreciation and amortization		100,476			93,565
General and administrative expenses		10,108			9,829
Investment management expenses		1,184			1,332
Other expenses, net		1,642			5,136
Total operating expenses		188,890			188,821

Interest income		4,523			2,726
Interest expense		(41,336	)		(41,409	)
(Loss) gain on dispositions of real estate		(34	)		291,473
Mezzanine investment income, net		6,747			—
Income from unconsolidated real estate partnerships		182			72
Income before income tax benefit (expense)		5,744			294,276
Income tax benefit (expense)		3,233			(2,981	)
Net income		8,977			291,295
Net income attributable to noncontrolling interests in consolidated real estate partnerships		(18	)		(91	)
Net income attributable to the Aimco Operating Partnership		8,959			291,204
Net income attributable to the Aimco Operating Partnership’s preferred unitholders		(1,869	)		(4,082	)
��Net income attributable to participating securities		(43	)		(483	)
Net income attributable to the Aimco Operating Partnership’s common unitholders	$	7,047		$	286,639
Net income attributable to the Aimco Operating Partnership per common unit – basic and diluted	$	0.04		$	1.88

Weighted-average common units outstanding – basic		156,660			152,303
Weighted-average common units outstanding – diluted		157,003			152,632

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 March 31,
	2020			2019
Net income	$	8,977		$	291,295
Unrealized (losses) gains on available for sale debt securities		(60	)		61
Comprehensive income		8,917			291,356
Comprehensive income attributable to noncontrolling interests		(18	)		(91	)
Comprehensive income attributable to the Aimco Operating Partnership	$	8,899		$	291,265

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~PARTNERS’ CAPITAL

For the Three Months Ended March 31, 2020 and 2019

(In thousands)

(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2019

2018

2019

2018

Net income

$
69,996

$
7,156

$
361,291

$
102,846

Other comprehensive income (loss):

Unrealized gains (losses) on available for sale debt securities

16

(451
)

77

(1,051
)
Unrealized (losses) gains on interest rate swaps

—

(4
)

—

415

Losses on interest rate swaps reclassified into earnings from
accumulated other comprehensive loss

—

100

—

219

Other comprehensive income (loss)

16

(355
)

77

(417
)
Comprehensive income

70,012

6,801

361,368

102,429

Comprehensive income attributable to noncontrolling interests

(70
)

(45
)

(161
)

(6,251
)
Comprehensive income attributable to the Aimco Operating
Partnership

$
69,942

$
6,756

$
361,207

$
96,178

	Preferred Units		General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to the Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Total Partners’ Capital
Balances at December 31, 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 Aimco Operating Partnership units		—		—			(2,557	)		(2,557	)		—			(2,557	)
Amortization of share-based compensation cost		—		2,442			796			3,238			—			3,238
Effect of changes in ownership of consolidated entities		—		(2,168	)		2,168			—			—			—
Change in accumulated other comprehensive income		—		57			4			61			—			61
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	)
Other, net		—		59			—			59			19			78
Balances at March 31, 2019	$	125,000	$	1,758,636		$	79,493		$	1,963,129		$	(2,857	)	$	1,960,272

Balances at December 31, 2019	$	—	$	1,780,649		$	83,442		$	1,864,091		$	(3,296	)	$	1,860,795
Repurchases of common partnership units		—		(10,004	)		—			(10,004	)		—			(10,004	)
Redemption of Aimco Operating Partnership units		—		—			(969	)		(969	)		—			(969	)
Amortization of share-based compensation cost		—		1,929			1,051			2,980			—			2,980
Effect of changes in ownership of consolidated entities		—		(769	)		769			—			—			—
Cumulative effect of a change in accounting principle		—		(277	)		—			(277	)		—			(277	)
Change in accumulated other comprehensive income		—		(56	)		(4	)		(60	)		—			(60	)
Net income		—		6,722			368			7,090			118			7,208
Distributions to common unitholders		—		(60,825	)		(3,155	)		(63,980	)		—			(63,980	)
Distributions to noncontrolling interests		—		—			—			—			(73	)		(73	)
Other, net		—		86			—			86			(158	)		(72	)
Balances at March 31, 2020	$	—	$	1,717,455		$	81,502		$	1,798,957		$	(3,409	)	$	1,795,548

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF ~~PARTNERS’ CAPITAL~~

~~For the Three Months Ended June 30, 2019 and 2018~~

~~(In thousands)~~

~~(Unaudited)~~

Preferred
Units

General
Partner
and Special
Limited
Partner

Limited
Partners

Partners’
Capital
Attributable to
the Aimco
Operating
Partnership

Noncontrolling
Interests in Consolidated Real Estate Partnerships

Total
Partners’
capital

Balances at March 31, 2018

$
125,000

$
1,545,190

$
(4,788
)

$
1,665,402

$
(2,755
)

$
1,662,647

Issuance of common partnership units

—

—

50,151

50,151

—

50,151

Redemption of partnership units held
     by non-Aimco partners

—

—

(648
)

(648
)

—

(648
)
Amortization of share-based
     compensation

—

1,850

423

2,273

—

2,273

Effect of changes in ownership of
     partnership units

—

101

704

805

—

805

Other, net

—

29

—

29

—

29

Net income

—

5,037

140

5,177

45

5,222

Change in accumulated other
     comprehensive income

—

(336
)

(19
)

(355
)

—

(355
)
Distributions paid to common
     unitholders

—

(59,781
)

(3,135
)

(62,916
)

—

(62,916
)
Distributions paid to preferred
     unitholders

—

(2,149
)

—

(2,149
)

—

(2,149
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

—

—

(274
)

(274
)
Balances at June 30, 2018

$
125,000
��

$
1,489,941

$
42,828

$
1,657,769

$
(2,984
)

$
1,654,785

Balances at March 31, 2019

$
125,000

$
1,758,636

$
79,493

$
1,963,129

$
(2,857
)

$
1,960,272

Redemption of preferred units held
     by Aimco

(125,000
)

—

—

(125,000
)

—

(125,000
)
Issuance of common partnership units

—

—

3,034

3,034

—

3,034

Redemption of partnership units held
     by non-Aimco partners

—

3,423

(4,998
)

(1,575
)

—

(1,575
)
Amortization of share-based
     compensation

—

1,190

796

1,986

—

1,986

Effect of changes in ownership of
     partnership units and consolidated
     entities

—

(4,851
)

3,809

(1,042
)

1,042

—

Purchase of noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

(917
)

(917
)
Other, net

—

(1
)

—

(1
)

—

(1
)
Net income

—

64,459

3,534

67,993

70

68,063

Change in accumulated other
     comprehensive income

—

15

1

16

—

16

Distributions paid to common
     unitholders

—

(58,039
)

(3,303
)

(61,342
)

—

(61,342
)
Common partnership units issued to
     common unitholders in special
     distribution

(516
)

—

(516
)

—

(516
)
Distributions paid to preferred
     unitholders

—

(1,098
)

—

(1,098
)

—

(1,098
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

—

—

(56
)

(56
)
Balances at June 30, 2019

$
—

$
1,763,218

$
82,366

$
1,845,584

$
(2,718
)

$
1,842,866

~~See notes to condensed consolidated financial statements.~~

~~Table of Contents~~

~~AIMCO PROPERTIES, L.P.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL~~

~~For the Six Months Ended June 30, 2019 and 2018~~

~~(In thousands)~~

~~(Unaudited)~~

Preferred
Units

General
Partner
and Special
Limited Partner

Limited
Partners

Partners’
Capital
Attributable to
the Aimco
Operating
Partnership

Noncontrolling
Interests in Consolidated Real Estate Partnerships

Total
Partners’
Capital

Balances at December 31, 2017

$
125,000

$
1,538,144

$
(5,675
)

$
1,657,469

$
(1,716
)

$
1,655,753

Issuance of common partnership units

—

—

50,151

50,151

—

50,151

Redemption of partnership units held
     by non-Aimco partners

—

—

(7,611
)

(7,611
)

—

(7,611
)
Amortization of share-based
     compensation

—

4,481

780

5,261

—

5,261

Effect of changes in ownership of
     partnership units

—

(17,385
)

7,283

(10,102
)

—

(10,102
)
Other, net

—

122

—

122

—

122

Net income

—

88,829

3,895

92,724

6,251

98,975

Change in accumulated other
     comprehensive income

—

(395
)

(22
)

(417
)

—

(417
)
Distributions paid to common
     unitholders

—

(119,558
)

(5,973
)

(125,531
)

—

(125,531
)
Distributions paid to preferred
     unitholders

—

(4,297
)

—

(4,297
)

—

(4,297
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

—

—

(7,519
)

(7,519
)
Balances at June 30, 2018

$
125,000

$
1,489,941

$
42,828

$
1,657,769

$
(2,984
)

$
1,654,785

Balances at December 31, 2018

$
125,000

$
1,574,419

$
67,189

$
1,766,608

$
(2,967
)

$
1,763,641

Repurchases of common partnership
     units held by Aimco

—

(20,682
)

—

(20,682
)

—

(20,682
)
Redemption of preferred units held
     by Aimco

(125,000
)

—

—

(125,000
)

—

(125,000
)
Issuance of common partnership units

—

—

3,034

3,034

—

3,034

Redemption of partnership units held
     by non-Aimco partners

—

3,423

(7,555
)

(4,132
)

—

(4,132
)
Amortization of share-based
     compensation

—

3,632

1,592

5,224

—

5,224

Effect of changes in ownership of
     partnership units and consolidated
     entities

—

(7,019
)

5,977

(1,042
)

1,042

—

Purchase of noncontrolling interest in
      consolidated real estate partnerships

—

—

—

—

(917
)

(917
)
Other, net

—

58

—

58

19

77

Net income

—

338,592

18,671

357,263

161

357,424

Change in accumulated other
     comprehensive income

—

72

5

77

—

77

Distributions paid to common
     unitholders

—

(125,514
)

—

(125,514
)

—

(125,514
)
Common partnership units issued to
     common unitholders in special
     distribution

(516
)

—

(516
)

—

(516
)
Distributions paid to preferred
     unitholders

—

(3,247
)

—

(3,247
)

—

(3,247
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

(6,547
)

(6,547
)

(56
)

(6,603
)
Balances at June 30, 2019

$
—

$
1,763,218

$
82,366

$
1,845,584

$
(2,718
)

$
1,842,866

~~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
	June 30,						Three Months Ended March 31,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	361,291		$	102,846		$	8,977		$	291,295
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		185,489			190,033			100,476			93,565
Gain on dispositions of real estate		(355,783	)		(53,505	)
Income tax expense (benefit)		1,154			(38,824	)
Loss (gain) on dispositions of real estate								34			(291,473	)
Income tax (benefit) expense								(3,233	)		2,981
Other adjustments		6,443			2,307			3,157			3,201
Net changes in operating assets and operating liabilities		(28,555	)		(17,231	)		(31,995	)		(17,952	)
Net cash provided by operating activities		170,039			185,626			77,416			81,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate		(43,743	)		(205,318	)		(2,733	)		(2,236	)
Capital expenditures		(176,488	)		(164,116	)		(94,842	)		(85,546	)
Proceeds from dispositions of real estate		422,456			76,317			—			342,083
Purchases of corporate assets		(7,186	)		(2,649	)		(5,104	)		(3,319	)
Other investing activities		2,486			2,079			4,665			1,422
Net cash provided by (used in) investing activities		197,525			(293,687	)
Net cash (used in) provided by investing activities								(98,014	)		252,404
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of non-recourse property debt		—			360,613
Principal repayments of non-recourse property debt		(207,790	)		(257,144	)
Net borrowings on revolving credit facility		134,600			153,010
Repurchases of common partnership units held by Aimco		(20,682	)		—
Redemption of preferred units held by Aimco		(125,000	)		—
Payment of distributions to Aimco		(125,350	)		(119,288	)
Principal repayments on non-recourse property debt								(22,622	)		(19,580	)
Net borrowings on (repayments of) revolving credit facility								318,845			(90,360	)
Repurchases of common partnership units held by General Partner and Special Limited Partner								(10,004	)		(20,682	)
Payment of distributions to General Partner and Special Limited Partner								(61,116	)		(67,405	)
Payment of distributions to Limited Partners		(7,014	)		(5,625	)		(3,492	)		(3,767	)
Payment of distributions to preferred unitholders		(7,114	)		(8,168	)
Payment of distributions to noncontrolling interests in consolidated real estate partnerships		(56	)		(7,502	)
Redemptions of partnership units held by non-Aimco partners		(4,244	)		(7,816	)
Purchases of noncontrolling interests in consolidated real estate partnerships		(917	)		(3,581	)
Payment of distributions to preferred OP Units								(1,869	)		(4,082	)
Payment of distributions to noncontrolling interests								(81	)		—
Redemption of common and preferred OP Units								(1,584	)		(2,653	)
Other financing activities		(10,685	)		(39	)		(365	)		302
Net cash (used in) provided by financing activities		(374,252	)		104,460
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(6,688	)		(3,601	)
Net cash provided by (used in) financing activities								217,712			(208,227	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH								197,114			125,794
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		72,595			142,541			177,702			72,595
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	65,907		$	138,940		$	374,816		$	198,389

See notes to condensed consolidated financial statements.

1412

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 2019~~March 31, 2020

(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 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~~holds a majority of the ownership interests in the Aimco Operating Partnership. Aimco conducts all of its business and owns all of its assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as OP Units. OP Units include common partnership units, which we refer to as common OP Units, as well as preferred partnership ~~preferred~~ units, which we refer to as preferred OP Units. As of ~~June 30, 2019,~~March 31, 2020, after elimination of units held by consolidated subsidiaries, the Aimco Operating Partnership had ~~158,463,083~~159,196,780 common ~~partnership units~~OP Units outstanding. As of ~~June 30, 2019,~~March 31, 2020, Aimco owned ~~148,827,363~~148,700,407 of the common ~~partnership units, or 93.9%,~~OP Units of the Aimco Operating Partnership and Aimco had an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock. Aimco’s ownership of the total common OP units outstanding represents a 93.4% legal interest in the Aimco Operating Partnership and a 94.8% economic interest.

Except as the context otherwise requires, “we,” ~~“our”~~“our,” and “us” refer to Aimco, the Aimco Operating Partnership, and their consolidated subsidiaries, collectively.

We own and operate a portfolio of apartment communities, diversified by both geography and price point, in 17 states and the District of Columbia. As of ~~June 30, 2019, we owned an equity interest in 128~~March 31, 2020, our portfolio included 124 apartment communities with ~~33,820~~32,846 apartment homes in ~~our portfolio. Our portfolio is diversified by both price point and geography and consists primarily of market rate apartment communities in~~ which we ~~own a substantial interest.~~held an average ownership of approximately 99%. We consolidated ~~124~~120 of these apartment communities with ~~33,678~~32,704 apartment homes.

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~~consisting of normal recurring ~~items)~~items, considered necessary for a fair presentation have been included. Operating results for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020.

The condensed consolidated balance sheets of Aimco and the Aimco Operating Partnership at December 31, ~~2018,~~2019, 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, ~~2018.~~2019. 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, please refer to Note 9.~~subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

1513

Table of Contents

We consolidate a variable interest entity, or VIE, in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. As of March 31, 2020, and December 31, 2019, Aimco consolidated 6 VIEs, in addition to the Aimco Operating Partnership.

As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company. 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~~We have an interest in a partnership that owns Parkmerced Apartments, which meets the definition of a VIE. However, we are not the primary beneficiary and ~~Partners’ Capital~~do not consolidate this partnership. We loaned $275 million to the partnership, which accrues interest at 10% per annum with a five-year term and the right to extend for a second five-year term. Our investment balance of $286.5 million, reflected in mezzanine investment in our condensed consolidated balance sheets, primarily consists of notes receivable and represents our maximum exposure to loss in this VIE.

~~The following table presents a reconciliation of the Aimco Operating Partnership’s preferred~~Redeemable Preferred OP Units ~~from December 31, 2018 to June 30, 2019.~~

As described in Note 6,5, the preferred OP Units may be redeemed at the holder’s option 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~~sheets. The following table presents a reconciliation of the Aimco Operating Partnership’s preferred OP Units from December 31, 2019, to March 31, 2020 (in thousands):

Balance, December 31, 2018

$
101,291

Distributions to holders of preferred OP Units

(3,867
)
Redemption of preferred OP Units and other

(113
)
Net income attributable to preferred OP Units

3,867

Balance, June 30, 2019

$
101,178

	2020
Balance at December 31	$	97,064
Preferred distributions		(1,869	)
Redemption of preferred units		(615	)
Net income		1,869
Balance at March 31	$	96,449

The Aimco Operating Partnership has outstanding various classes of redeemable preferred OP Units. As of March 31, 2020, the Aimco Operating Partnership had 3,618,802 redeemable preferred OP Units issued and outstanding with a total redemption value of $96.4 million. Distributions per annum range from 1.92% to 8.75% per class and from $0.48 to $8.00 per unit.

Revenue from Leases

The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements. For the three months ended March 31, 2020 and 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):

	2020		2019
Fixed lease income	$	213,416	$	215,581
Variable lease income		13,615		14,144
Total lease income	$	227,031	$	229,725

We monitor the collectability of unpaid rent obligations and due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, we recognized a write-off of straight-line rent receivables and deferred leasing costs of $2.9 million and $2.2 million, respectively. The write-off of the straight-line rent receivables is not included in the fixed lease income in the table above.

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 in the 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 tax benefit (expense) in our condensed consolidated statements of operations, as follows (in thousands):

Three Months Ended June 30, 2018

Six Months Ended June 30, 2018

As Previously
Reported

Adjustments

As Revised

As Previously
Reported

Adjustments

As Revised

Income tax benefit

$
4,395

$
(88
)

$
4,307

$
41,783

$
(2,959
)

$
38,824

Gain on dispositions of real estate

222

88

310

50,546

2,959

53,505

During the six months ended June 30, 2019, Aimco and the Aimco Operating Partnership effected a reverse split of Common Stock and common partnership units, respectively, at a ratio of one share or unit for every 1.03119 shares or units outstanding on the date of effectiveness. The accounting guidance for recapitalization events requires that we revise Aimco’s equity and the Aimco Operating Partnership’s partners’ capital as if the reverse split had occurred at the beginning of the earliest period presented. As such, we have revised the outstanding share and unit counts, presentation of share and unit activity, and earnings per share and unit, as if the reverse split had occurred on December 31, 2017.

~~Accounting Pronouncements Adopted in the Current Year~~

Effective January 1, 2019, we adopted the lease accounting standard issued by the Financial Accounting Standards Board, or FASB. We elected to adopt 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 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.

1614

Table of Contents

~~In 2018,~~Reclassifications and Revisions

For 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 mix2020 presentation 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 of operations, we have added a caption for investment management expenses. We have reclassified certain items from property operating expenses, general and administrative expenses, and other expenses, net, in our 2019 presentation to conform to the ~~three and six months ended June 30, 2019 and 2018.~~current presentation.

~~Recent~~ Accounting Pronouncements Adopted in the Current Year

~~In 2016,~~On January 1, 2020, we adopted ASC 326, Financial Instruments – Credit Losses, issued by the Financial Accounting Standards Board, or 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~~requires us to estimate and record credit losses over the life of a ~~receivable~~financial instrument, including receivables, at its inception. ~~We have limited loans~~Our notes receivable and ~~we invest~~investments in available for sale, or AFS, debt securities ~~which~~ are subject to the new standard. ~~Receivables related to operating leases are excluded from~~For AFS debt securities, the new standard ~~as they are subject~~requires us to estimate a credit loss if the ~~lease accounting standard. This~~fair value of the instruments is less than the carrying value of the instruments.

We adopted the credit loss standard ~~is required to be applied~~ using athe modified-retrospective ~~approach and requires~~approach. We recorded a cumulative-effect adjustment ~~to retained~~for the estimated credit loss associated with our notes receivable of $0.3 million in distributions in excess of earnings ~~be recorded~~and partners’ capital in our condensed consolidated balance sheets as of January 1, 2020. As of the date of ~~adoption. The new standard is effective~~adoption, the fair value of our AFS debt securities exceeded their carrying value and 0 estimate of credit loss was required for us on January 1, 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.

these instruments.

Note 3 — Significant Transactions

~~Acquisitions of Apartment Communities~~Financing Activity

~~During~~On April 20, 2020, we secured a $350.0 million term loan. The loan matures on April 20, 2021, includes a one-year extension option, and currently bears interest at a 30-day LIBOR plus 1.85%, with a 50-basis point LIBOR floor. Proceeds from the six months ended June 30, 2019, we acquired an apartment community located in Ardmore, Pennsylvania, a suburb of Philadelphia. Summarized information regarding this acquisition is set forth in the table below (dollars in thousands):loan were used primarily to repay borrowings on our revolving credit facility.

Number of apartment homes

110

Purchase price (1)

$
66,725

Capitalized transaction costs

$
892

Acquisition costs allocated to land

$
4,929

Acquisition costs allocated to building and improvements

$
61,271

~~(1)~~

The gross purchase price of the acquisition consisted of $32.8 million in cash, $30.9 million of assumed property-level debt and the issuance of 59,761 OP Units. In accordance with GAAP, the OP Units were valued at $50.77 per unit, the Aimco Common Stock closing price on April 5, 2019, the purchase date.

Dispositions of Apartment Communities

During the ~~six~~three months ended ~~June 30,~~March 31, 2020, 0 apartment communities were sold. During the three months ended March 31, 2019 we sold apartment communities as summarized below (dollars in thousands):

Apartment communities sold

8

Apartment homes sold

2,605

Gain on dispositions of real estate

$
355,783

	2019
Number of apartment communities sold		7
Number of apartment homes sold		2,206
Gain on dispositions of real estate	$	291,473

The apartment communities sold were predominantly located outside of our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

~~In addition to the apartment communities we sold during the current period, from~~From time to time we may be marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy. At the end of each reporting period we evaluate whether such communities meet the criteria to be classified as held for sale. As of ~~June 30, 2019, no~~March 31, 2020, 0 apartment communities were classified as held for 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 and six months ended June 30, 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):

Three Months Ended June 30, 2019

Six Months Ended June 30, 2019

Fixed lease income

$
209,890

$
425,471

Variable lease income

13,608

27,752

Total lease income

$
223,498

$
453,223

~~Table of Contents~~

In general, our commercial leases have options to extend for a certain period of time at the tenant’s option. Future minimum annual rental payments we will receive under commercial operating leases are as follows (in thousands):

July 1, 2019 to December 31, 2019

$
9,269

2020

16,589

2021

14,127

2022

13,637

2023

12,816

Thereafter

61,306

Total

$
127,744

Generally, our residential leases do not provide extension options and, as of June 30, 2019, have an average remaining term of 9.8 months. Future minimum rental payments pursuant to residential leases are excluded from the table above due to their shorter term.

For leases in which we are the lessee, beginning in 2019, we recognize right of use assets and related lease liabilities on our consolidated balance sheets. Upon adoption of the accounting guidance for leases, we recognized right of use assets of $87.5 million, which are included in other assets on our condensed consolidated balance sheets. We also recognized the related lease liabilities of $79.7 million, which are included in accrued liabilities and other on our condensed consolidated balance sheets. We estimated the value of the lease liabilities using a discount rate equivalent to the rate Aimco would pay on a secured borrowing with similar terms to the 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 adjusted to market value at the time the option is exercised; therefore, these extension periods were not included in our determination of the right of use asset and lease liability. For the three and six months ended June 30, 2019, our total lease cost for ground leases was $1.3 million and $4.5 million, respectively, and for office leases was $0.6 million and $1.3 million, respectively.

As of June 30, 2019, the ground and office leases have weighted average remaining terms of 79.4 years and 9.6 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 included in accrued liabilities and other on our condensed consolidated balance sheets are as follows (in thousands):

Office Lease
Future
Minimum Rent

Ground Lease
Future
Minimum Rent

Total
Operating Lease
Future Minimum Rent

July 1, 2019 to December 31, 2019

$
1,583

$
1,057

$
2,640

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

$
22,169

$
432,999

$
455,168

Less: minimum payments for leases not yet commenced

(17,849
)

—

(17,849
)
Less: discount

(308
)

(356,204
)

(356,512
)
Total lease liability

$
4,012

$
76,795

$
80,807

~~Note 5~~ — Commitments and Contingencies

Commitments

In connection with our redevelopment, development and other capital additions 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, 2019,~~March 31, 2020, our commitments related to these capital activities totaled approximately ~~$235.9~~$219.0 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.

~~Table of Contents~~

~~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.

Table of Contents

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 near an Indiana apartment community that has not been owned by us since 2008. The contamination allegedly derives from a dry cleaner that operated on our former property, prior to our ownership. We undertook a voluntary remediation of the dry cleaner contamination under ~~IDEM’s~~state 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 to formulate a scope of work and ~~IDEM~~agreed order to ~~identify options for clean-up~~finish clean up of the ~~site.~~site outside the Superfund program. Although the outcome of these processes are uncertain, we do not expect their resolution to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

We also have a contingent environmental liability ~~stemming from~~related to a property in Lake Tahoe, ~~California, regarding environmental contamination from the historic operation of a dry cleaner.~~California. 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.~~where a laundromat, with a self-service dry-cleaning machine, operated. 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~~4 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 inby GAAP. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or apartment community casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of ~~June 30, 2019,~~March 31, 2020, are immaterial to our consolidated financial condition, results of operations and cash flows.

Note 65 — 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 excludes participating securities~~ outstanding. ~~Diluted~~We calculate diluted earnings per share and diluted earnings per unit ~~are calculated~~ 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

~~Table of Contents~~

unvested total ~~stockholder~~shareholder 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 shares of Common Stock and common partnership units outstanding equal to the number of shares that vest. Common partnership unit equivalents also include unvested long-term incentive partnership units. ~~Securities~~We include in the denominator securities with dilutive effect ~~are included~~ in ~~the denominator for~~ calculating diluted earnings per share and per unit during these periods.

Our ~~time-based~~ restricted stock awards that are subject to time-based vesting receive non-forfeitable dividends similar to shares of Common Stock and common partnership units prior to ~~vesting. These dividends~~vesting, and our TSR long-term incentive partnership units receive non-forfeitable distributions ~~are not forfeited if~~based on specified percentages of the ~~awards fail~~distributions paid to ~~vest. Therefore, the~~common partnership units prior to vesting and conversion. The unvested restricted shares and units related to these awards are participating securities. ~~The~~ We include the

Table of Contents

effect of participating securities ~~is included~~ in basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and undistributed earnings when the two-class method is more dilutive than the treasury stock method.

~~The effect~~Reconciliations of ~~dilutive securities included~~the numerator and denominator in the ~~calculation~~calculations of basic and diluted earnings per share and ~~securities not dilutive and excluded from the calculation of earnings~~ per ~~share,~~unit for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018, were~~are as follows (in ~~thousands)~~thousands, except per share and per unit data):

	Three Months Ended		Six Months Ended		Three Months Ended
	June 30, 2019	June 30, 2018	June 30, 2019	June 30, 2018	March 31, 2020		March 31, 2019
Earnings per share
Numerator:
Basic and dilutive net income attributable to Aimco common stockholders					$	6,679	$	271,568

Denominator - shares:
Basic weighted-average Common Stock outstanding						148,518		144,232
Dilutive share equivalents outstanding	232	130	226	130		268		213
Dilutive weighted-average Common Stock outstanding						148,786		144,445

Earnings per share – basic					$	0.04	$	1.88
Earnings per share – dilutive					$	0.04	$	1.88

Non-dilutive share equivalents outstanding						97		36

Earnings per unit
Numerator:
Basic and dilutive net income attributable to the Aimco Operating Partnership's common unitholders					$	7,047	$	286,639

Denominator - units
Basic weighted-average common partnership units outstanding						156,660		152,303
Dilutive partnership unit equivalents outstanding	381	126	359	129		343		329
Non-dilutive share equivalents outstanding	—	184	—	184
Dilutive weighted-average common partnership units outstanding						157,003		152,632

Earnings per unit – basic					$	0.04	$	1.88
Earnings per unit – dilutive					$	0.04	$	1.88

Non-dilutive partnership unit equivalents outstanding	—	421	—	421		1,847		229
Unvested restricted participating shares and partnership units	199	257	199	257

The Aimco Operating Partnership has various classes of preferred OP Units, which may be redeemed at the ~~holder’s~~holders’ option. The Aimco Operating Partnership may redeem these units for cash, or at its option, shares of Common Stock. As of ~~June 30, 2019,~~March 31, 2020, these preferred OP Units were potentially redeemable for approximately ~~2.0~~2.7 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 for the periods presented above, and we expect to exclude them in future periods.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, we paid ~~$0.39~~$0.41 and ~~$2.41,~~$2.02, respectively, in dividends and distributions per share and per unit. OfThe $2.02 paid during the ~~$2.41 paid in dividends and distributions in~~three months ended March 31, 2019 ~~$2.02 was paid in March and~~ represents the per share and per unit value of the special dividend and special ~~distribution.~~distribution authorized by the Board of Directors in the first quarter of 2019. The special dividend consisted of $67.1 million in cash, 4.5 million shares of Common Stock and $0.4 million of cash paid in 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. ~~During~~

In connection with the special dividend and distribution, the Board of Directors authorized a reverse stock split during the three ~~and six~~ months ended ~~June 30, 2018, we paid $0.38~~March 31, 2019. The reverse split combined every 1.03119 common shares and ~~$0.76, respectively,~~common partnership units into one common share or common partnership unit and was intended to neutralize the dilutive impact of the shares and units issued in ~~dividends~~the special dividend and ~~distributions per share~~distribution. As a result, the number of shares and ~~per unit.~~units outstanding after the dividend/distribution and reverse split was unchanged from the number outstanding immediately prior to the two actions.

Table of Contents

Note 76 — Fair Value Measurements

Recurring Fair Value Measurements

We ~~hold several positions~~measure at fair value on a recurring basis our investments in the securitization trust that holds certain of our property debt, ~~and~~which we classify as AFS debt securities. These investments are presented within other assets in the condensed consolidated balance sheets. We hold several positions in the securitization trust that pay interest ~~currently. We~~currently and we also hold the first loss position in the securitization trust, which accrues interest over the term of the investment. These 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 through interest income using the effective interest method over the remaining expected term of the investments, which as of ~~June 30, 2019,~~March 31, 2020, was approximately ~~1.9~~1.2 years. ~~We measure at fair value, on a recurring basis, our investments in the securitization trust, which we classify as available for sale, or AFS, debt securities.~~

~~Our investments in AFS debt securities are included in other assets in the accompanying condensed consolidated balance sheets.~~ Our amortized cost basis for ~~AFS debt securities,~~these investments, which represents the original cost adjusted for interest accretion less interest payments received, was ~~$86.7~~$91.7 million and ~~$83.6~~$90.0 million as of ~~June 30, 2019~~March 31, 2020, and December 31, ~~2018, respectively. We estimated the fair value of these investments to be $91.7 million and $88.5 million as of June 30,~~ 2019, ~~and December 31, 2018,~~ respectively.

~~Table of Contents~~

Our investments in AFS debt securities are classified within Level 2 of the GAAP fair value hierarchy. We estimate the fair value of these investments using an income and market approach with primarily observable inputs, including yields and other information regarding similar types of investments, and adjusted for certain unobservable inputs specific to these investments. The fair value of the positions that pay interest currently typically moves in an inverse relationship with movements in interest rates. The fair value of the first loss position is primarily correlated to collateral quality and demand for similar subordinate commercial mortgage-backed securities.

The following table summarizes fair value for our AFS debt securities (in thousands):

	As of March 31, 2020								As of December 31, 2019
	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
AFS debt securities	$	95,906	$	—	$	95,906	$	—	$	94,251	$	—	$	94,251	$	—

Non-Recurring Fair Value ~~Disclosures~~Measurements

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, ~~receivables~~restricted cash, accounts receivable, and ~~payables~~accounts payable approximated their fair value as of ~~June 30, 2019~~March 31, 2020, and December 31, ~~2018,~~2019, due to their relatively short-term nature and high probability of realization. The carrying amounts of ~~longer term seller financing~~ notes receivable and the revolving credit facility approximated their estimated fair value as of ~~June 30, 2019~~March 31, 2020, and December 31, ~~2018. The carrying amount of our total indebtedness was approximately $4.0 billion as compared to an estimated fair value of $4.1 billion as of June 30,~~ 2019. ~~The carrying amount of our total indebtedness approximated its estimated fair value at December 31, 2018.~~ We estimate the fair value of our ~~seller financing notes and our consolidated~~non-recourse property debt using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, collateral quality and loan to value ratios on similarly encumbered apartment communities within our portfolio. We classify the fair value of our non-recourse property debt ~~and seller financing notes~~ within Level 32 of the GAAP valuation hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.

The following table summarizes carrying value and fair value for our non-recourse property debt (in thousands):

	As of March 31, 2020				As of December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Non-recourse property debt	$	4,228,440	$	4,166,396	$	4,251,339	$	4,298,630

Note 87 — Business Segments

In 2019, as a result of the 2018 sale of the Asset Management business, we revised the information regularly reviewed by our chief executive officer, who is our chief operating decision maker, to assess our operating performance. We have ~~determined we have four~~4 segments: Same Store, Redevelopment and Development, Acquisition, and Other Real Estate.

Our Same Store segment includes communities that have reached a stabilized level of operations as of the beginning of a two-year comparable period and maintained it throughout the current and comparable prior year and are not expected to be sold 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.~~sale, communities that we expect to redevelop, and certain commercial spaces.

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~~reflects our share of rental and other property ~~revenue~~revenues, excluding utility reimbursements, less ~~our share of~~direct property operating expenses, ~~for consolidated apartment communities. We exclude from rental and other property revenues the amount~~net of utility ~~costs reimbursed by residents and reflect such amount as a reduction~~reimbursements, for consolidated

Table of ~~the related utility expense within property operating expenses in our evaluation of segment results.~~Contents

communities. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP.

As of ~~June 30, 2019,~~March 31, 2020, our Same Store segment included 95 consolidated apartment communities with ~~27,640~~28,095 apartment homes; our Redevelopment and Development segment included ~~seven~~6 consolidated ~~apartment~~ communities with ~~3,134 apartment~~2,210 homes; our Acquisition segment included ~~seven~~1 consolidated ~~apartment communities~~community with ~~1,590 apartment homes;~~110 homes, and 1 consolidated community with 136 homes under construction; and our Other Real Estate segment included ~~15 apartment~~18 communities with ~~1,315 apartment homes.~~

~~Table of Contents~~

2,289 homes and 1 office building.

The following tables present the rental and other property revenues, property operating expenses, proportionate property net operating income, and income before income tax benefit (expense) of our segments on a proportionate basis, excluding amounts related to sold communities and ~~excluding~~ our proportionate share of ~~four~~4 apartment communities with 142 apartment homes ~~which~~that we ~~do not~~neither manage nor consolidate, ~~and amounts related to apartment communities sold as of June 30, 2019~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):

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 June 30, 2019:

Total revenues

$
176,375

$
19,166

$
10,237

$
9,275

$
8,255

$
892

$
224,200

Property operating expenses attributable
   to real estate

47,169

7,030

2,974

3,904

7,725

7,037

75,839

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

108,257

108,257

Total operating expenses

47,169

7,030

2,974

3,904

7,725

115,294

184,096

Proportionate property net operating
   income

129,206

12,136

7,263

5,371

530

(114,402
)

40,104

Other items included in income
   before income tax benefit (4)

—

—

—

—

—

28,065

28,065

Income before income tax benefit

$
129,206

$
12,136

$
7,263

$
5,371

$
530

$
(86,337
)

$
68,169

	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, 2020:
Rental and other property revenues	$	187,956	$	11,913	$	884	$	17,875	$	8,812	$	(2,888	)	$	224,552
Property operating expenses		48,782		4,687		401		6,174		8,175		7,261			75,480
Other operating expenses not allocated to segments (3)		—		—		—		—		—		113,410			113,410
Total operating expenses		48,782		4,687		401		6,174		8,175		120,671			188,890
Proportionate property net operating income (loss)		139,174		7,226		483		11,701		637		(123,559	)		35,662
Other items included in income before income tax benefit (4)		—		—		—		—		—		(29,918	)		(29,918	)
Income before income tax benefit	$	139,174	$	7,226	$	483	$	11,701	$	637	$	(153,477	)	$	5,744

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 June 30, 2018:

Total revenues

$
169,902

$
18,482

$
6,358

$
9,378

$
7,640

$
38,427

$
250,187

Property operating expenses attributable
   to real estate

46,352

6,936

1,875

3,679

7,116

10,073

76,031

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

124,795

124,795

Total operating expenses

46,352

6,936

1,875

3,679

7,116

134,868

200,826

Proportionate property net operating
   income

123,550

11,546

4,483

5,699

524

(96,441
)

49,361

Other items included in income
   before income tax benefit (4)

—

—

—

—

—

(46,512
)

(46,512
)
Income before income tax benefit

$
123,550

$
11,546

$
4,483

$
5,699

$
524

$
(142,953
)

$
2,849

	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:
Rental and other property revenues	$	181,523	$	14,012	$	—		$	14,113	$	8,292	$	12,295		$	230,235
Property operating expenses		48,990		5,255		127			4,991		7,733		11,863			78,959
Other operating expenses not allocated to segments (3)		—		—		—			—		—		109,862			109,862
Total operating expenses		48,990		5,255		127			4,991		7,733		121,725			188,821
Proportionate property net operating income (loss)		132,533		8,757		(127	)		9,122		559		(109,430	)		41,414
Other items included in income before income tax expense (4)		—		—		—			—		—		252,862			252,862
Income before income tax expense	$	132,533	$	8,757	$	(127	)	$	9,122	$	559	$	143,432		$	294,276

Same
Store

Redevelopment
and
Development

Acquisition

Other Real
Estate

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments (2)

Consolidated

Six months ended June 30, 2019:

Total revenues

$
350,494

$
39,516

$
20,230

$
18,741

$
16,884

$
8,570

$
454,435

Property operating expenses
   attributable to real estate

93,904

14,317

5,827

7,790

15,792

17,393

155,023

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

217,894

217,894

Total operating expenses

93,904

14,317

5,827

7,790

15,792

235,287

372,917

Proportionate property net operating
   income

256,590

25,199

14,403

10,951

1,092

(226,717
)

81,518

Other items included in income
   before income tax expense (4)

—

—

—

—

—

280,927

280,927

Income before income tax expense

$
256,590

$
25,199

$
14,403

$
10,951

$
1,092

$
54,210

$
362,445

~~Table of Contents~~

Same
Store

Redevelopment
and
Development

Acquisition

Other
Real
Estate

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments (2)

Consolidated

Six months ended June 30, 2018:

Total revenues

$
336,931

$
36,560

$
7,937

$
18,689

$
15,767

$
82,023

$
497,907

Property operating expenses
   attributable to real estate

92,659

13,436

2,398

7,525

14,734

23,566

154,318

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

240,851

240,851

Total operating expenses

92,659

13,436

2,398

7,525

14,734

264,417

395,169

Proportionate property net operating
   income

244,272

23,124

5,539

11,164

1,033

(182,394
)

102,738

Other items included in income
   before income tax benefit (4)

—

—

—

—

—

(38,716
)

(38,716
)
Income before income tax benefit

$
244,272

$
23,124

$
5,539

$
11,164

$
1,033

$
(221,110
)

$
64,022

(1)

Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of consolidated ~~apartment~~ communities in our 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 prior to its sale in July 2018. Corporate and Amounts Not Allocated to Segments alsoany. 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. Write-off of straight-line rent receivables, which was recognized due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, is included in consolidated rental and other property revenues. The write-off of straight-line rent is not included in our measurement of segment performance.

(3)

~~Other operating expenses not allocated to segments consists of property operating expenses of partnerships served by our Asset Management business prior to its sale in July 2018,~~Includes depreciation and amortization, general and administrative expenses, and other operating expenses including provision for real estate impairment loss, which are not included in our measure of segment performance.

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

Table of Contents

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

	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Same Store	$	4,110,917	$	4,131,494	$	4,643,371	$	4,679,211
Redevelopment and Development		852,177		792,126		731,811		694,188
Acquisition		627,109		507,190		102,217		89,405
Other Real Estate		327,326		327,099		733,138		736,934
Corporate and other assets (1)		323,275		432,095		837,708		629,001
Total consolidated assets	$	6,240,804	$	6,190,004	$	7,048,245	$	6,828,739

(1)	Includes the assets not allocated to our segments, primarily corporate assets and assets of sold apartment ~~communities sold as of June 30, 2019.~~communities.

For the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ capital additions related to our segments were as follows (in thousands):

	2019		2018		2020		2019
Same Store	$	73,242	$	61,581	$	27,526	$	35,379
Redevelopment and Development		84,782		86,202		44,596		36,458
Acquisition		15,056		3,985		15,343		76
Other Real Estate		6,063		4,285		6,419		3,477
Total capital additions	$	179,143	$	156,053	$	93,884	$	75,390

Note ~~9 — Variable Interest Entities~~8 – Subsequent Events

~~Generally,~~In December 2019, COVID-19 was first identified during an investigation into an outbreak in Wuhan, China. The World Health Organization declared COVID-19 to be 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 majoritypandemic on March 11, 2020. The outbreak of the ~~limited partners unrelated~~COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. Many states and local jurisdictions have reacted by instituting a wide variety of measures including states of emergency, mandatory quarantines, required business and school closures, implementing “shelter in place” orders, and restricting travel. In addition, many cities and states have enacted, or are considering enacting, protections for residents and commercial tenants, including government mandated rent delays, other abatement measures or concessions, and prohibitions on lease terminations or evictions for tenants. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession.

We will continue to monitor impairments of our real estate assets, impairment of our mezzanine loan investment, and estimates of bad debt on rental income. The unknown duration of the pandemic, any limitations that prevent us from enforcing our legal right, and the resulting economy are expected to likely result in increased bad debt and lower occupancy, negatively impacting our results. We will continue to monitor the collectability of all unpaid commercial rent obligations and may be required to make further write-offs in the future. Additionally, we will continue to monitor economic and market conditions and provide no assurance that a prolonged recession will not result in a non-cash impairment loss in the future.

On April 10, 2020, the FASB issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions, including deferrals or reductions of future lease payments. Consequently, in accordance with the Staff Q&A issued by the FASB, we may elect to not follow lease modification accounting for concessions related 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~~effects of the ~~partnership. In determining whether we~~COVID-19 pandemic. We are currently working with tenants impacted by the COVID-19 pandemic and will continue to evaluate the accounting impact of future lease concessions.

Table of Contents

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, a VIE of 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 the Aimco Operating Partnership consolidates own interests in one or more apartment communities and are typically structured to generate a return for their partners through the operation and ultimate sale of the communities. The Aimco Operating Partnership is the primary beneficiary in the limited partnerships in which it is the sole decision maker and has a substantial economic interest. The table below summarizes information regarding VIEs consolidated by the Aimco Operating Partnership:

June 30, 2019

December 31, 2018

VIEs with interests in apartment communities

7

9

Apartment communities owned by VIEs

7

9

Apartment homes in communities owned by VIEs

3,183

3,592

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, 2019

December 31, 2018

Assets

Net real estate

$
405,174

$
488,127

Cash and cash equivalents

7,618

15,416

Restricted cash

3,106

4,461

Other assets

27,144

3,973

Liabilities

Non-recourse property debt secured by Aimco communities, net

177,825

322,685

Accrued liabilities and other

35,946

13,576

~~Table of Contents~~

~~ITEM 2.~~

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

~~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: the impact of the COVID-19 pandemic, including on 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; the availability and cost of corporate debt; 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;

•

Impact of the COVID-19 pandemic on our residents, commercial tenants, and operations, including as a result of government restrictions and the overall impact on the real estate industry and economy generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, all of which heightens the impact of the other risks and factors described below;

•

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 Item 1A. Risk Factors in Part II of this report, 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, ~~2018,~~2019, and the other documents we file from time to time with the Securities and Exchange Commission.

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

Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States, or GAAP. These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading and include: Nareit Funds ~~From~~from Operations, Pro forma Funds ~~From~~from Operations, Adjusted Funds ~~From~~from Operations, Free Cash Flow, Net Asset Value, Economic Income, and the measures used to compute our leverage ratios.

Executive Overview

We are focused on the ownership, management, redevelopment, and some development of quality apartment communities located in several of the largest markets in the United States.

2521

Table of Contents

Our principal financial objective is to provide predictable and attractive returns to our equity holders. We measure our long-term total return using Economic Income, defined as changes in the per share Net Asset Value, or NAV, growth plus dividends. NAV is used by many investors because the value of company assets can be readily estimated, even for non-earning assets such as land or properties under development. NAV has the advantage of incorporating the investment decisions of thousands of real estate investors, enhancing comparability among companies that have differences in their accounting and avoiding disparity that can result from application of GAAP to investment properties and various ownership structures. NAV also provides real estate investors a basis for the perceived quality and predictability of future cash flows as well as their expected growth. Some investors focus on multiples of Adjusted Funds ~~From~~from Operations, or AFFO, and Funds ~~From~~from Operations as defined by the National Association of Real Estate Investment Trusts, or Nareit FFO. Our disclosure of AFFO, a measure of current return, complements our focus on Economic Income. We also use Pro forma ~~Funds From Operations, or Pro forma~~ FFO as a secondary measure of operational performance.

Our Economic Income is the result of performance in five key business ~~plan to achieve our principal financial objective is to:~~areas:

•

~~operate our portfolio~~increase revenue based on high levels of ~~desirable apartment homes with a high level of focus on~~resident retention, through superior customer selection and ~~customer~~ satisfaction, ~~and~~coupled with innovation resulting in ~~an efficient manner that produces predictable and growing Free Cash Flow;~~sustained cost control, to further improve net operating income margins;

•

~~improve our portfolio~~create value and future earnings growth by the renovation and repositioning of apartment communities ~~which is diversified both by geography~~through short-cycle 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;long-cycle redevelopments;

•

~~use low levels~~own an apartment portfolio diversified by geography and price point with a focus on properties with high land value located in submarkets with outsized future growth prospects, and diversify the portfolio by maintaining allocation to both “income” properties (high quality properties with predictable, “low beta” AFFO returns, usually with B or C+ rents) where we expect appreciation of ~~financial leverage~~ the substantial land value will create opportunities for “high alpha” value creation through profitable redevelopment;

•

primarily ~~in the form of non-recourse, long-dated, fixed-rate~~utilize safe property debt that is low-cost, long-dated, amortizing, and ~~perpetual preferred equity, a combination that reduces our~~non-recourse, limiting entity and refunding ~~and re-pricing~~ risk ~~and provides a hedge against increases in interest rates;~~while maintaining flexibility to sell or redevelop properties; and

•

~~focus intentionally on a~~emphasize an intentional culture that is collaborative and productive, ~~culture~~ based on respect for others and personal ~~responsibility.~~responsibility, strengthened by a preference for promotion from within and explicit talent development and succession planning to produce the strong, stable team that is the enduring foundation of our success.

Over our first 25 years as a public company, our Economic Income compounded at an annual rate of 14%.

COVID-19 Update

In December 2019, COVID-19 was first identified during an investigation into an outbreak in Wuhan, China. The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The following is a summary of our response to the COVID-19 pandemic and a discussion of financial information for the three months ended March 31, 2020, and periods subsequent to March 31, 2020.

As the crisis approached, we made the health and safety of teammates our priority and we:

•

formed a cross-functional committee of approximately a dozen, from across the company, that met daily to re-design how work was done on site, to keep our team safe while continuing to lease apartments and fulfil service requests;

•

made it clear, and consistent with company policies providing flexibility, that any teammate who felt unsafe at work because of the virus was free to stay home, with pay and without penalty;

•

undertook to pay all costs related to COVID-19 testing and treatment;

•

committed to keep our team intact, without layoffs or pay cuts; and

•

continued, and increased, regular communications and transparency, providing a steady flow of written, oral, and video reports to the entire team.

Table of Contents

Customer focus led us to make our properties safer by increasing cleaning, reducing opportunities for infection, and limiting in-person interactions with neighbors and site teams, and we:

•

searched out ways to support those sheltering at home and to meet the needs of the relatively few who reported positive for infection by COVID-19;

•

redeployed construction supervisors whose work had been paused to support property service teams, and redeployed dozens of our office workers to join our shared service center team to hold thousands of structured conversations with residents helping each plan his or her personal adjustment to the crisis, including offering financial advice, tips on job searches, help with errands, ideas about how to find a roommate, establishing payment plans where appropriate, and even, in a few difficult cases, providing money for groceries;

•

utilized our previous investment in technology and artificial intelligence to adapt to the new conditions of social distancing and sheltering at home; and

•

mindful of the sacrifice of healthcare providers who worked long hours and felt unable to go home without risking infection of their families, and as part of the Aimco Cares Good Neighbor program, provided free use of furnished apartments at 21 Fitzsimons on the Anschutz Medical Campus, Parc Mosaic near Boulder Community Health, and River Club near Newark University Hospital.

Our ~~business~~Board of Directors was fully informed and fully engaged, including two candidates for the board who were not formally elected until the end of April. During March and April, we delivered five management reports, made numerous calls, asked individual directors for specific assistance, and held four virtual board meetings.

Knowing the importance of financial liquidity and building on $650 million of cash and committed credit at the start of 2020, we drew down $300 million on our revolving credit facility, reduced expected 2020 capital spending by $150 million, or almost one-half, and undertook to increase available credit by another $720 million: a $350 million bank term loan and approximately $370 million in proceeds from property loans, of which half are closed or rate-locked and half closing over the next 30 days.

Preliminary 2^nd Quarter Information

•

In April, our resident turnover reached an all-time low of 41.1%, down 270 basis points year over year.

•

Leasing pace, which initially dropped by half in mid-March, is recovering. In April, our leasing team provided more than 3,300 live, virtual tours to prospects generating more than 1,000 leases.

•

April average daily occupancy of 96.6% was down 40 basis points year over year, yet higher by 20 basis points from April 2018.

•

Pricing has remained solid with April blended lease rate increases of 4.2%, up 50 basis points year-over-year.

•

April residential revenue was approximately $69 million, of which we recognized 99%, after a 1% provision for bad debt. Of the 99% recognized, 96% was received in cash and 3% was accrued based on security deposits available for offset, and the FICO scores of the resident or his guarantor. Effective in April, we revised our estimation of residential bad debt to consider creditworthy residents and their guarantors who choose to withhold rent payments.

Our new methodology accelerated the estimate of collectability to month-end based on our assessment of the creditworthiness of the tenants and third-party guarantors, based on their FICO scores. Previously, we evaluated collectability of balances only after such balances were more than 30 days past due. Using the new methodology, April residential bad debt expense was approximately 1% of revenues, or $670k; an increase of $270k from what would have been the result using our former methodology.

We also reviewed the viability of our commercial tenants and the related accounting assets for straight-line rents and deferred broker commissions.

Approximately $2.5 million, or 3.5%, of our monthly revenue is ~~organized around five areas~~derived from commercial tenants, about one-half office uses and one-half other commercial uses. In April, we collected 90% of ~~strategic focus: operational excellence;~~amounts due from office tenants and 30% of rents from the other commercial users.

US GAAP requires revenue subject to long-term leases to be recognized in a ratable, or straight-line, manner over the life of the lease. In practice, this results in GAAP income in excess of cash receipts in the early years of a lease. Additionally, GAAP requires broker commissions paid for origination of the lease to be deferred and recognized over the life of the lease. Entering 2020, we had recognized $6.7 million of GAAP rental revenue in-excess of cash rent and had deferred $3.8 million of broker commissions. Based on the expected economic impact of COVID-19 and the recession at hand, we wrote off, in the first

Table of Contents

quarter, $2.9 million of its straight-line rent receivable and $2.2 million of deferred broker commissions related to leases to commercial tenants with retail, restaurant, and fitness uses. Monthly rent for these tenants is approximately $0.6 million and future rental revenue will be recognized on a cash basis.

The unknown duration of the pandemic, any limitations that prevent us from enforcing our legal right, and the resulting economy are expected to likely result in higher uncollected rents and lower expected occupancy, negatively impacting our results. Partially mitigating these negative factors is an expectation for higher customer retention and lowering turnover costs. Additionally, while no provision for real estate impairment was recognized during the first quarter, we continue to monitor economic and market conditions and provide no assurance that a prolonged recession will not result in a non-cash impairment loss in the future.

Redevelopment and Development

When the current crisis became apparent, we paused all of our short-cycle redevelopment and ~~development; portfolio management;~~capital enhancement activities. Together with other projects that had been slated to start later this year, we reduced expected 2020 capital spending by 45%, or $150 million.

We are continuing construction of five long-cycle redevelopments and developments currently underway. These five apartment communities have an estimated remaining cost to complete of approximately $212 million; approximately $140 million of which is expected to be spent in 2020. Three are expected to be completed in 2020 and two are expected to be completed in 2021. When stabilized, these communities are expected to contribute approximately $30 million of additional net operating income.

Liquidity and Leverage

Today, we have $1 billion of liquidity: summing cash on hand; availability under our revolving credit facility; and excess proceeds on rate-locked debt closing in the next few weeks. This liquidity will increase by an additional $200 million, as in-process property loans close over the next 30 days.

In total, we are placing $688 million of new property debt, generating incremental proceeds of $367 million. We have closed or rate-locked $326 million of the new property loans. These loans have a weighted-average term to maturity of 8.3 years and a weighted-average interest rate of 2.9%, lowering our overall borrowing costs by five basis points. When these financings, and the property loans currently in process, are completed, we will have no loan maturities in 2020 and will have reduced 2021 to 2024 maturities by $229 million; resulting in average annual maturities of $265 million for the four years 2021 to 2024.

Our investment-grade balance ~~sheet;~~sheet provides flexibility and ~~team~~liquidity. Leverage, as measured by leverage-to-EBITDAre, remains above targeted levels. We expect to reduce leverage to targeted levels through increased EBITDAre from the lease up of the five properties under construction and ~~culture.~~ from property sales.

In early May, we sold an apartment community located in Annandale, Virginia at a price of $58.9 million, equal to its estimated gross asset value at December 31, 2019.

Results for the Three Months Ended March 31, 2020

The results from the execution of our business plan during the three months ended ~~June 30, 2019,~~March 31, 2020, are further described below.

~~Operational Excellence~~Operations

We own and operate a portfolio of apartment communities, diversified by both geography and price point. ~~At June 30, 2019,~~As of March 31, 2020, our portfolio included ~~128~~124 apartment communities with ~~33,820~~32,846 apartment homes in which we held an average ownership of approximately 99%.

Our property operations team produced solid results for our portfolio for the three months ended ~~June 30, 2019. Highlights~~March 31, 2020. Same Store highlights include:

•

~~Same Store portfolio average~~Average daily occupancy of ~~96.9%~~97.6%, a 60 basis ~~point increase over~~points higher than the ~~same period in 2018;~~three months ended March 31, 2019;

•

~~Same Store~~Net operating income increased 5.0% with a 74.0% net operating income ~~increased 4.6% with net operating income margins of 73.3%, a 60~~margin, 100 basis ~~point increase over~~points higher than the margin for the three months ended ~~June 30, 2018;~~March 31, 2019; and

Table of Contents

•

~~Same Store rent~~Rent increases on renewals and new leases averaged ~~5.0%~~5.8% and ~~2.0%~~1.7%, respectively, for a ~~weighted average~~weighted-average increase of 3.6%., 50 basis points higher than the three months ended March 31, 2019.

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~~increased automation has helped us control operating expenses. These and other innovations contributed to ~~limiting~~a growth rate in Same Store controllable operating expense, ~~(defined~~which we define as property expenses less taxes, insurance, and utility ~~expenses)~~expenses, compounding for the 12 years ended December 31, 2019, at an annual rate of negative 0.2%. During the three months ended March 31, 2020, Same Store controllable operating expenses decreased 3.5% compared to the three months ended March 31, 2019.

Redevelopment and Development

Our second line of business is the redevelopment and some development of apartment communities. Through ~~these~~redevelopment activities, we expect to create value by repositioning communities within our portfolio. ~~We measure the rate and quality of financial returns by NAV creation, an important component of Economic Income, our primary measure of long-term financial performance.~~ 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. 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.

~~Table of Contents~~

We invest to earn ~~leverage-neutral~~ risk-adjusted returns in excess of those expected from the apartment communities sold in “paired trades” to fund the redevelopment or development. Of these two activities, we generally favor redevelopment because it permits adjustment toof the scope and timing of spending to align with changing market conditions and customer preferences.

We execute redevelopments using a range of approaches. We prefer to limit risk by executing redevelopments using a short-cycle approach, in which we renovate an apartment community in stages. These short-cycle redevelopments can be completed one apartment home at a time, when that home is vacated and available for renovation, or one floor at a time, thereby limiting the number of down homes and lease-up risk. As a result, short-cycle redevelopments provide us the flexibility to maintain current earnings while aligning the timing of the completed apartment homes with market demand. When short-cycle redevelopments are not possible, we may engage in redevelopment activities where an entire building or community is vacated. We refer to these as long-cycle redevelopments. We undertake some ground-up development when warranted by risk-adjusted investment returns. Redevelopment work may include seeking entitlements from local governments, which enhance the value of our existing portfolio by increasing density; that is, the right to add apartment homes to a site.

During the three months ended ~~June 30, 2019,~~March 31, 2020, we invested ~~$51.7~~$67.4 million in redevelopment and development. In March, as mentioned above, we paused investment in our short-cycle redevelopment projects and delayed the start of new projects. We ~~continued phased~~intend to continue five long-cycle redevelopment ~~activities at Bay Parc in Miami,~~and development projects already under construction, including the full redevelopment of the North Tower at Flamingo Point and 707 Leahy, ~~in Redwood City, California, and~~ ground-up construction at ~~Parc Mosaic in Boulder, Colorado,~~ The Fremont on the Anschutz Medical Campus, ~~in Aurora, Colorado, and~~Eldridge Townhomes adjacent to our Elm Creek ~~Townhomes~~apartment community, and Prism in ~~Elmhurst, Illinois.~~Cambridge, Massachusetts. Our estimated cost to complete these projects is $212.2 million, an amount equal to 1.5% of our estimated gross asset value and readily funded from our liquidity.

~~At Parc Mosaic, an unusually wet spring slowed the delivery~~The following table summarizes our significant redevelopment and development communities as of ~~the first building to August. We now~~March 31, 2020 (dollars in millions):

	Location	Homes Approved for Redevelopment		Homes Completed		Homes Leased		Total Planned Investment (1)		Investment to Date		Expected Initial Occupancy (2)	Expected NOI Stabilization (3)
Short-cycle redevelopments:
Bay Parc	Miami, FL		75		75		70	$	26.3	$	26.3	N/A	N/A
Long-cycle redevelopments:
707 Leahy (4)	Redwood City, CA		110		12		19		25.0		16.1	1Q 2020	2Q 2022
Eldridge Townhomes	Elmhurst, IL		58		—		12		35.1		24.1	2Q 2020	4Q 2022
Flamingo Point	Miami Beach, FL		385		18		12		224.9		90.2	4Q 2021	2Q 2024
The Fremont	Denver, CO (MSA)		253		—		16		87.0		69.8	3Q 2020	1Q 2023
Parc Mosaic (5)	Boulder, CO		226		226		157		124.6		123.4	3Q 2019	1Q 2022
Prism (6)	Cambridge, MA		136		—		2		73.2		32.8	1Q 2021	3Q 2023
Total			1,243		331		288	$	596.1	$	382.7

(1)	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.

(2)

Delivery timing and stabilization is subject to change and are based on the best estimate at this time. Temporary local restrictions halting construction activity and extended ‘‘shelter-in-place’ orders, related to COVID-19 or otherwise, may delay project completion and impact the timing of stabilization. Any additional delays may also result in increased costs.

(3)	Represents the period in which we expect the communities to achieve stabilized rents and operating costs, generally five quarters after occupancy stabilization.

Table of Contents

(4)

In March 2020, complying with local COVID-19 related restrictions, construction activities were halted temporarily at 707 Leahy. On May 4, 2020, restrictions were eased, and construction activities resumed. Completion of construction, previously expected during the second quarter of 2020, is now expected during the third quarter of 2020.

(5)	During the three months ended March 31, 2020, we substantially completed construction at Parc Mosaic. As of March 31, 2020, we had leased 69% of the apartment homes at rents exceeding underwriting.

(6)	In July 2019, we announced the acquisition of an under-development apartment community, now called Prism. The City of Cambridge has halted all construction. Assuming the current ban is lifted by early summer, completion of this 136-apartment home property is expected in the first quarter of 2021.

As of March 31, 2020, our total estimated net investment at redevelopment and development communities is $596.1 million, of which we have funded $382.7 million. We expect to ~~be $123~~fund the remaining estimated net investment of $213.4 million ~~an increase~~on these communities in 2020 and future years, on a leverage-neutral basis, with proceeds from sales of ~~$6 million due primarily to weather. The expected rate~~apartment communities with lower forecasted FCF internal rates of ~~return is unchanged as rental rates have increased sufficiently to offset the higher cost.~~return.

During the three months ended ~~June 30, 2019,~~March 31, 2020, we ~~also began the next phase of redevelopment at Flamingo Point in Miami Beach, Florida. At the North Tower, we expect to invest approximately $170 million and to create 366 new~~leased 73 redeveloped or newly developed apartment homes. ~~Construction on the North Tower~~As of March 31, 2020, our exposure to lease-up at long-cycle redevelopment and development communities was 892 apartment homes; 70 homes where construction is underway and initial occupancies are expected to occur in the third quarter of 2021. Aimco believes the construction risk associated with this portion of the redevelopment is similar to our recently completed projects at Park Towne Place and The Sterling and the lease-up risk is similar to our One Canal and Indigo projects. At the Center Tower, we expect to invest $70 million to renovate apartmentcomplete, 347 homes on-the-turn at a pace dictated by the market, thereby limiting construction and lease-up risk. The initial $40 million phase of redevelopment, which is focused on amenity and common area improvements is expected to be ~~complete by year-end 2019. Upon completion~~delivered during the remainder of ~~the amenities, common areas,~~2020, and ~~apartments~~475 homes expected to be delivered in the North and Center towers, we will have invested $280 million, generating a free cash flow internal rate of return of approximately 10% on the incremental investment, or 400 basis points greater than the expected free cash flow from communities sold to fund the redevelopment.2021.

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

~~Portfolio Management~~Allocation

Our portfolio of apartment communities is diversified across “A,” “B,” and “C+” price points, averaging “B/B+” in quality, and is ~~geographically~~also diversified across several of the largest markets in the United States. We measure the quality of apartment communities in our 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 data and analysis. Under this rating system, we classify as “A” quality apartment communities those earning rents greater than 125% of local market average; as “B” quality apartment communities those earning rents between 90% and 125% of local market average; as “C+” quality apartment communities those earning rents greater than $1,100 per month, but lower than 90% of local market average; and as “C” quality apartment communities those earning rents less than $1,100 per month and lower than 90% of local market average. We classify as “B/B+” quality a portfolio that on average earns rents between 100% and 125% of local market average rents. Although some companies and analysts within the multifamily real estate industry use apartment community quality ratings of “A,” ~~“B”~~“B,” and “C,” some of which are tied to local market rent averages, the metrics used to classify apartment community quality as well as the period for which local market rents are calculated may vary from company to company. Accordingly, our rating system for measuring apartment community quality is neither broadly nor consistently used in the multifamily real estate industry.

The following table summarizes information about our portfolio relative to the market for the three months ended March 31, 2020:

Average revenue per Aimco apartment home (1)	$	2,280
Portfolio average rents as a percentage of local market average rents		112	%
Percentage A (1Q 2020 average revenue per Aimco apartment home $2,988)		53	%
Percentage B (1Q 2020 average revenue per Aimco apartment home $2,010)		30	%
Percentage C+ (1Q 2020 average revenue per Aimco apartment home $1,769)		17	%

(1)	Represents average monthly rental and other property revenues (excluding resident reimbursement of utility cost) divided by the number of occupied apartment homes as of the end of the period.

Our average revenue per apartment home was $2,280 for the three months ended March 31, 2020, representing an increase of 5% compared to the same period in 2019. This increase is due primarily to growth in Same Store revenue, lease-up of redeveloped apartment homes, and the sale of communities with average monthly revenues per apartment home lower than those of the retained portfolio.

We follow a disciplined paired trade policy in making investments. As part of our portfolio strategy, we seek to sell up to 10% of our portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, some developments, and selective acquisitions with projected ~~Free Cash Flow~~FCF internal rates of return higher than expected from the communities being sold. We prefer well-located real estate where land is a significant percentage of total value and provides potential upside from development or redevelopment. Through this disciplined approach to capital recycling, we increase the quality and expected growth rate of our portfolio.

Three Months Ended June 30,

2019

2018

Average revenue per Aimco apartment home ⁽¹⁾

$
2,218

$
2,093

Portfolio average rents as a percentage of local market average rents

113
%

112
%
Percentage A (2Q 2019 average revenue per Aimco apartment home $2,884)

52
%

50
%
Percentage B (2Q 2019 average revenue per Aimco apartment home $1,959)

31
%

35
%
Percentage C+ (2Q 2019 average revenue per Aimco apartment home $1,745)

17
%

15
%

~~(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.~~

~~Table of Contents~~

Our average revenue per apartment home was $2,218 for the three months ended June 30, 2019, a 6% increase compared to 2018. This increase is due to growth in Same Store revenue for the three months ended June 30, 2019 as compared to June 30, 2018, as well as our acquisition activities, lease-up of redevelopment communities, and sales 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;~~growth, increase ~~Free Cash Flow margins;~~FCF margins, and maintain sufficient geographic and price point diversification to limit volatility and concentration risk.

~~Apartment Community Acquisitions~~26

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

Table of Contents

During the three months ended ~~June 30, 2019,~~March 31, 2020, we acquired three properties with a weighted-average free cash flow internal rate of return of about 9%, approximately 300 basis points better than expected from the properties being sold in paired trades to fund the acquisitions.

During the three months ended June 30, 2019, we closed the $65.9 million acquisition of One Ardmore, the fifth and final community included in the Philadelphia portfolio acquisition announced in 2018.

During the three months ended June 30, 2019, we acquired a 136-apartment home community currently under development in Cambridge, Massachusetts and located directly across the street from our Axiom community. We expect our total investment of $70 million to generate a free cash flow internal rate of return over 9%. Coupled with our Axiom and Vivo communities, we will have $200 million invested in the heart of the Kendall Square submarket.

Subsequent to June 30, 2019, in an off-market transaction, we purchased for $157 million a 95% interest in 1001 Brickell Bay Drive, a 1.8-acre waterfront parcel currently improved with an office building and directly adjacent to our Yacht Club apartment community in Brickell, located in Miami, Florida. The land underlying 1001 Brickell Bay Drive and our Yacht Club community constitutes a site of 4.2 acres with bay frontage of more than 600 feet. Nearby land has been developed with an 86-story tower and thatmade no acquisitions or greater density is permitted by right under the existing zoning. The use of the combined site at a future date will likely be mixed, such as condominiums, hotel and office uses, and perhaps rental apartments. A development of this magnitude and complexity is not within our typical investment. As a result, we expect such a development will be conducted by a purchaser of the land and not by us. We plan to operate both properties for their existing uses and expect to earn from the office building a free cash flow internal rate of return in the mid 8% range, approximately 250 basis points greater than the returns from the apartment communities expected to be sold to fund the acquisition.

~~Dispositions~~

During the three months ended June 30, 2019, we sold one apartment community with 399 apartment homes for gross proceeds of $79.0 million. Proceeds, net of transaction costs, were $78.1 million. The community is located in suburban Chicago, Illinois.

Our investments in redevelopment and acquisitions, which we intend to fund with the second quarter and future sales of apartment communities, are consistent with our leverage neutral paired trade policy. The investments described above are consistent with our competency and track record and the paired trades result in a reallocation of capital from expected slower growth markets to those with greater opportunities for growth, such as Florida.dispositions.

Balance Sheet

Leverage

Our leverage strategy seeks to increase financial returns by using leverage with appropriate caution. We limit risk through our balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; build financial flexibility by maintaining ample unused and available ~~credit as well as~~credit; holding properties with substantial value unencumbered by property debt; maintaining an investment grade rating; and ~~use~~using partners’ capital when it enhances financial returns or reduces investment risk.

Our leverage includes our share of long-term, non-recourse property debt encumbering apartment communities, outstanding borrowings on the revolving credit facility, and ~~outstanding preferred equity.~~

~~Subsequent~~other leverage. Please refer to June 30, 2019, we rate-locked $587.0 million of new non-recourse, fixed-rate property debt, with a weighted average interest rate of 3.37% and a weighted average term to maturity of 11.5 years. After repayment of existing debt, we expect $462.0 million of proceeds to be used to repay borrowings on our credit facility.

~~Table of Contents~~

We are responding to today’s interest rates to extend duration, reduce refinancing risk, and lower our cost of debt. Our current net leverage and leverage to Adjusted EBITDAre are above target levels. We expect to be at or below these targets at year-end.

~~For additional information regarding our leverage, please see the discussion under~~ the Liquidity and Capital Resources ~~heading.~~

~~Leverage Ratios~~section for additional information regarding our leverage. Other leverage includes mezzanine equity instruments, including preferred OP Units and redeemable noncontrolling interests in consolidated real estate partnership.

Our target leverage ratios are ~~Proportionate Debt and Preferred Equity~~Net Leverage to Adjusted EBITDAre below 7.0x and Adjusted EBITDAre to Adjusted Interest Expense and Preferred ~~Dividends~~Distributions greater than 2.5x. ~~Our leverage ratios for the three months ended June 30, 2019, are presented below:~~

		~~Leverage Ratios~~
~~Proportionate Debt to Adjusted EBITDAre~~		~~7.2x~~
~~Proportionate Debt and Preferred Equity to Adjusted EBITDAre~~		~~7.4x~~
~~Adjusted EBITDAre to Adjusted Interest Expense~~		~~3.6x~~
~~Adjusted EBITDAre to Adjusted Interest Expense and Preferred Dividends~~		~~3.3x~~

We calculate Adjusted EBITDAre and Adjusted Interest Expense used in our leverage ratios based on the most recent ~~three month~~three-month amounts, annualized. ~~Adjusted EBITDAre has been calculated on~~Our leverage ratios for the three months March 31, 2020, are presented below:


Proportionate Debt to Adjusted EBITDAre		7.5x
Net Leverage to Adjusted EBITDAre		7.7x
Adjusted EBITDAre to Adjusted Interest Expense		3.7x
Adjusted EBITDAre to Adjusted Interest Expense and Preferred Distributions		3.6x

Our leverage is expected to be reduced to target levels through the lease up of the five properties under construction and through property sales.

Under our revolving credit facility, we have agreed to maintain a ~~pro forma basis~~fixed charge coverage ratio of 1.40x, as well as other covenants customary for similar revolving credit arrangements. For the trailing twelve months ended March 31, 2020, our fixed charge coverage ratio was 2.08x. We expect to ~~reflect the disposition of one apartment community during the period as if the transaction closed on April 1, 2019.~~remain in compliance with these covenants.

In 2019, we retitled our Adjusted EBITDA measure to Adjusted 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 EBITDAre. The impact of this change is less than 0.1x to each ratio. We also began presenting a reconciliation of net income to earnings before interest, taxes, depreciation and amortization for real estate, or EBITDAre, as defined by Nareit. Please refer to the Leverage Ratios subsection of the Non-GAAP Measures section ~~below.~~for further information about the calculation of our leverage ratios.

Liquidity

~~We use our credit facility primarily for working capital and other short-term purposes and to secure letters of credit.~~ Our liquidity consists of cash and restricted cash balances and available capacity on our revolving ~~line of credit. As of June 30, 2019,~~credit facility.

In April 2020, we ~~had cash and restricted cash of $65.9~~secured a $350.0 million ~~and had~~term loan. The loan has a one-year term, with a one-year extension option. The loan bears interest at 185 basis points above 30-day LIBOR, with a 50-basis point LIBOR floor. Proceeds from the ~~capacity~~loan were primarily used to ~~borrow up to $498.1 million~~repay borrowings on our $800.0 million revolving credit facility, ~~after consideration~~increasing our availability to $473.6 million as of ~~$6.9~~April 30, 2020.

Additionally, as of May 1, 2020, we had closed or rate-locked $326.2 million of ~~letters~~fixed-rate property debt financing with a weighted-average term to maturity of ~~credit backed by~~8.3 years and a weighted-average interest rate of 2.9%. We have an additional $200.0 million of in-process property loans that we expect to close over the ~~facility. Pro forma subsequent~~next 30 days.

After these financing ~~activity described above, we have capacity of $793.1 million on~~activities, our ~~revolving credit facility.~~total liquidity is expected to be approximately $1.2 billion.

We manage our financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt. At June 30, 2019, we held unencumbered apartment communities with an estimated fair market value of approximately $3.2 billion which, pro forma the subsequent financing activity mentioned above, will be reduced to $2.3 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 are not indicative of the ratios that may be calculated by these agencies.

Table of Contents

Equity Capital Activities

During the three months ended March 31, 2020, we repurchased 0.2 million shares of Common Stock for $10.0 million, at a weighted-average price of $42.79 per share, approximately a 27% discount to our estimated NAV per share.

On ~~July 29, 2019,~~April 28, 2020, our Board of Directors declared a quarterly cash dividend of ~~$0.39~~$0.41 per share of ~~Class A~~ Common Stock, ~~for the quarter ended June 30, 2019, representing~~ an increase of 3%5% compared to the regular quarterly dividends paid ~~during the three months ended September 30, 2018.~~in 2019. This ~~dividend~~amount is payable on ~~August 30, 2019~~May 29, 2020, to stockholders of record on ~~August 16, 2019.~~May 15, 2020.

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 based~~within. We focus on succession planning and talent development to produce a strong, stable team that is the enduring foundation of our success. We offer benefits reinforcing our value of caring for each other, including paid time for parental leave, paid time annually to volunteer in local communities, college scholarships for the children of team members, an emergency fund to help team members in crisis, financial support for our team members who are becoming United States citizens, and a bonus structure at all levels of the organization. We also pay full compensation and benefits for team members who are actively deployed by the United States military. Out of hundreds of participating companies in 2019, ~~Aimco was~~we were one of only seven recognized as a “Top ~~Place to Work”~~Workplace” in Colorado for each of the past seven years. ~~Aimco was~~We were also recognized as a Top Workplace in the Bay Area in 2019.

~~Table~~ Also in 2019, we were the only real estate company to receive a BEST award from the Association for Talent Development in recognition of ~~Contents~~

~~Key Financial Indicators~~

~~The key financial indicators that we use~~our company-wide success in ~~managing~~talent development, marking our business and in evaluating our operating performance are Economic Income, our measure of long-term total return, and 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 property net operating income; proportionate property net operating income; average revenue per effective apartment home; leverage ratios; and net leverage.second consecutive year receiving this award.

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.

Financial Highlights

Net income attributable to common stockholders per common share, ~~increased~~on a dilutive basis, decreased by ~~$0.38~~$1.84 during the three months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018,~~2019, due primarily ~~due~~ to lower gains ~~on the sale of apartment communities in 2019.~~from dispositions.

~~Pro forma FFO~~AFFO per share ~~was down $0.01~~increased $0.05 for the three months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018~~2019, due primarily to ~~the following items:~~

•

~~$0.04 contribution from Same Store property net operating income growth of 4.6%, driven by a 3.8% increase in revenue, offset by a 1.8% increase in expenses;~~

•

~~$0.03 lower cost of leverage; and~~

•

~~$0.01 lower general and administrative expenses; offset by~~

•

($0.03) contribution eliminated following the 2018 Asset Management business paired trade, including related tax benefits, net of the benefit of reinvestment in apartment communities with higher long-term growth prospects;

•

~~($0.01) higher casualty losses; and~~

•

($0.05) net reduction from other activities including contributions from investments in accretive redevelopment and development, offset by sales of lower growth apartment communities to fund these investments.

~~AFFO per share decreased $0.03 for the three months ended June 30, 2019 compared to 2018 due to the $0.01 decline in Pro forma FFO per share and~~ a ~~$0.02~~$0.05 increase in capital replacement spending due to timing. For the full year 2019, we expect total capital replacement expenditures, per share, to be flat year-over-year as we continue to upgrade our portfolio and invest capital in fewer, but more valuable, properties.Same Store property net operating income.

Detailed Results of Operations for the Three Months Ended ~~June 30, 2019~~March 31, 2020, Compared to ~~June 30, 2018~~March 31, 2019

Net income ~~attributable to Aimco increased~~decreased by ~~$59.4~~$282.3 million during the three months ended ~~June 30,~~March 31, 2020, compared to 2019, as compared to 2018. Net income attributable to the Aimco Operating Partnership increased by $62.8 million during the three months ended June 30, 2019 as compared to 2018. Details regarding the increases in net income are described more fully below.

Property Operations

~~As further described below, we~~We have four 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 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 those ~~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.~~sale, communities that we expect to redevelop, and certain commercial spaces.

~~Table of Contents~~

As of ~~June 30, 2019,~~March 31, 2020, our Same Store segment included 95 ~~Same Store~~ apartment communities with ~~27,640~~28,095 apartment homes.

From December 31, ~~2018~~2019 to ~~June 30, 2019,~~March 31, 2020, on a net basis, our Same Store segment increased by ~~two~~four apartment communities and ~~1,735~~1,446 apartment homes. These changes consisted of:

Table of Contents

•

the addition of ~~eight~~one redeveloped ~~and developed~~ apartment ~~communities~~community with ~~3,008~~940 apartment homes ~~previously classified in the Redevelopment and Development segment, now~~that was classified as Same Store upon maintaining stabilized ~~operations~~operation for the entirety of the periods presented;

•

the addition of ~~one~~six acquired apartment ~~community~~communities with ~~463~~1,480 apartment homes ~~previously classified in the Acquisition segment, now~~that were classified as Same Store because we have now owned itthem for the entirety of both periods presented;

•

the addition of one apartment community with 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 change in the total number of apartment homes;

•

~~the reduction of two apartment communities with 153 apartment homes for which we commenced redevelopment during the period and were reclassified to the Redevelopment and Development segment;~~

•

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

•

the reduction of ~~six~~three apartment communities with ~~1,823~~974 apartment homes that ~~were sold~~we have classified in Other Real Estate, as ~~of June 30, 2019.~~we are planning to redevelop these communities.

As of ~~June 30, 2019:~~March 31, 2020: our Redevelopment and Development segment included ~~seven~~six apartment communities with ~~3,133~~2,210 apartment homes; our Acquisition segment included ~~seven~~one apartment ~~communities~~community with ~~1,590~~110 apartment ~~homes;~~homes and one apartment community with 136 homes under construction; and our Other Real Estate segment included 1518 apartment communities with ~~1,315~~2,289 apartment ~~homes.~~homes and one office building.

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,~~reimbursements, less direct property operating expenses, net of ~~resident~~ utility ~~reimbursement,~~reimbursements, 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 consolidate.

We do not include offsite costs associated with property management, casualty gains or ~~casualty-related~~losses, or the results of apartment communities sold or held for sale, reported in consolidated amounts, in our assessment of segment performance. Accordingly, these items are not allocated to our segment results discussed below.

Please refer to Note 87 to the condensed consolidated financial statements in Item 1 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating ~~expense.~~

~~Table of Contents~~

expenses.

Proportionate Property Net Operating Income

The results of our segments for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ as presented below, are based on ~~the apartment community populations~~segment classifications as of ~~June 30, 2019.~~

March 31, 2020.

	Three Months Ended June 30,										Three Months Ended March 31,
(in thousands)	2019		2018		$ Change			% Change			2020		2019			$ Change			% Change
Rental and other property revenues, before utility reimbursements:
Same Store	$	176,375	$	169,902	$	6,473			3.8	%	$	187,956	$	181,523		$	6,433			3.5	%
Redevelopment and Development		19,166		18,482		684			3.7	%		11,913		14,012			(2,099	)		(15.0	%)
Acquisition		10,237		6,358		3,879			61.0	%		884		—			884		nm
Other Real Estate		9,275		9,378		(103	)		(1.1	%)		17,875		14,113			3,762			26.7	%
Total		215,053		204,120		10,933			5.4	%		218,628		209,648			8,980			4.3	%
Property operating expenses, net of utility reimbursements:
Same Store		47,169		46,352		817			1.8	%		48,782		48,990			(208	)		(0.4	%)
Redevelopment and Development		7,030		6,936		94			1.4	%		4,687		5,255			(568	)		(10.8	%)
Acquisition		2,974		1,875		1,099			58.6	%		401		127			274			215.7	%
Other Real Estate		3,904		3,679		225			6.1	%		6,174		4,991			1,183			23.7	%
Total		61,077		58,842		2,235			3.8	%		60,044		59,363			681			1.1	%
Proportionate property net operating income:
Same Store		129,206		123,550		5,656			4.6	%		139,174		132,533			6,641			5.0	%
Redevelopment and Development		12,136		11,546		590			5.1	%		7,226		8,757			(1,531	)		(17.5	%)
Acquisition		7,263		4,483		2,780			62.0	%		483		(127	)		610			(480.3	%)
Other Real Estate		5,371		5,699		(328	)		(5.8	%)		11,701		9,122			2,579			28.3	%
Total	$	153,976	$	145,278	$	8,698			6.0	%	$	158,584	$	150,285		$	8,299			5.5	%

For the three months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018,~~2019, our Same Store proportionate property net operating income increased by $5.7 million, or 4.6%. This increase was primarily attributable to a $6.5 million, or 3.8% increase in rental and other property revenues due to higher average revenues of $68 per Aimco apartment home comprised of increases in rental rates and a 60 basis point increase in average daily occupancy. Renewal rents, which is the rent paid by an existing resident who renewed a lease compared to the rent paid prior to renewal, were up 5.0%, 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 2.0%, resulting in a weighted average increase of 3.6%. The increase in Same Store rental and other property revenues was partially offset by a $0.8 million, or 1.8%, increase in property operating expenses primarily due to higher real estate taxes and repairs and maintenance expense, partially offset by a decrease in utilities expense, net. During the three months ended June 30, 2019 compared to 2018, controllable operating expenses, which exclude utility costs, real estate taxes and insurance, increased by $0.4 million, or 1.6%.

Redevelopment and Development proportionate property net operating income increased by $0.6 million, or 5.1%, for the three months ended June 30, 2019 compared to 2018. This increase was primarily attributable to lease-up as some redevelopments reach further stages of completion, partially offset by reduced net operating income due to de-leasing other communities in preparation for redevelopment.

Acquisition proportionate property net operating income increased by $2.8 million, or 62.0%, for the three months ended June 30, 2019 compared to 2018. This increase was primarily attributable to a full period of operating activity at communities acquired in 2018, compared to a partial quarter of operations for the four Philadelphia communities during the three months ended June 30, 2018.

Other Real Estate proportionate property net operating income decreased by $0.3 million, or 5.8%, for the three months ended June 30, 2019 compared to 2018 primarily due to decreased revenue of $0.1 million, or 1.1%, due to planned repositioning of an apartment community. Increases in repairs and maintenance expense, real estate taxes and personnel expenses resulted in higher operating expenses.

~~Detailed Results of Operations for the Six Months Ended June 30, 2019 Compared to June 30, 2018~~

Net income attributable to Aimco increased by $249.8 million during the six months ended June 30, 2019 as compared to 2018. Net income attributable to the Aimco Operating Partnership increased by $264.5 million during the six months ended June 30, 2019 as compared to 2018. Details regarding the increases in net income are described more fully below.

~~Table of Contents~~

~~The results of our segments for the six months ended June 30, 2019 and 2018 as presented below, are based on the apartment community populations as of June 30, 2019.~~

Six Months Ended June 30,

(in thousands)

2019

2018

$ Change

% Change

Rental and other property revenues, before utility reimbursements:

Same Store

$
350,494

$
336,931

$
13,563

4.0
%
Redevelopment and Development

39,516

36,560

2,956

8.1
%
Acquisition

20,230

7,937

12,293

154.9
%
Other Real Estate

18,741

18,689

52

0.3
%
Total

428,981

400,117

28,864

7.2
%
Property operating expenses, net of utility reimbursements:

Same Store

93,904

92,659

1,245

1.3
%
Redevelopment and Development

14,317

13,436

881

6.6
%
Acquisition

5,827

2,398

3,429

143.0
%
Other Real Estate

7,790

7,525

265

3.5
%
Total

121,838

116,018

5,820

5.0
%
Proportionate property net operating income:

Same Store

256,590

244,272

12,318

5.0
%
Redevelopment and Development

25,199

23,124

2,075

9.0
%
Acquisition

14,403

5,539

8,864

160.0
%
Other Real Estate

10,951

11,164

(213
)

(1.9
%)
Total

$
307,143

$
284,099

$
23,044

8.1
%

~~For the six months ended June 30, 2019 compared to 2018, our Same Store proportionate property net operating income increased by $12.3~~$6.6 million, or 5.0%. This increase was attributable primarily ~~attributable~~ to a ~~$13.6~~$6.4 million, or ~~4.0%~~3.5%, increase in rental and other property revenues due to higher average revenues of ~~$69~~$62 per ~~Aimco~~ apartment home comprised of increases in rental rates and ~~an 80 basis~~a 60-basis point increase in average daily occupancy. Renewal rents ~~which is~~in the ~~rent paid~~first quarter increased by ~~an existing resident who renewed a lease compared to the rent paid prior to renewal, were up 5.1%~~5.8%, and new lease rents ~~which is the rent paid~~increased by ~~a new resident compared to the rent paid by the previous resident of the same apartment home, were up 1.6%~~1.7%, resulting in a ~~weighted average~~weighted-average increase of ~~3.4%~~3.6%. ~~The increase in~~ Same Store ~~rental and other property revenues was partially offset by a $1.2 million, or 1.3%, increase in~~ property operating expenses decreased $0.2 million, contributing to the proportionate property net operating income growth, driven primarily ~~due to higher real estate taxes and repairs and maintenance expense. During the six months ended June 30, 2019 compared to 2018,~~by a $0.8 million, or 3.5%, decrease in controllable operating expenses, which exclude utility costs, real estate taxes, and ~~insurance, decreased by $0.1 million, or 0.2%.~~insurance.

Table of Contents

Redevelopment and Development proportionate property net operating income ~~increased~~decreased by ~~$2.1~~$1.5 million, or ~~9.0%~~17.5%, for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018.~~2019. This ~~increase~~decrease was ~~primarily~~ attributable ~~to lease-up as some redevelopments reach further stages of completion, partially offset by reduced net operating income due~~primarily to de-leasing ~~other communities~~at Flamingo Point and 707 Leahy in preparation for ~~redevelopment.~~

~~Acquisition proportionate property net operating income~~redevelopment, offset partially by increased occupancy driven by ~~$8.9 million or 160.0%, for~~ the ~~six months ended June 30, 2019 compared to 2018. This increase was primarily attributable to a full period of operating activity~~lease-up at ~~communities acquired in 2018 and 2019, compared to two months of operations for the four Philadelphia communities during the six months ended June 30, 2018.~~

Parc Mosaic.

Other Real Estate proportionate property net operating income ~~decreased~~increased by ~~$0.2~~$2.6 million, or ~~1.9%~~28.3%, for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018,~~2019, due primarily ~~due~~ to ~~revenue growth~~the acquisition of ~~30 basis points, offset by increases~~1001 Brickell Bay Drive in ~~repairs and maintenance expense, real estate taxes and personnel expenses.~~July 2019.

Non-Segment Real Estate Operations

Operating income amounts not attributed to our segments include offsite costs associated with property management, casualty losses, write-off of straight-line rent receivables, and the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not allocate to our segments for purposes of evaluating segment ~~performance, please see Note 8 to the condensed consolidated financial statements in Item 1.~~performance.

For the three months ended ~~June 30, 2019, casualty losses totaled $1.9 million~~March 31, 2020, we recognized a write-off of straight-line rent receivables due to the impact of COVID-19 and ~~included two claims related to fires and one claim related to flooding.~~ the resulting economic impact on our commercial tenants. No similar write-off was recognized in 2019.

For the three months ended ~~June 30, 2018, casualty losses totaled $0.6 million and included several minor claims.~~

~~Table of Contents~~

~~For the six months ended June 30,~~March 31, 2020, compared to 2019, casualty losses totaled $4.0 million and included large claims related to fires and water and winter storm damage, and several minor claims. For the six months ended June 30, 2018, casualty losses totaled $1.6 million and included several claims primarily related to water and winter storm damage, partially offset by recovery from insurance carriers for insured losses in excess of policy limits.

~~Net~~net operating income decreased ~~for the three and six months ended June 30, 2019 compared to 2018,~~ by ~~$13.2~~$7.7 million ~~and $21.7 million, respectively,~~ due to the sale of apartment communities in ~~2018 and~~ 2019.

For the three and six months ended June 30, 2019 compared to 2018, net operating income decreased by $10.0 million and $23.1 million, respectively, due to the 2018 sale of our Asset Management business.

Depreciation and Amortization

For the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018,~~2019, depreciation and amortization ~~decreased~~expense increased by ~~$5.6~~$6.9 million, or ~~5.7%~~7.4%, due primarily to communities acquired in 2019 and ~~$4.5 million, or 2.4%, respectively, primarily due to the reduction~~apartment homes placed in service after completion of ~~depreciation expense associated with communities owned~~construction. This increase was offset partially by ~~partnerships served by our Asset Management business, which was sold~~decreases in ~~2018, and~~ depreciation associated with apartment communities sold and assets fully depreciated in ~~2018 and 2019, partially offset by depreciation and amortization related to apartment communities acquired in 2018 and 2019 and renovated apartment homes placed in service upon their completion.~~

~~General and Administrative Expenses~~

For the three and six months ended June 30, 2019 compared to 2018, general and administrative expenses decreased $1.8 million, or 12.7%, and $2.7 million, or 10.9%, respectively, primarily due to lower personnel costs and timing of travel expenses.2019.

Other Expenses, Net

Other expenses, net, includes costs associated with our risk management activities, partnership administration expenses, ground lease rent expense, and certain non-recurring items.

For the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020, compared to ~~2018,~~2019, other expenses, net decreased by $3.5 million, or 68.0%, due primarily to a favorable incremental cash receipt in the first quarter of 2020 related to a previous settlement and lower ground lease expense.

Interest Income

Interest income for the three months ended March 31, 2020, compared to 2019, increased by ~~$2.6~~$1.8 million, or ~~35.3%~~65.9%, due primarily to a gain recognized due to ~~ground lease rent expense for~~the early payoff of a ~~ground lease assumed in 2018, partially offset by reduced legal fees.~~

~~Interest Expense~~

For the three and six months ended June 30, 2019 compared to 2018, interest expense, which includes the amortization of debt issuance costs, decreased $10.4 million, or 20.8%, and $16.8 million, or 17.1%, respectively, due to lower interest on property-level debt following refinancing and debt payoff activity, including the 2018 repayment of our term loan, partially offset by an increase in interest on property-level debt assumed in connection with our acquisition of the Philadelphia portfolio.seller financing note.

Gain on Dispositions of Real Estate

During the three months ended March 31, 2020, no apartment communities were sold. The table below summarizes dispositions of apartment communities from our portfolio during the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 ~~and 2018~~ (dollars in ~~millions)~~thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019
Number of apartment communities sold		1		—		8		3		7
Gross proceeds	$	79.0	$	—	$	487.6	$	71.9	$	408,550
Net proceeds (1)		78.1		—		418.3		70.2	$	340,218
Gain on disposition		64.3		—		355.8		53.5
Gain on dispositions									$	291,473

(1)	Net proceeds are after repayment of debt, if any, net working capital settlements, ~~payments~~payment of transaction costs, and debt prepayment penalties, if applicable.

The apartment communities sold from our portfolio during the three months ended March 31, 2019, were primarily located outside of our primary markets or in lower-rated locations within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

Table of Contents

Mezzanine Investment Income, Net

On November 26, 2019, we loaned $275 million to the partnership owning Parkmerced Apartments. During the three months ended March 31, 2020, we recognized $6.7 million of income in connection with the mezzanine loan, and we received cash payments of $0.6 million on the accrued interest.

Income Tax Benefit (Expense)

Certain of our operations, including property management and risk management, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, some of our apartment communities and 1001 Brickell Bay Drive are owned through TRS entities.

Our income tax benefit ~~(expense)~~ 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;

~~Table of Contents~~

and (c) historic tax credits that offset income tax obligations of our TRS entities. Income taxes related to these items, as well as changes in valuation allowance and the establishment of incremental deferred tax items in conjunction with intercompany asset transfers (if applicable), are included in income tax ~~(expense)~~ benefit in our condensed consolidated statements of operations.

For the three months ended ~~June 30, 2019 compared to 2018, income tax benefit decreased by $2.5 million primarily due to lower historic tax credits generated in 2019. For the six months ended June 30, 2019,~~March 31, 2020, we incurred income tax ~~expense~~benefit of ~~$1.2~~$3.2 million, compared to income tax ~~benefit~~provision of ~~$38.8~~$3.0 million during the same period in ~~2018.~~2019. The change is due primarily ~~due~~ to aincome tax ~~benefit recognized in connection with a 2018 intercompany transfer of assets related to our Asset Management business, offset slightly by lower historic tax credits generated in 2019.~~

~~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, interestprovision on ~~notes and other amounts that we charge to these partnerships.~~

The amount of net income attributed 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 six months ended June 30, 2019 and 2018, we attributed net income of $0.2 million and $6.3 million, respectively, to noncontrolling interests in consolidated real estate partnerships. The operating income attributed to noncontrolling interests resulting from operations of the consolidated apartment communities was $0.2 million and $0.1 million for the six months ended June 30, 2019 and 2018, respectively. Additionally, we attributed the gain on ~~the sale~~dispositions of ~~an apartment community to noncontrolling interests totaling $6.2 million during the six months ended June 30, 2018.~~

~~Noncontrolling Interests~~real estate in ~~Aimco Operating Partnership~~

In Aimco’s consolidated financial statements, noncontrolling interests in the Aimco Operating Partnership reflects the results attributable to the OP Unit holders. For the three months ended June 30, 2019, ~~compared to 2018, net income attributed to noncontrolling interests in the Aimco Operating Partnership increased~~offset partially by $3.4 million. For the six months ended June 30, 2019 compared to 2018, net income attributed to noncontrolling interests in the Aimco Operating Partnership increased by $14.8 million. Net income attributable to noncontrolling interests in the Aimco Operating Partnership fluctuates in proportion to variations in net income, as described above. The overall percentage of net income attributed to noncontrolling interests in the Aimco Operating Partnership also increaseddecreased benefit due to ~~the issuance of OP Units as partial consideration for the acquisition of apartment~~lower net operating losses at communities in May 2018 and April 2019 and the repurchases of Common Stock completed in 2018. These transactions increased the noncontrolling interests’ share of the Aimco Operating Partnership relative to Aimco’s ownership.held by TRS entities.

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, ~~2018.~~2019. 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~~Certain 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, we provide reconciliations of the non-GAAP measures to the most comparable financial measure computed in accordance with ~~GAAP are provided.~~GAAP.

~~Table of Contents~~

We measure our long-term total return using Economic Income, which is a non-GAAP financial measure. Economic Income represents stockholder value creation as measured by the per share change in estimated ~~net asset value, or~~ NAV plus cash dividends. We believe Economic Income is important to investors as it represents a measure of ~~the~~ total return ~~we have~~ earned ~~for~~by 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, ~~2018,~~2019, 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~~net operating income less $1,200 per apartment home of assumed annual capital replacement spending, as a percentage of the apartment community’s rental and other property revenues. Capital replacement spending represents a measure of capital asset usage during the period; therefore, we believe that FCF is useful to investors as a supplemental measure of apartment community performance because it takes into consideration costs incurred during the period to replace capital assets that have been consumed during our ownership.

Table of Contents

Nareit Funds From Operations, Pro ~~Forma~~forma Funds From Operations, and Adjusted Funds From Operations

Nareit FFO is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers, or other personal property. ~~The National Association of Real Estate Investment Trusts, or~~ Nareit defines FFO as net income computed in accordance with GAAP, excluding: depreciation and amortization related to real estate; gains and losses from sales and impairment of depreciable assets and land used in our primary business; and income taxes directly associated with a gain or loss on the sale of real estate, and including our share of the FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine Nareit FFO. We calculate Nareit FFO attributable to Aimco common stockholders (diluted) by subtracting ~~dividends on preferred stock and~~ amounts allocated from Nareit FFO to participating securities.

In addition to Nareit FFO, we compute Pro forma FFO and AFFO, which are also non-GAAP financial measures that we believe are helpful to investors in understanding our short-term performance. Pro forma FFO represents Nareit FFO attributable to Aimco common stockholders (diluted), excluding certain amounts that are unique or occur infrequently.

In computing ~~2019~~2020 Pro forma FFO, we made the following ~~adjustments:~~adjustment to Nareit FFO:

•

Preferred equity redemption related costs: On May 16, 2019, we redeemed our Class A Preferred Perpetual Stock. We excluded the redemption-related costs from Pro forma FFO because we believe these costs are not representative of operating performance.

•

Straight-line rent: Inin 2018, we assumed a 99-year ground lease with scheduled rent increases. Due to the terms of the lease, GAAP rent expense will exceed cash rent payments until 2076. We include the cash rent payments for this ground lease in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. ~~The~~We include the rent expense for this lease ~~is included~~ in other expenses, net, in our condensed consolidated statements of operations.

In computing 2019 Pro forma FFO, we made the following adjustments to Nareit FFO:

•

Straight-line rent: as described above.

•

Litigation: ~~During~~during 2018, we were engaged in litigation with Airbnb, which was resolved in December 2018. Due to the unpredictable nature of these proceedings, related amounts recognized ~~net of income tax effect,~~ are excluded from Pro forma FFO. These ~~costs~~amounts are included in other expenses, net, in our condensed consolidated statements of operations.

•

Severance costs: In 2019, we incurred restructuring costs in connection with an office closure. We excluded such costs from Pro forma FFO because we believe these costs are not representative of operating performance.

~~Table of Contents~~

~~In computing 2018 Pro forma FFO, we made the following adjustments:~~

•

~~Litigation: Adjustment is described above.~~

•

Change in lease accounting: Effective January 1, 2019, we adopted accounting guidance that changed how we recognize costs incurred to obtain resident leases. For comparability of Pro forma FFO between periods, we have recast 2018 as if the new standard was effective January 1, 2018. AFFO is unchanged by the new standard.

•

Severance costs: In connection with the sale of our Asset Management business in 2018, we incurred severance costs. We excluded such costs from Pro forma FFO because we believe these costs are not representative of operating performance.

AFFO represents Pro forma FFO reduced by Capital Replacements, which ~~represents~~represent 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 this criterion, and we classify as Capital Replacements those that do not. AFFO is a key financial indicator we use to evaluate our short-term operational performance and is one of the factors that we use to determine the amounts of our dividend payments.

Nareit FFO, Pro forma FFO, and AFFO should not be considered alternatives to net income as determined in accordance with GAAP, as indications of our performance. Although we use these non-GAAP measures for comparability in assessing our performance compared to other REITs, not all REITs compute these same measures and those who do may not compute them in the same manner. Additionally, computation of AFFO is subject to our definition of Capital Replacement spending. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other REITs.

3732

Table of Contents

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ Aimco’s Nareit FFO, Pro forma FFO, and AFFO are calculated as follows (in ~~thousands)~~thousands, except per share data):

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Net income attributable to Aimco common stockholders (1)

$
59,234

$
2,817

$
330,802

$
84,342

Adjustments:

Real estate depreciation and amortization, net of noncontrolling
   partners’ interest

89,780

95,238

181,154

185,632

Gain on dispositions and other, net of noncontrolling partners’
   interest

(64,310
)

(217
)

(355,783
)

(47,240
)
Income tax adjustments related to gain on dispositions and
   other tax-related items (2)

210

85

6,736

(30,635
)
Common noncontrolling interests in Aimco Operating
   Partnership’s share of above adjustments

(1,356
)

(4,610
)

8,893

(5,167
)
Amounts allocable to participating securities

(73
)

(82
)

243

(97
)
Nareit FFO attributable to Aimco common stockholders – diluted

$
83,485

$
93,231

$
172,045

$
186,835

Adjustments, all net of common noncontrolling interests in Aimco OP and participating
   securities:

     Preferred equity redemption related costs

3,864

—

3,864

—

     Litigation, net

122

1,557

147

1,906

     Severance costs

473

1,215

473

1,215

     Change in lease accounting

—

(670
)

—

(1,372
)
     Straight-line rent

634

—

2,946

—

Pro forma FFO attributable to Aimco common stockholders –
   diluted

$
88,578

$
95,333

$
179,475

$
188,584

Capital Replacements, net of common noncontrolling interests in
   Aimco Operating Partnership and participating securities

(13,134
)

(11,040
)

(22,845
)

(20,105
)
AFFO attributable to Aimco common stockholders – diluted

$
75,444

$
84,293

$
156,630

$
168,479

Total shares and dilutive share equivalents used to calculate Net
   income and Nareit FFO per share (3)

148,599

152,093

147,220

152,048

     Adjustment to weight reverse stock split (4)

—

4,740

1,242

4,738

Pro forma shares and dilutive share equivalents used to calculate Pro
   forma FFO and AFFO per share

148,599

156,833

148,462

156,786

     Net income attributable to Aimco per common share – diluted

$
0.40

$
0.02

$
2.25

$
0.55

     FFO per share – diluted

$
0.56

$
0.61

$
1.17

$
1.23

     Pro forma FFO per share – diluted

$
0.60

$
0.61

$
1.21

$
1.20

     AFFO per share – diluted

$
0.51

$
0.54

$
1.06

$
1.07

	2020			2019
Net income attributable to Aimco common stockholders (1)	$	6,679		$	271,568
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest		97,792			91,374
Loss (gain) on dispositions and other, net of noncontrolling partners’ interest		34			(291,473	)
Income tax adjustments related to gain on dispositions and other tax-related items		226			6,526
Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments		(5,096	)		10,249
Amounts allocable to participating securities		(39	)		316
Nareit FFO attributable to Aimco common stockholders	$	99,596		$	88,560
Adjustments, all net of common noncontrolling interests in Aimco Operating Partnership and participating securities:
Straight-line rent		635			2,307
Litigation, net		—			25
Pro forma FFO attributable to Aimco common stockholders	$	100,231		$	90,892
Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities		(11,605	)		(9,711	)
AFFO attributable to Aimco common stockholders	$	88,626		$	81,181

Total share and dilutive share equivalents used to calculate Net income and Nareit FFO per share (2)		148,786			144,445
Adjustment to weight reverse stock split (3)		—			3,888
Pro forma shares and dilutive share equivalents used to calculate Pro forma FFO and AFFO per share		148,786			148,333

Net income attributable to Aimco per common share – diluted	$	0.04		$	1.88
Nareit FFO per share – diluted	$	0.67		$	0.61
Pro forma FFO per share – diluted	$	0.67		$	0.61
AFFO per share – diluted	$	0.60		$	0.55

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

(2)

Income taxes related to gain on dispositions and other items for the six months ended June 30, 2018 included a $33.6 million tax benefit related to an intercompany transfer of assets related to the Asset Management business, which was sold in July 2018. Upon completion of the sale, the deferred tax asset that resulted from the intercompany transfer was realized. Accordingly, we excluded the benefit related to the reorganization from Nareit FFO.

~~(3)~~

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

~~(4)~~(3)

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 six months ended June 30,~~ 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.

Please refer to ~~the Results of Operations heading~~Financial Highlights above for discussion of the factors affecting our Pro forma FFO and AFFO ~~results~~growth for ~~2019~~2020, as compared to ~~their comparable periods in 2018.~~2019.

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

~~Table of Contents~~

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 substantially the same as the corresponding per share amounts for Aimco.

Table of Contents

Leverage Ratios

~~Leverage Ratios~~

~~Our~~As discussed under the Balance Sheet heading, our leverage strategy targets the ratio of ~~Proportionate Debt and Preferred Equity~~Net Leverage to Adjusted EBITDAre to be below 7.0x and the ratio of Adjusted EBITDAre to Adjusted Interest Expense and Preferred ~~Dividends~~Distributions to be greater than 2.5x. ~~We also focus on the ratios of proportionate Debt to Adjusted EBITDAre and Adjusted EBITDAre Coverage of Adjusted Interest.~~ We believe these ratios, which are 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. EBITDAre and Adjusted 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 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, and outstanding borrowings under our revolving credit facility. Proportionate Debt excludes unamortized debt ~~issue~~issuance costs because these amounts represent cash expended in earlier periods and do not reduce our contractual obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand ~~which~~(which are primarily restricted under the terms of our property debt ~~agreements,~~agreements), excluding tenant security deposits included in restricted cash, assuming ~~these~~the remaining amounts of cash and restricted cash 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 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,~~OP Units, as used in our leverage ratios, represents the redemption ~~amounts~~amount for ~~Aimco’s preferred stock and~~ the Aimco Operating Partnership’s preferred OP ~~Units. Preferred Equity,~~Units and, although perpetual in nature, is another component of our overall leverage.

The reconciliation of total indebtedness to Proportionate Debt and ~~Preferred Equity,~~Net Leverage, as used in our leverage ratios as of ~~June 30, 2019,~~March 31, 2020, is as follows (in thousands):

				March 31, 2020
Total indebtedness	$	3,997,447		$	4,802,532
Adjustments:
Debt issue costs related to non-recourse property debt		19,556
Debt issuance costs related to non-recourse property debt					19,753
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships		(7,706	)		(7,732	)
Cash and restricted cash		(65,907	)		(374,816	)
Tenant security deposits included in restricted cash					14,432
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships		814			1,071
Securitization trust investment		(91,666	)
Securitization trust investment and other					(95,906	)
Proportionate Debt	$	3,852,538		$	4,359,334

Preferred Equity		101,178
Proportionate Debt and Preferred Equity	$	3,953,716
Preferred OP Units					96,449
Redeemable noncontrolling interests in consolidated real estate partnership					4,617
Net Leverage				$	4,460,400

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

•

gains and losses on the dispositions of depreciated property;

•

impairment write-downs of depreciated property;

•

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

~~Table of Contents~~

•

adjustments to reflect ~~the~~ Aimco’s share of EBITDAre of investments in unconsolidated entities.

Table of Contents

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

•

net income attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, to allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry;

•

the amount of interest income related to our investment in the subordinated tranches in a securitization trust holding primarily Aimco property debt, as we view our interest cost on this debt to be net of any interest income received from the investment; and

•

the amount by which GAAP rent expense exceeds cash rents for a long-term ground lease for which expense exceeds cash payments until 2076. The excess of ~~the~~ GAAP rent expense over the cash payments for this lease does not reflect a current obligation that affects our ability to service debt.

In 2019, we retitled our Adjusted EBITDA measure to Adjusted 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 EBITDAre. The impact of this change is less than 0.1x to each ratio. We also began including a reconciliation of net income to EBITDAre. EBITDAre is defined by 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 for the three months ended ~~June 30, 2019,~~March 31, 2020, as used in our leverage ratios, is as follows (in thousands):

Net income

$
69,996

Adjustments:

Interest expense

39,541

Income tax benefit

(1,827
)
Depreciation and amortization

91,924

Gain on disposition of real estate

(64,310
)
Adjustment related to EBITDAre of unconsolidated partnerships

210

EBITDAre

$
135,534

Net income attributable to noncontrolling interests in Aimco Operating Partnership

(70
)
EBITDAre adjustments attributable to noncontrolling interests

(389
)
Interest income received on securitization investment

(2,042
)
Straight-line rent adjustment

671

Pro forma adjustment (1)

(569
)
Severance costs (2)

500

Adjusted EBITDAre

$
133,635

Annualized Adjusted EBITDAre

$
534,540

~~(1)~~

~~Adjusted EBITDAre has been calculated on a pro forma basis to reflect the disposition of one apartment community during the period as if the transaction closed on April 1, 2019.~~

~~(2)~~

~~We excluded severance costs incurred in connection with restructuring activities, as these costs are not representative of operating performance.~~

	Three Months Ended
	March 31, 2020
Net income	$	8,977
Adjustments:
Interest expense		41,336
Income tax benefit		(3,233	)
Depreciation and amortization		100,476
Loss on dispositions of real estate		34
Adjustment related to EBITDAre of unconsolidated partnerships		211
EBITDAre	$	147,801
Net income attributable to noncontrolling interests in Aimco Operating Partnership		(18	)
EBITDAre adjustments attributable to noncontrolling interests		(620	)
Interest income received on securitization investment		(2,171	)
Straight-line rent		635
Adjusted EBITDAre	$	145,627
Annualized Adjusted EBITDAre	$	582,508

We calculate Adjusted Interest Expense, as used in our leverage ratios, based on the most recent ~~three months,~~three-month amounts, 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 and interest expense on our revolving credit facility borrowings. We exclude from our calculation of Adjusted Interest Expense:

•

debt prepayment penalties, which are items that, from time to time, affect our interest expense, but are not representative of our scheduled interest obligations; and

•

the income we receive on our investment in the securitization trust that holds certain of our property debt, as this income is being generated indirectly from interest we pay with respect to property debt held by the trust.

~~Table of Contents~~

Preferred ~~Dividends~~Distributions represents ~~the dividends paid on Aimco’s preferred stock and~~ the distributions paid on the Aimco Operating Partnership’s preferred OP Units. We add Preferred ~~Dividends~~Distributions to Adjusted Interest Expense for a more complete picture of the interest and dividend requirements of our leverage.

Table of Contents

The reconciliation of interest expense to Adjusted Interest Expense and Preferred ~~Dividends~~Distributions for the three months ended ~~June 30, 2019,~~March 31, 2020, as used in our leverage ratios, is as follows (in thousands):

				Three Months Ended
				March 31, 2020
Interest expense	$	39,541		$	41,336
Adjustments:
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships		(76	)		(68	)
Debt prepayment penalties and other non-interest items		(118	)
Interest income earned on securitization trust investment		(2,042	)		(2,171	)
Adjusted Interest Expense	$	37,305		$	39,097
Preferred dividends		3,031
Adjusted Interest Expense and Preferred Dividends	$	40,336
Preferred distributions					1,869
Adjusted Interest Expense and Preferred Distributions				$	40,966
Annualized Adjusted Interest Expense	$	149,220		$	156,388
Annualized Adjusted Interest Expense and Preferred Dividends	$	161,344
Annualized Adjusted Interest Expense and Preferred Distributions				$	163,864

Liquidity and Capital Resources

Liquidity

Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flow from operations. Additional sources are proceeds from ~~sales~~dispositions of apartment communities, proceeds from refinancing existing property debt, borrowings under new property debt, borrowings under our revolving credit facility, and proceeds from equity offerings.

~~Our principal uses~~As of March 31, 2020, our primary sources of liquidity were as follows:

•

$340.9 million in cash and cash equivalents;

•

$19.5 million of restricted cash, excluding amounts related to tenant security deposits, consists primarily of escrows held by lenders for capital additions, property taxes, and insurance; and

•

$198.7 million of available capacity to borrow under our revolving credit facility after consideration of $7.4 million of letters of credit backed by the facility.

In response to economic uncertainty caused by the COVID-19 pandemic, we have taken several measures to further increase liquidity, including the following:

•

Reduced expected 2020 capital spending by approximately $150 million, or almost half, by pausing investment in our short-cycle redevelopment projects and delaying the start of new projects; and

•

undertook to increase available credit by approximately $720 million, comprised of a $350 million term loan and approximately $370 million in proceeds from property loans, of which half are closed or rate-locked and half closing over the next 30 days.

Additional liquidity may also be provided through property debt financing at properties current unencumbered by debt. As of March 31, 2020, we also held unencumbered communities with an estimated fair market value in excess of $2 billion.

Table of Contents

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 ~~property-level debt issuance.~~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,~~including 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 Additionally, we expect to meet our liquidity requirements associated with our debt maturities. Our revolving credit facility matures on January 22, 2022. The following table summarizes the payments due under our non-recourse property debt commitments, excluding debt issuance costs, as of ~~June 30, 2019, our primary sources of liquidity were as follows:~~March 31, 2020 (in thousands):

•

~~$34.0~~ ~~million in cash and cash equivalents;~~

•

~~$31.9~~ ~~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~~

•

~~$498.1~~ ~~million of capacity to borrow under our revolving credit.~~

Total

Less than

One Year

(2020)

2-3 Years

(2021-2022)

4-5 Years

(2023-2024)

More than Five Years (2025 and Thereafter)

Non-recourse property debt

4,228,440

148,329

1,021,230

673,617

2,385,264

As of June 30, 2019, we held unencumbered apartment communities with an estimated fair market value of approximately $3.2 billion which, pro forma the subsequent financing activity described below, will be $2.3 billion.

~~Table of Contents~~

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~~levels. Recent events have increased volatility in interest rates, resulting in substantial movements, both up and ~~many lenders are active~~down, in ~~the market. However, any~~short periods of time. Capital is still available, but with fewer sources than in past periods. 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~~future 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, 2019,~~March 31, 2020, approximately ~~90.4%~~85.9% of our leverage consisted of property-level, non-recourse, long-dated, amortizing debt. Approximately ~~92.2%~~96.0% of ~~this~~our property-level debt is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates, and inflation. The ~~weighted average~~weighted-average remaining term to maturity of our property-level debt was ~~7.8~~7.3 years. On average, ~~8.0%~~8.1% of our unpaid principal balances will mature each year from ~~2020~~2021 through ~~2022.~~

Subsequent to June 30, 2019, we rate-locked $587.0 million of new non-recourse, fixed-rate property debt, with a weighted average interest rate of 3.37% and a weighted average term to maturity of 11.5 years. After repayment of existing debt, we expect $462.0 million of proceeds to be used to repay borrowings on our credit facility.2023.

While our primary source of leverage is property-level, non-recourse, long-dated, fixed-rate, amortizing debt, we also have a revolving credit facility with a syndicate of financial institutions. As of ~~June 30, 2019,~~March 31, 2020, we had ~~$295.0~~$593.8 million ~~or 7.2%~~ of ~~leverage, drawn against~~outstanding borrowings under our revolving credit facility, ~~and the capacity to borrow up to $498.1 million after consideration~~which represented approximately 12.1% of ~~$6.9 million of letters of credit backed by the facility. Pro forma the financing activity described above, we have capacity of $793.1 million on~~ our ~~revolving credit facility.~~total leverage.

As of ~~June 30, 2019,~~March 31, 2020, our outstanding preferred OP Units represented approximately ~~2.4%~~2.0% of our total leverage. Preferred OP Units are redeemable at the holder’s option; however, for illustrative purposes, we ~~have computed~~compute the ~~weighted average~~weighted-average maturity of our total leverage assuming a ~~40-year~~10-year maturity on the ~~Units. We redeemed our Class A Perpetual Preferred Stock during three months ended June 30, 2019.~~units.

The combination of non-recourse property-level debt, borrowings under our revolving credit facility, ~~and~~ preferred OP Units, ~~that~~and redeemable noncontrolling interests in a consolidated real estate partnership comprise our total ~~leverage, reduces our refunding and re-pricing risk.~~leverage. The ~~weighted average~~weighted-average remaining term to maturity for our total leverage described above was ~~8.3~~6.7 years as of ~~June 30, 2019.~~March 31, 2020.

Under the revolving credit facility, 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~~12-month period ended ~~June 30, 2019,~~March 31, 2020, our Fixed Charge Coverage ratio was ~~2.11x,~~2.08x, compared to a ratio of ~~2.00x~~2.05x for the trailing ~~twelve month~~12-month period ended ~~June 30, 2018.~~March 31, 2019. Our Fixed Charge Coverage ratio for March 31, 2020. 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.

Table of Contents

For information on additional financing activity subsequent to March 31, 2020, please refer to Liquidity above.

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, 2019,~~March 31, 2020, net cash provided by operating activities was ~~$170.0~~$77.4 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, 2019~~March 31, 2020, decreased by ~~$15.6~~$4.2 million compared to ~~2018,~~2019, due to lower net operating income associated with ~~apartment~~ communities sold, ~~and the Asset Management~~

~~Table of Contents~~

~~business sold in 2018,~~ offset partially by improved operating results of our Same Store communities and increased contribution from our ~~redevelopment~~Acquisition and ~~lease-up~~Other Real Estate communities.

Investing Activities

For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, our net cash ~~provided by~~used in investing activities of ~~$197.5~~$98.0 million ~~consisted primarily of proceeds from~~was attributed to the ~~disposition of eight~~items discussed below.

Total capital additions at apartment communities ~~partially offset by the acquisitions of One Ardmore and 50 Rogers, and by capital expenditures.~~

~~Further information about the acquisitions and dispositions completed during the six months ended June 30, 2019 is included in Note 3 to the condensed consolidated financial statements in Item 1.~~

~~Capital additions for our segments~~ totaled ~~$179.1~~$92.4 million and ~~$156.1~~$75.4 million during the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018~~ 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 portfolio broadly into 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 our investment in acquired apartment communities consumed during our period of ownership;

•

capital improvements, which represent capital additions made to replace the portion of acquired apartment communities consumed prior to our period of ~~ownership, and not contemplated in our underwriting of an acquisition;~~ownership;

•

capital enhancements, which may include kitchen and bath remodeling, energy conservation projects, and investments in more durable, longer-lived materials designed to reduce ~~turnover~~ costs, ~~such as simulated wood flooring and granite countertops,~~ all of which ~~differs~~differ from redevelopment additions in that they are generally lesser in scope and do not significantly disrupt property operations;

•

initial capital expenditures, which represent capital additions contemplated in the underwriting of our recently acquired communities;

•

redevelopment additions, which represent capital additions intended to enhance the value of the apartment community through the ability to generate higher average rental rates, and may include costs related to entitlement, which enhance the value of a community through increased density, and costs related to renovation of exteriors, common areas, or apartment homes;

•

development additions, which represent construction and related capitalized costs associated with the ground-up development of apartment communities; and

•

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

We exclude the amounts of capital spending related to commercial spaces and to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures. We have also excluded from these measures indirect capitalized costs, which are not yet allocated to ~~apartment~~ communities with capital additions, and their related capital spending categories.

4338

Table of Contents

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, 2020 and 2019, ~~and 2018,~~ are presented below (in thousands):

	Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2020		2019
Capital replacements	$	19,777		$	13,526		$	8,347	$	7,695
Capital improvements		6,162			5,484			1,755		2,286
Capital enhancements		41,487			44,064			10,363		15,736
Redevelopment additions		41,267			70,778
Development additions		55,611			17,416
Redevelopment								34,458		18,917
Development								32,917		26,211
Initial capital expenditures		11,052			794			2,002		2,705
Casualty capital additions		3,787			3,991
Total capital additions		179,143			156,053
Plus: additions related to consolidated Asset Management communities and apartment communities sold or held for sale		2,209			11,432
Casualty								2,524		1,809
Total apartment community capital additions							$	92,366	$	75,359
Plus: additions related to commercial spaces								1,518		31
Plus: additions related to apartment communities sold or held for sale								—		2,263
Consolidated capital additions		181,352			167,485		$	93,884	$	77,653
Plus: net change in accrued capital spending and capitalized stock compensation		(4,864	)		(3,369	)
Plus: net change in accrued capital spending								958		7,893
Capital expenditures per condensed consolidated statement of cash flows	$	176,488		$	164,116		$	94,842	$	85,546

For the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we capitalized ~~$4.5~~$3.4 million and ~~$3.9~~$2.1 million ~~respectively,~~ of interest costs, respectively, and ~~$17.6~~$10.1 million and ~~$17.7~~$8.9 million ~~respectively,~~ of other direct and indirect ~~costs.~~costs, respectively.

We invested ~~$41.5~~$10.4 million in capital enhancements ~~during the six months ended June 30, 2019,~~ and ~~we anticipate a full year investment ranging from $80~~$67.4 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 ongoing redevelopments of this nature at June 30, 2019 (dollars in millions):

Location

Apartment
Homes
Approved for
Redevelopment

Estimated
Net
Investment

Inception
-to-Date
Net Investment

Bay Parc

Miami, FL

60

$
24.1

$
22.8

Total

60

$
24.1

$
22.8

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

Location

Apartment
Homes Approved
for Redevelopment
or Development

Estimated
Net
Investment

Inception
-to-Date
Net Investment

Stabilized
Occupancy

NOI
Stabilization
707 Leahy

Redwood City, CA

110

$
23.7

$
2.5

3Q 2020

4Q 2021
Elm Creek Townhomes

Elmhurst, IL

58

35.1

11.3

2Q 2021

3Q 2022
Flamingo Point

Miami Beach, FL

886

280.0

38.0

4Q 2022

1Q 2024
The Fremont

Denver, CO (MSA)

253

87.0

28.7

3Q 2021

4Q 2022
Parc Mosaic

Boulder, CO

226

123.4

102.8

4Q 2020

1Q 2022
Total

1,533

$
549.2

$
183.3

~~Table of Contents~~

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.~~

~~Our total estimated net investment~~ in redevelopment and development ~~is $573.3 million with a projected weighted average net operating income yield on these investments of 5.3%, assuming untrended rents. Of this total, $206.1 million has been funded. We expect to fund~~during the ~~remaining~~three months ended March 31, 2020. Further details regarding our redevelopment and development ~~investment through a combination of leverage~~activities, including apartment communities constructed and ~~proceeds from community sales.~~

~~During~~delivered during the ~~six~~three months ended June 30, 2019, we invested $96.9 million in redevelopment and development. We continued phased redevelopment activities at Bay Parc in Miami, and the ground-up construction at Parc Mosaic in Boulder, Colorado, The Fremont on the Anschutz Medical Campus in Aurora, Colorado, and Elm Creek Townhomes in Elmhurst, Illinois. We also commenced the full redevelopment of 707 Leahy in Redwood City, California.

During the six months ended June 30, 2019, we also began the next phase of redevelopment at Flamingo Point in Miami Beach, Florida. At the North Tower, we expect to invest approximately $170 million and to create 366 new apartment homes. At the Center Tower, we expect to invest $70 million to renovate apartment homes on-the-turn at a pace dictated by the market. The initial $40 million phase of redevelopment, whichMarch 31, 2020, is ~~focused on amenity and common area improvements is expected to be complete by year-end 2019. Upon completion of the amenities, common areas, and apartments~~discussed in the ~~North and Center towers, we will have invested $280.0 million.~~Executive Overview section above.

Financing Activities

For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, our net cash ~~used in~~provided by financing activities of ~~$374.3~~$217.7 million was attributed to the items discussed ~~below.~~below:

Net borrowings on our revolving credit facility of ~~$134.6~~$318.8 million ~~primarily relate~~were made to ~~the timing~~provide coverage of ~~apartment community acquisitions and dispositions and of property debt financing activities.~~financial obligations.

Principal payments on property loans during the period totaled ~~$207.8~~$22.6 million of scheduled principal amortization.

~~Redemption of Preferred Stock of $125.0 million represents the cash paid upon redemption of our Class A Perpetual Preferred Stock~~Aimco common share repurchases during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020 totaled $10.0 million.

Net cash ~~used in~~provided by financing activities also includes ~~$139.5~~$66.6 million of payments to equity holders, as further detailed in the ~~table~~tables 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, 2019~~March 31, 2020 (in thousands):

Cash distributions paid by the Aimco Operating Partnership to preferred unitholders ~~(1)~~	$	7,114	$	1,869
Cash distributions paid by the Aimco Operating Partnership to common unitholders ~~(2)~~(1)		132,364		64,608
Cash distributions paid to holders of noncontrolling interests in consolidate real estate partnerships		56
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships				81
Total cash distributions paid by the Aimco Operating Partnership	$	139,534	$	66,558

(1)	$~~3.2~~61.1 million represented distributions to Aimco, and ~~$3.9~~$3.5 million represented distributions paid to holders of OP Units.

The following table presents Aimco’s dividend and distribution activity during the three months ended March 31, 2020 (in thousands):

~~(2)~~

~~$125.4 million represented distributions to Aimco, and $7.0 million represented distributions paid to holders of OP Units.~~

Cash distributions paid to holders of OP Units	$	5,361
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships		81
Cash dividends paid by Aimco to common stockholders		61,116
Total cash dividends and distributions paid by Aimco	$	66,558

4539

Table of Contents

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

Cash distributions paid to holders of OP Units

$
10,881

Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships

56

Cash dividends paid by Aimco to preferred stockholders

3,247

Cash dividends paid by Aimco to common stockholders

125,350

Total cash dividends and distributions paid by Aimco

$
139,534

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~~near-term business plan does not contemplate the issuance of equity. We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for 2020 and beyond.

ITEM 3.~~Quantitative and Qualitative Disclosures About Market Risk~~ QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of ~~the date~~March 31, 2020, on a consolidated basis, we had approximately $170.1 million of ~~this report, there have been no material changes from the market~~variable-rate property-level debt outstanding and $593.8 million of outstanding borrowings under our revolving credit facility. We estimate that a change in 30-day LIBOR of 100 basis points with constant credit risk ~~information provided~~spreads would reduce or increase interest expense by approximately $7.6 million on an annual basis.

As of March 31, 2020, we had approximately $374.8 million of cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may offset somewhat a change in ~~Aimco’s and the Aimco Operating Partnership’s combined Annual Report~~rates on ~~Form 10-K for the year ended December 31, 2018.~~our variable-rate debt discussed above.

~~ITEM 4.~~

ITEM 4. CONTROLS AND PROCEDURES

~~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 ~~2019~~2020 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 ~~2019~~2020 that has materially affected, or is reasonably likely to materially affect, the Aimco Operating Partnership’s internal control over financial reporting.

4640

Table of Contents

PART II. OTHER INFORMATION

~~ITEM 1A.~~

ITEM 1A. RISK FACTORS

~~Risk Factors~~

As of the date of this report, ~~there have been no material changes from~~we are updating 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, ~~2018.~~2019 to include the following risk factor. The risk factors as-filed remain unchanged.

Pandemics may affect our operating results and financial condition.

A local, regional, national or international outbreak of a contagious disease, such as COVID-19, could negatively impact our tenants and our operations. The World Health Organization declared COVID-19 to be a pandemic on March 11, 2020. The outbreak of the COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting a wide variety of measures including states of emergency, mandatory quarantines, required business and school closures, implementing “shelter in place” orders and restricting travel. In addition, many cities and states have enacted, or are considering enacting, protections for residents and commercial tenants, including government mandated rent delays or other abatement measures or concessions or prohibitions on lease terminations or evictions. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession.

Factors that have negatively impacted, or would negatively impact, our ability to successfully operate during the COVID-19 pandemic or another pandemic include:

•

our ability to collect rents on a timely basis or at all, without reductions or other concessions;

•

our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption;

•

fluctuations in regional and local economies, local real estate conditions and rental rates;

•

our ability to dispose communities at all or on terms favorable to us;

•

our ability to complete redevelopments and developments as planned; and

•

potential litigation relating to the COVID-19 pandemic.

Given the ongoing and dynamic nature of the circumstances surrounding the COVID-19 pandemic, it is difficult to predict how significant the impact of this outbreak will be on the global economy, our residents and commercial tenants, and our communities or for how long disruptions are likely to continue. The extent of such impact will depend on developments, which are highly uncertain, rapidly evolving and cannot be predicted, including the ability to contain the virus, the duration of measures implemented and the overall impact of these measures. Such developments, depending on their nature, duration, and intensity, could have a material adverse effect on our operating results and financial condition. The COVID-19 pandemic also may have the effect of heightening many of the other risks described in our combined Annual Report on Form 10-K for the year ended December 31, 2019.

~~ITEM 2.~~

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Aimco

~~(a)~~ Unregistered Sales of Equity ~~Securities.~~ Securities

From time to time, ~~during the three months ended June 30, 2019, we issued~~Aimco may issue shares of Common Stock in exchange for ~~common~~ OP Units, ~~tendered to the~~defined under The Aimco Operating Partnership ~~for redemption in accordance with the terms and provisions of the agreement of limited partnership of the Aimco Operating Partnership.~~heading below. Such shares are issued based on an exchange ratio of one share for each common OP Unit. Aimco may also issue shares of Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended ~~June 30, 2019, approximately 70,000~~March 31, 2020, Aimco did not issue any shares of Common Stock ~~were issued~~ in exchange for ~~common~~ OP Units or limited partnership interests in ~~these transactions. All~~consolidated real estate partnerships.

Table of ~~the foregoing issuances were made in private placement transactions exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.~~Contents

~~(c)~~

Repurchases of Equity 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, 2019.~~ March 31, 2020.

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 the Plans or Programs (1)
January 1, 2020 ‒ January 31, 2020		—	$	—		—		10,630
February 1, 2020 ‒ February 29, 2020		—		—		—		10,630
March 1, 2020 ‒ March 31, 2020		234		42.79		234		10,396
Total		234	$	42.79		234

(1)

Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding capital stock. ~~As of June 30, 2019, Aimco was authorized to repurchase approximately 10.6 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.

The Aimco Operating Partnership

~~(a)~~ Unregistered Sales of Equity ~~Securities.~~ Securities

~~On April 1, 2019, the~~The Aimco Operating Partnership ~~issued 59,761 common~~did not issue any unregistered OP ~~Units as a partial consideration for~~units during the acquisition of One Ardmore, an apartment community located in the Philadelphia area. Such common 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, 2020.

~~(c)~~ Repurchases of Equity ~~Securities.~~ Securities

The Aimco Operating Partnership’s Partnership Agreement generally provides that after holding ~~the~~ common OP Units for one year, limited partners other than Aimco 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~~at our election, shares of ~~Common Stock. Common OP Units redeemed for~~Aimco Common Stock ~~are exchanged~~ on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended ~~June 30, 2019, approximately 70,000~~March 31, 2020, no common OP Units or preferred OP Units held by Limited Partners were redeemed in exchange for shares of Aimco Common Stock.

The following table summarizes the Aimco Operating Partnership’s repurchases, or redemptions in exchange for cash, of ~~the Aimco Operating Partnership’s equity securities~~common OP Units (in thousands, except for per share data) for the three months ended ~~June 30, 2019.~~

March 31, 2020.

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)
April 1, 2019 - April 30, 2019

3,088

$
50.20

N/A

N/A
May 1, 2019 - May 31, 2019

13,387

$
49.34

N/A

N/A
June 1, 2019 - June 30, 2019

15,077

$
50.43

N/A

N/A
Total

31,552

$
49.94

Fiscal period	Total Number of Units Purchased		Average Price Paid per Unit (1)		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, 2020 ‒ January 31, 2020		1	$	51.55	N/A	N/A
February 1, 2020 ‒ February 29, 2020		12		53.10	N/A	N/A
March 1, 2020 ‒ March 31, 2020		239		43.05	N/A	N/A
Total		252	$	43.55

(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.

~~Table of Contents~~

~~Aimco and the Aimco Operating Partnership~~

Dividend and Distribution ~~Payments.~~ Payments

As a REIT, Aimco is required to distribute annually to holders of its Common Stock at least 90% of its “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. Our 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~~four consecutive fiscal quarters in an aggregate amount of up to 95% of Aimco’s Funds From Operations for such period, subject to certain non-cash adjustments, ~~for such period~~ or such amount as may be necessary ~~for Aimco~~ to maintain ~~its~~Aimco’s REIT ~~status.~~status and avoid the payment of federal income or excise tax. Aimco’s Board of Directors targets a dividend payout ratio between 65% and 70% of AFFO.

4842

Table of Contents

~~ITEM 6.~~

ITEM 6. EXHIBITS

~~Exhibits~~

The following exhibits are filed with this report:


EXHIBIT NO. (1)		DESCRIPTION

3.1		Charter – Articles of Restatement (Exhibit 3.1 to Aimco’s ~~Quarterly~~Annual Report on Form ~~10-Q for the quarterly period ended March 31, 2018,~~10-K dated February 24, 2020, 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)~~3.2

~~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)

4.1		Description of Aimco’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Exhibit 4.1 to Aimco’s Annual Report on Form 10-K dated February 24, 2020, is incorporated herein by this reference)

10.1		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 April 5,8, 2019 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K dated April 9,5, 2019, inis incorporated herein by this reference)

10.2		Second Amendment to Second Amended and Restated Senior Secured Credit Agreement, dated as of April 20, 2020, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., certain subsidiary loan parties party thereto, the lenders party thereto and KeyBank National Association, as administrative agent (Exhibit 10.1 to Aimco’s Current Report on Form 8-K dated April 20, 2020, is incorporated herein by this reference)

31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco

31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Aimco

31.3		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – 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

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		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, 2019,~~March 31, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language): (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.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

(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~~

4943

Table of Contents

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
		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
		Paul Beldin
		Executive Vice President and Chief Financial Officer
		(duly authorized officer and principal financial officer)

Date: ~~August 9, 2019~~May 8, 2020

5044

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income	$	69,996		$	7,156		$	361,291		$	102,846
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale debt securities		16			(451	)		77			(1,051	)
Unrealized (losses) gains on interest rate swaps		—			(4	)		—			415
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss		—			100			—			219
Other comprehensive income (loss)		16			(355	)		77			(417	)
Comprehensive income		70,012			6,801			361,368			102,429
Comprehensive income attributable to noncontrolling interests		(5,538	)		(2,100	)		(22,704	)		(13,995	)
Comprehensive income attributable to Aimco	$	64,474		$	4,701		$	338,664		$	88,434

	Preferred Units			General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to the Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Total Partners’ capital
Balances at March 31, 2018	$	125,000		$	1,545,190		$	(4,788	)	$	1,665,402		$	(2,755	)	$	1,662,647
Issuance of common partnership units		—			—			50,151			50,151			—			50,151
Redemption of partnership units held by non-Aimco partners		—			—			(648	)		(648	)		—			(648	)
Amortization of share-based compensation		—			1,850			423			2,273			—			2,273
Effect of changes in ownership of partnership units		—			101			704			805			—			805
Other, net		—			29			—			29			—			29
Net income		—			5,037			140			5,177			45			5,222
Change in accumulated other comprehensive income		—			(336	)		(19	)		(355	)		—			(355	)
Distributions paid to common unitholders		—			(59,781	)		(3,135	)		(62,916	)		—			(62,916	)
Distributions paid to preferred unitholders		—			(2,149	)		—			(2,149	)		—			(2,149	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—			—			—			—			(274	)		(274	)
Balances at June 30, 2018	$	125,000	��	$	1,489,941		$	42,828		$	1,657,769		$	(2,984	)	$	1,654,785

Balances at March 31, 2019	$	125,000		$	1,758,636		$	79,493		$	1,963,129		$	(2,857	)	$	1,960,272
Redemption of preferred units held by Aimco		(125,000	)		—			—			(125,000	)		—			(125,000	)
Issuance of common partnership units		—			—			3,034			3,034			—			3,034
Redemption of partnership units held by non-Aimco partners		—			3,423			(4,998	)		(1,575	)		—			(1,575	)
Amortization of share-based compensation		—			1,190			796			1,986			—			1,986
Effect of changes in ownership of partnership units and consolidated entities		—			(4,851	)		3,809			(1,042	)		1,042			—
Purchase of noncontrolling interest in consolidated real estate partnerships		—			—			—			—			(917	)		(917	)
Other, net		—			(1	)		—			(1	)		—			(1	)
Net income		—			64,459			3,534			67,993			70			68,063
Change in accumulated other comprehensive income		—			15			1			16			—			16
Distributions paid to common unitholders		—			(58,039	)		(3,303	)		(61,342	)		—			(61,342	)
Common partnership units issued to common unitholders in special distribution					(516	)		—			(516	)		—			(516	)
Distributions paid to preferred unitholders		—			(1,098	)		—			(1,098	)		—			(1,098	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—			—			—			—			(56	)		(56	)
Balances at June 30, 2019	$	—		$	1,763,218		$	82,366		$	1,845,584		$	(2,718	)	$	1,842,866

	Preferred Units			General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to the Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Total Partners’ Capital
Balances at December 31, 2017	$	125,000		$	1,538,144		$	(5,675	)	$	1,657,469		$	(1,716	)	$	1,655,753
Issuance of common partnership units		—			—			50,151			50,151			—			50,151
Redemption of partnership units held by non-Aimco partners		—			—			(7,611	)		(7,611	)		—			(7,611	)
Amortization of share-based compensation		—			4,481			780			5,261			—			5,261
Effect of changes in ownership of partnership units		—			(17,385	)		7,283			(10,102	)		—			(10,102	)
Other, net		—			122			—			122			—			122
Net income		—			88,829			3,895			92,724			6,251			98,975
Change in accumulated other comprehensive income		—			(395	)		(22	)		(417	)		—			(417	)
Distributions paid to common unitholders		—			(119,558	)		(5,973	)		(125,531	)		—			(125,531	)
Distributions paid to preferred unitholders		—			(4,297	)		—			(4,297	)		—			(4,297	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—			—			—			—			(7,519	)		(7,519	)
Balances at June 30, 2018	$	125,000		$	1,489,941		$	42,828		$	1,657,769		$	(2,984	)	$	1,654,785

Balances at December 31, 2018	$	125,000		$	1,574,419		$	67,189		$	1,766,608		$	(2,967	)	$	1,763,641
Repurchases of common partnership units held by Aimco		—			(20,682	)		—			(20,682	)		—			(20,682	)
Redemption of preferred units held by Aimco		(125,000	)		—			—			(125,000	)		—			(125,000	)
Issuance of common partnership units		—			—			3,034			3,034			—			3,034
Redemption of partnership units held by non-Aimco partners		—			3,423			(7,555	)		(4,132	)		—			(4,132	)
Amortization of share-based compensation		—			3,632			1,592			5,224			—			5,224
Effect of changes in ownership of partnership units and consolidated entities		—			(7,019	)		5,977			(1,042	)		1,042			—
Purchase of noncontrolling interest in consolidated real estate partnerships		—			—			—			—			(917	)		(917	)
Other, net		—			58			—			58			19			77
Net income		—			338,592			18,671			357,263			161			357,424
Change in accumulated other comprehensive income		—			72			5			77			—			77
Distributions paid to common unitholders		—			(125,514	)		—			(125,514	)		—			(125,514	)
Common partnership units issued to common unitholders in special distribution					(516	)		—			(516	)		—			(516	)
Distributions paid to preferred unitholders		—			(3,247	)		—			(3,247	)		—			(3,247	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—			—			(6,547	)		(6,547	)		(56	)		(6,603	)
Balances at June 30, 2019	$	—		$	1,763,218		$	82,366		$	1,845,584		$	(2,718	)	$	1,842,866

Balance, December 31, 2018	$	101,291
Distributions to holders of preferred OP Units		(3,867	)
Redemption of preferred OP Units and other		(113	)
Net income attributable to preferred OP Units		3,867
Balance, June 30, 2019	$	101,178

	Three Months Ended June 30, 2018							Six Months Ended June 30, 2018
	As Previously Reported		Adjustments			As Revised		As Previously Reported		Adjustments			As Revised
Income tax benefit	$	4,395	$	(88	)	$	4,307	$	41,783	$	(2,959	)	$	38,824
Gain on dispositions of real estate		222		88			310		50,546		2,959			53,505

Number of apartment homes		110
Purchase price (1)	$	66,725
Capitalized transaction costs	$	892
Acquisition costs allocated to land	$	4,929
Acquisition costs allocated to building and improvements	$	61,271

Apartment communities sold		8
Apartment homes sold		2,605
Gain on dispositions of real estate	$	355,783

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Fixed lease income	$	209,890	$	425,471
Variable lease income		13,608		27,752
Total lease income	$	223,498	$	453,223

July 1, 2019 to December 31, 2019	$	9,269
2020		16,589
2021		14,127
2022		13,637
2023		12,816
Thereafter		61,306
Total	$	127,744

	Office Lease Future Minimum Rent			Ground Lease Future Minimum Rent			Total Operating Lease Future Minimum Rent
July 1, 2019 to December 31, 2019	$	1,583		$	1,057		$	2,640
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	$	22,169		$	432,999		$	455,168
Less: minimum payments for leases not yet commenced		(17,849	)		—			(17,849	)
Less: discount		(308	)		(356,204	)		(356,512	)
Total lease liability	$	4,012		$	76,795		$	80,807

	Same Store		Redevelopment and Development		Acquisition		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Six months ended June 30, 2019:
Total revenues	$	350,494	$	39,516	$	20,230	$	18,741	$	16,884	$	8,570		$	454,435
Property operating expenses attributable to real estate		93,904		14,317		5,827		7,790		15,792		17,393			155,023
Other operating expenses not allocated to segments (3)		—		—		—		—		—		217,894			217,894
Total operating expenses		93,904		14,317		5,827		7,790		15,792		235,287			372,917
Proportionate property net operating income		256,590		25,199		14,403		10,951		1,092		(226,717	)		81,518
Other items included in income before income tax expense (4)		—		—		—		—		—		280,927			280,927
Income before income tax expense	$	256,590	$	25,199	$	14,403	$	10,951	$	1,092	$	54,210		$	362,445

	June 30, 2019		December 31, 2018
VIEs with interests in apartment communities		7		9
Apartment communities owned by VIEs		7		9
Apartment homes in communities owned by VIEs		3,183		3,592

	Location	Apartment Homes Approved for Redevelopment or Development		Estimated Net Investment		Inception -to-Date Net Investment		Stabilized Occupancy	NOI Stabilization
707 Leahy	Redwood City, CA		110	$	23.7	$	2.5	3Q 2020	4Q 2021
Elm Creek Townhomes	Elmhurst, IL		58		35.1		11.3	2Q 2021	3Q 2022
Flamingo Point	Miami Beach, FL		886		280.0		38.0	4Q 2022	1Q 2024
The Fremont	Denver, CO (MSA)		253		87.0		28.7	3Q 2021	4Q 2022
Parc Mosaic	Boulder, CO		226		123.4		102.8	4Q 2020	1Q 2022
Total			1,533	$	549.2	$	183.3

Cash distributions paid to holders of OP Units	$	10,881
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships		56
Cash dividends paid by Aimco to preferred stockholders		3,247
Cash dividends paid by Aimco to common stockholders		125,350
Total cash dividends and distributions paid by Aimco	$	139,534

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)
April 1, 2019 - April 30, 2019		3,088	$	50.20	N/A	N/A
May 1, 2019 - May 31, 2019		13,387	$	49.34	N/A	N/A
June 1, 2019 - June 30, 2019		15,077	$	50.43	N/A	N/A
Total		31,552	$	49.94