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 ~~September~~June 30, ~~2019~~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 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~~Each Class		Trading Symbol(s)		Name of ~~each exchange~~Each Exchange on ~~which registered~~Which Registered
~~Aimco Investment and Management Company~~ 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 ☒

The number of shares of Apartment Investment and Management Company Class A Common Stock outstanding as of ~~November 1, 2019: 148,884,686~~

~~The number of AIMCO Properties, L.P. Partnership Common Units outstanding as of November 1, 2019: 158,433,601~~

July 31, 2020: 148,865,047

Table of Contents

EXPLANATORY NOTE

This filing combines the reports on Form 10-Q for the quarterly period ended ~~September~~June 30, ~~2019,~~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 ~~September~~June 30, ~~2019,~~2020, Aimco owned ~~a 94.0% ownership~~approximately 93.5% of the legal interest in the common partnership units of the Aimco Operating Partnership and 94.9% of the economic interest in the Aimco Operating Partnership. The remaining ~~6.0%~~6.5% legal interest and 5.1% 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 earnings per share ~~and~~or earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

This report also includes separate Part 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)	8
	AIMCO Properties, L.P.:
	Condensed Consolidated Balance Sheets (Unaudited)	9
	Condensed Consolidated Statements of Operations (Unaudited)	10
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	11
	Condensed Consolidated Statements of Partners’ Capital (Unaudited)	12
	Condensed Consolidated Statements of Cash Flows (Unaudited)	14
	Notes to the Condensed Consolidated Financial Statements of Apartment Investment and Management Company and AIMCO Properties, L.P. (Unaudited)	15
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	2523
ITEM 3.	~~Quantitative and Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4643
ITEM 4.	~~Controls and Procedures~~CONTROLS AND PROCEDURES	4643
	PART II. OTHER INFORMATION
ITEM 1A.	~~Risk Factors~~RISK FACTORS	4845
ITEM 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4845
ITEM 6.	~~Exhibits~~EXHIBITS	4947
Signatures		5048

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)

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Buildings and improvements	$	6,848,162		$	6,552,065		$	6,928,584		$	6,868,543
Land		1,887,424			1,756,525			1,866,009			1,869,048
Total real estate		8,735,586			8,308,590			8,794,593			8,737,591
Accumulated depreciation		(2,684,694	)		(2,585,115	)		(2,786,104	)		(2,718,284	)
Net real estate		6,050,892			5,723,475			6,008,489			6,019,307
Cash and cash equivalents		58,724			36,858			398,408			142,902
Restricted cash		34,501			35,737			44,100			34,800
Mezzanine investment								293,427			280,258
Other assets		395,061			351,541			376,723			351,472
Assets held for sale		—			42,393
Total assets	$	6,539,178		$	6,190,004		$	7,121,147		$	6,828,739

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	4,254,710		$	3,915,305		$	4,543,743		$	4,230,590
Term loan, net								348,440			—
Revolving credit facility borrowings		—			160,360			—			275,000
Total indebtedness		4,254,710			4,075,665			4,892,183			4,505,590
Accrued liabilities and other		397,216			226,230			353,787			360,574
Liabilities related to assets held for sale		—			23,177
Total liabilities		4,651,926			4,325,072			5,245,970			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								4,492			4,716
Commitments and contingencies (Note 4)
Equity:
Perpetual Preferred Stock		—			125,000
Common Stock, $0.01 par value, 500,787,260 shares authorized, 148,884,686 and 144,623,034 shares issued/outstanding at September 30, 2019 and December 31, 2018, respectively		1,489			1,446
Common Stock, $0.01 par value, 510,587,500 shares authorized, 148,865,047 and 148,885,197 shares issued/outstanding at June 30, 2020 and December 31, 2019, respectively								1,489			1,489
Additional paid-in capital		3,497,333			3,515,686			3,491,277			3,497,367
Accumulated other comprehensive income		4,488			4,794			3,807			4,195
Distributions in excess of earnings		(1,797,851	)		(1,947,507	)		(1,798,561	)		(1,722,402	)
Total Aimco equity		1,705,459			1,699,419			1,698,012			1,780,649
Noncontrolling interests in consolidated real estate partnerships		1,500			(2,967	)		(3,190	)		(3,296	)
Common noncontrolling interests in Aimco Operating Partnership		79,115			67,189			79,414			83,442
Total equity		1,786,074			1,763,641			1,774,236			1,860,795
Total liabilities and equity	$	6,539,178		$	6,190,004		$	7,121,147		$	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						Nine Months Ended
	September 30,						September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
REVENUES
Rental and other property revenues attributable to real estate	$	229,827		$	234,048		$	684,262		$	690,571
Asset Management business rental and tax credit revenues		—			8,433			—			49,817
Total revenues		229,827			242,481			684,262			740,388
Rental and other property revenues													$	218,808		$	224,200		$	443,360		$	454,435

OPERATING EXPENSES
Property operating expenses attributable to real estate		77,430			78,254			232,453			232,572
Property operating expenses of partnerships served by Asset Management business		—			2,608			—			20,865
Property operating expenses														74,123			75,647			149,603			154,606
Depreciation and amortization		97,538			96,406			283,027			286,439			97,689			91,924			198,165			185,489
General and administrative expenses		11,821			12,479			34,314			37,196			9,696			11,498			19,804			21,327
Investment management expenses														1,121			1,406			2,305			2,738
Other expenses, net		4,411			5,780			14,323			13,624			4,239			3,621			5,881			8,757
Total operating expenses		191,200			195,527			564,117			590,696			186,868			184,096			375,758			372,917

Interest income		2,824			2,712			8,615			7,768			2,843			3,065			7,366			5,791
Interest expense		(42,011	)		(45,492	)		(122,961	)		(143,193	)		(48,802	)		(39,541	)		(90,138	)		(80,950	)
Gain on dispositions of real estate and the Asset Management business		1,146			626,232			356,929			679,738
Other, net		288			(283	)		591			141
Gain on dispositions of real estate														47,238			64,310			47,204			355,783
Mezzanine investment income, net														6,936			—			13,683			—
Income from unconsolidated real estate partnerships														170			231			352			303
Income before income tax benefit (expense)		874			630,123			363,319			694,146			40,325			68,169			46,069			362,445
Income tax benefit (expense)		3,096			(26,206	)		1,942			12,617			2,879			1,827			6,112			(1,154	)
Net income		3,970			603,917			365,261			706,763			43,204			69,996			52,181			361,291
Noncontrolling interests:
Net loss (income) attributable to noncontrolling interests in consolidated real estate partnerships		58			(1,794	)		(103	)		(8,045	)		17			(70	)		(1	)		(161	)
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership		(1,933	)		(1,934	)		(5,800	)		(5,805	)		(1,859	)		(1,933	)		(3,728	)		(3,867	)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership		(116	)		(30,198	)		(18,787	)		(34,093	)		(2,107	)		(3,534	)		(2,475	)		(18,671	)
Net income attributable to noncontrolling interests		(1,991	)		(33,926	)		(24,690	)		(47,943	)		(3,949	)		(5,537	)		(6,204	)		(22,699	)
Net income attributable to Aimco		1,979			569,991			340,571			658,820			39,255			64,459			45,977			338,592
Net income attributable to Aimco preferred stockholders		—			(2,148	)		(7,335	)		(6,445	)		—			(5,187	)		—			(7,335	)
Net loss (income) attributable to participating securities		24			(814	)		(431	)		(1,004	)
Net income attributable to participating securities														(43	)		(38	)		(86	)		(455	)
Net income attributable to Aimco common stockholders	$	2,003		$	567,029		$	332,805		$	651,371		$	39,212		$	59,234		$	45,891		$	330,802
Net income attributable to Aimco per common share – basic	$	0.01		$	3.73		$	2.26		$	4.29
Net income attributable to Aimco per common share – diluted	$	0.01		$	3.73		$	2.26		$	4.28

Net income attributable to Aimco per common share – basic and diluted													$	0.26		$	0.40		$	0.31		$	2.25

Weighted average common shares outstanding – basic		148,434			151,971			147,474			151,928			148,535			148,367			148,527			146,994
Weighted average common shares outstanding – diluted		148,636			152,193			147,692			152,086			148,553			148,599			148,670			147,220

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
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Net income

$
3,970

$
603,917

$
365,261

$
706,763

Other comprehensive income:

Unrealized (losses) gains on available for sale debt securities

(402
)

979

(325
)

(72
)
Losses on interest rate swaps reclassified into earnings from
accumulated other comprehensive loss

—

757

—

1,391

Other comprehensive (loss) income

(402
)

1,736

(325
)

1,319

Comprehensive income

3,568

605,653

364,936

708,082

Comprehensive income attributable to noncontrolling interests

(1,967
)

(34,020
)

(24,671
)

(48,015
)
Comprehensive income attributable to Aimco common stockholders

$
1,601

$
571,633

$
340,265

$
660,067

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income	$	43,204		$	69,996		$	52,181		$	361,291
Unrealized (losses) gains on available for sale debt securities		(355	)		16			(415	)		77
Comprehensive income		42,849			70,012			51,766			361,368
Comprehensive income attributable to noncontrolling interests		(3,926	)		(5,538	)		(6,177	)		(22,704	)
Comprehensive income attributable to Aimco	$	38,923		$	64,474		$	45,589		$	338,664

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 ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

(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 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

Redemption of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

(847
)

(847
)
Amortization of share-based
     compensation cost

—

—

—

—

1,804

—

—

1,804

—

456

2,260

Effect of changes in ownership of
     consolidated entities

—

—

—

—

(753
)

—

—

(753
)

—

753

—

Other, net

—

—

—

—

1

—

(3
)

(2
)

—

—

(2
)
Net income

—

—

—

—

—

—

569,991

569,991

1,794

30,198

601,983

Change in accumulated other
     comprehensive income

—

—

—

—

—

1,642

—

1,642

—

94

1,736

Cash dividends paid to Common Stockholders

—

—

—

—

—

—

(59,793
)

(59,793
)

—

—

(59,793
)
Cash dividends paid to Preferred Stockholders

—

—

—

—

—

—

(2,148
)

(2,148
)

—

—

(2,148
)
Distributions to noncontrolling interests

—

—

—

—

—

—

—

—

(415
)

(3,429
)

(3,844
)
Balances at September 30, 2018

5,000

$
125,000

152,592

$
1,526

$
3,888,360

$
4,850

$
(1,894,054
)

$
2,125,682

$
(1,605
)

$
70,053

$
2,194,130

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

Redemption of Aimco Operating
     Partnership Units

—

—

57

1

2,820

—

—

2,821

—

(3,647
)

(826
)
Amortization of share-based
     compensation cost

—

—

—

—

1,163

—

—

1,163

—

795

1,958

Effect of changes in ownership of
     consolidated entities

—

—

—

—

(5,104
)

—

—

(5,104
)

2,315

2,789

—

Contribution from noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

—

—

—

—

4,911

—

4,911

Purchase of noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

—

—

—

—

(2,863
)

—

(2,863
)
Other, net

—

—

1

—

(175
)

—

—

(175
)

—

—

(175
)
Net income

—

—

—

—

—

—

1,979

1,979

(58
)

116

2,037

Change in accumulated other
     comprehensive income

—

—

—

—

—

(378
)

—

(378
)

—

(24
)

(402
)
Cash dividends paid to Common Stockholders

—

—

—

—

—

—

(58,065
)

(58,065
)

—

—

(58,065
)
Distributions to noncontrolling interests

—

—

—

—

—

—

—

—

(87
)

(3,280
)

(3,367
)
Balances at September 30, 2019

—

$
—

148,885

$
1,489

$
3,497,333

$
4,488

$
(1,797,851
)

$
1,705,459

$
1,500

$
79,115

$
1,786,074

	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 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 for consolidated entities		—			—			—			—			(4,851	)		—			—			(4,851	)		1,042			3,809			—
Purchase of noncontrolling interest in consolidated real estate partnerships		—			—			—			—			—			—			—			—			(917	)		—			(917	)
Change in accumulated other comprehensive income		—			—			—			—			—			15			—			15			—			1			16
Net income		—			—			—			—			—			—			64,459			64,459			70			3,534			68,063
Common Stock dividends		—			—			—			—			—			—			(58,039	)		(58,039	)		—						(58,039	)
Common Stock issued to Common Stockholders in special dividend		—			—			—			—			(516	)		—			—			(516	)		—			—			(516	)
Preferred Stock dividends		—			—			—			—			—			—			(1,098	)		(1,098	)		—			—			(1,098	)
Distributions to noncontrolling interests		—			—			—			—			—			—			—			—			(56	)		(3,303	)		(3,359	)
Other, net		—			—			(1	)		(1	)		—			—			—			(1	)		—			—			(1	)
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

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
Redemption of Aimco Operating Partnership units		—			—			159			2			5,135			—			—			5,137			—			(5,423	)		(286	)
Amortization of share-based compensation cost		—			—			5			—			1,080			—			—			1,080			—			1,051			2,131
Effect of changes in ownership of consolidated entities		—			—			—			—			(3,579	)		—			—			(3,579	)		36			3,543			—
Change in accumulated other comprehensive income		—			—			—			—			—			(332	)		—			(332	)		—			(23	)		(355	)
Net income		—			—			—			—			—			—			39,255			39,255			107			2,107			41,469
Common Stock dividends		—			—			—			—			—			—			(61,034	)		(61,034	)		—			—			(61,034	)
Distributions to noncontrolling interests		—			—			—			—			—			—			—			—			(35	)		(3,343	)		(3,378	)
Other, net		—			—			1			—			30			—			—			30			111			—			141
Balances at June 30, 2020		—		$	—			148,865		$	1,489		$	3,491,277		$	3,807		$	(1,798,561	)	$	1,698,012		$	(3,190	)	$	79,414		$	1,774,236

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

(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

—

—

—

—

—

—

—

—

—

(8,458
)

(8,458
)
Amortization of share-based
     compensation cost

—

—

21

—

6,285

—

—

6,285

—

1,236

7,521

Effect of changes in ownership of
      consolidated entities

—

—

—

—

(18,137
)

—

—

(18,137
)

—

8,036

(10,101
)
Other, net

—

—

136

2

122

—

(5
)

119

—

—

119

Net income

—

—

—

—

—

—

658,820

658,820

8,045

34,093

700,958

Change in accumulated other
     comprehensive income

—

—

—

—

—

1,247

—

1,247

—

72

1,319

Cash dividends paid to Common Stockholders

—

—

—

—

—

—

(179,351
)

(179,351
)

—

—

(179,351
)
Cash dividends paid to Preferred Stockholders

—

—

—

—

—

—

(6,445
)

(6,445
)

—

—

(6,445
)
Distributions to noncontrolling interests

—

—

—

—

—

—

—

—

(7,934
)

(9,402
)

(17,336
)
Balances at September 30, 2018

5,000

$
125,000

152,592

$
1,526

$
3,888,360

$
4,850

$
(1,894,054
)

$
2,125,682

$
(1,605
)

$
70,053

$
2,194,130

Balances at December 31, 2018

5,000

$
125,000

144,623

$
1,446

$
3,515,686

$
4,794

$
(1,947,507
)

$
1,699,419

$
(2,967
)

$
67,189

$
1,763,641

Repurchases of Common Stock

—

—

(461
)

(5
)

(20,677
)

—

—

(20,682
)

—

—

(20,682
)
Redemption of Preferred Stock

(5,000
)

(125,000
)

—

—

4,089

—

(4,089
)

(125,000
)

—

—

(125,000
)
Issuance of Aimco Operating
     Partnership units

—

—

—

—

—

—

—

—

—

3,034

3,034

Redemption of Aimco Operating
     Partnership Units

—

—

127

2

6,242

—

—

6,244

—

(11,202
)

(4,958
)
Amortization of share-based
     compensation cost

—

—

22

—

4,795

—

—

4,795

—

2,387

7,182

Effect of changes in ownership of
      consolidated entities

—

—

—

—

(12,123
)

—

—

(12,123
)

3,357

8,766

—

Contribution from noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

—

—

—

—

4,911

—

4,911

Purchase of noncontrolling interest
      in consolidated real estate partnerships

—

—

—

—

—

—

—

—

(3,780
)

—

(3,780
)
Other, net

—

—

82

1

(118
)

—

—

(117
)

19

—

(98
)
Net income

—

—

—

—

—

340,571

340,571

103

18,787

359,461

Change in accumulated other
     comprehensive income

—

—

—

—

—

(306
)

—

(306
)

—

(19
)

(325
)
Cash dividends paid to Common Stockholders

—

—

—

—

—

—

(183,579
)

(183,579
)

—

—

(183,579
)
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

—

—

—

—

—

—

—

—

(143
)

(9,827
)

(9,970
)
Balances at September 30, 2019

—

$
—

148,885

$
1,489

$
3,497,333

$
4,488

$
(1,797,851
)

$
1,705,459

$
1,500

$
79,115

$
1,786,074

	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 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 for consolidated entities		—			—			—			—			(7,019	)		—			—			(7,019	)		1,042			5,977			—
Purchase of noncontrolling interest in consolidated real estate partnerships		—			—			—			—			—			—			—			—			(917	)		—			(917	)
Change in accumulated other comprehensive income		—			—			—			—			—			72			—			72			—			5			77
Net income		—			—			—			—			—			—			338,592			338,592			161			18,671			357,424
Common Stock dividends		—			—			—			—			—			—			(125,514	)		(125,514	)		—			—			(125,514	)
Common Stock issued to Common Stockholders in special dividend		—			—			4,492			45			(561	)		—			—			(516	)		—			—			(516	)
Preferred Stock dividends		—			—			—			—			—			—			(3,247	)		(3,247	)		—			—			(3,247	)
Distributions to noncontrolling interests		—			—			—			—			—			—			—			—			(56	)		(6,547	)		(6,603	)
Other, net		—			—			81			1			57			—			—			58			19			—			77
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

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		—			—			159			2			5,135			—			—			5,137			—			(6,392	)		(1,255	)
Amortization of share-based compensation cost		—			—			25			—			3,009			—			—			3,009			—			2,102			5,111
Effect of changes in ownership of consolidated entities		—			—			—			—			(4,348	)		—			—			(4,348	)		36			4,312			—
Cumulative effect of a change in accounting principle		—			—			—			—			—			—			(277	)		(277	)		—			—			(277	)
Change in accumulated other comprehensive income		—			—			—			—			—			(388	)		—			(388	)		—			(27	)		(415	)
Net income		—			—			—			—			—			—			45,977			45,977			225			2,475			48,677
Common Stock dividends		—			—			—			—			—			—			(121,859	)		(121,859	)		—			—			(121,859	)
Distributions to noncontrolling interests		—			—			—			—			—			—			—			—			(108	)		(6,498	)		(6,606	)
Other, net		—			—			30			—			116			—			—			116			(47	)		—			69
Balances at June 30, 2020		—		$	—			148,865		$	1,489		$	3,491,277		$	3,807		$	(1,798,561	)	$	1,698,012		$	(3,190	)	$	79,414		$	1,774,236

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30,						Six Months Ended June 30,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	365,261		$	706,763		$	52,181		$	361,291
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		283,027			286,439			198,165			185,489
Gain on dispositions of real estate and the Asset Management business		(356,929	)		(679,738	)
Income tax benefit		(1,942	)		(12,617	)
Gain on dispositions of real estate								(47,204	)		(355,783	)
Income tax (benefit) expense								(6,112	)		1,154
Other adjustments		10,429			11,762			7,411			6,443
Net changes in operating assets and operating liabilities		(21,098	)		(9,683	)		(20,084	)		(28,555	)
Net cash provided by operating activities		278,748			302,926			184,357			170,039
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate		(131,613	)		(212,358	)		(7,794	)		(43,743	)
Capital expenditures		(292,749	)		(253,149	)		(182,348	)		(176,488	)
Proceeds from dispositions of real estate		422,463			708,464			36,869			422,456
Purchases of corporate assets		(14,825	)		(5,530	)		(8,743	)		(7,186	)
Proceeds from repayments on notes receivable		111			3,242
Other investing activities		608			(1,547	)		1,946			2,486
Net cash (used in) provided by investing activities		(16,005	)		239,122			(160,070	)		197,525
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of non-recourse property debt		667,965			360,613
Principal repayments of non-recourse property debt		(390,346	)		(403,141	)
Repayment of term loan		—			(250,000	)
Net repayments on revolving credit facility		(160,360	)		(67,160	)
Proceeds from non-recourse property debt								608,756			—
Principal repayments on non-recourse property debt								(274,347	)		(207,790	)
Proceeds from term loan								350,000			—
Net (repayments of) borrowings on revolving credit facility								(275,000	)		134,600
Repurchases of Common Stock		(20,682	)		—			(10,004	)		(20,682	)
Redemption of Preferred Stock		(125,000	)		—
Payment of dividends to Common Stockholders		(183,319	)		(178,937	)
Payment of dividends to Preferred Stockholders		(3,247	)		(6,445	)
Repurchases of Preferred Stock								—			(125,000	)
Payment of dividends to holders of Common Stock								(122,058	)		(125,350	)
Payment of dividends to holders of Preferred Stock								—			(3,247	)
Payment of distributions to noncontrolling interests		(16,320	)		(22,549	)		(10,639	)		(10,937	)
Redemption of noncontrolling interests in the Aimco Operating Partnership		(5,071	)		(8,675	)
Contribution from noncontrolling interests in consolidated real estate partnerships		4,911			—
Redemptions of noncontrolling interests in the Aimco Operating Partnership								(1,870	)		(4,244	)
Purchases of noncontrolling interests in consolidated real estate partnerships		(3,780	)		(3,581	)		—			(917	)
Other financing activities		(6,864	)		(415	)		(24,319	)		(10,685	)
Net cash used in financing activities		(242,113	)		(580,290	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		20,630			(38,242	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		72,595			142,541
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	93,225		$	104,299
Net cash provided by (used in) financing activities								240,519			(374,252	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH								264,806			(6,688	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD								177,702			72,595
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD							$	442,508		$	65,907

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Buildings and improvements	$	6,848,162		$	6,552,065		$	6,928,584		$	6,868,543
Land		1,887,424			1,756,525			1,866,009			1,869,048
Total real estate		8,735,586			8,308,590			8,794,593			8,737,591
Accumulated depreciation		(2,684,694	)		(2,585,115	)		(2,786,104	)		(2,718,284	)
Net real estate		6,050,892			5,723,475			6,008,489			6,019,307
Cash and cash equivalents		58,724			36,858			398,408			142,902
Restricted cash		34,501			35,737			44,100			34,800
Mezzanine investment								293,427			280,258
Other assets		395,061			351,541			376,723			351,472
Assets held for sale		—			42,393
Total assets	$	6,539,178		$	6,190,004		$	7,121,147		$	6,828,739

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	4,254,710		$	3,915,305		$	4,543,743		$	4,230,590
Term loan, net								348,440			—
Revolving credit facility borrowings		—			160,360			—			275,000
Total indebtedness		4,254,710			4,075,665			4,892,183			4,505,590
Accrued liabilities and other		397,216			226,230			353,787			360,574
Liabilities related to assets held for sale		—			23,177
Total liabilities		4,651,926			4,325,072			5,245,970			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								4,492			4,716
Commitments and contingencies (Note 4)
Partners’ capital:
Preferred units		—			125,000
General Partner and Special Limited Partner		1,705,459			1,574,419			1,698,012			1,780,649
Limited Partners		79,115			67,189			79,414			83,442
Partners’ capital attributable to the Aimco Operating Partnership		1,784,574			1,766,608			1,777,426			1,864,091
Noncontrolling interests in consolidated real estate partnerships		1,500			(2,967	)		(3,190	)		(3,296	)
Total partners’ capital		1,786,074			1,763,641			1,774,236			1,860,795
Total liabilities and partners’ capital	$	6,539,178		$	6,190,004		$	7,121,147		$	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

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

REVENUES

Rental and other property revenues attributable to real estate

$
229,827

$
234,048

$
684,262

$
690,571

Asset Management business rental and tax credit revenues

—

8,433

—

49,817

Total revenues

229,827

242,481

684,262

740,388

OPERATING EXPENSES

Property operating expenses attributable to real estate

77,430

78,254

232,453

232,572

Property operating expenses of partnerships served by Asset
   Management business

—

2,608

—

20,865

Depreciation and amortization

97,538

96,406

283,027

286,439

General and administrative expenses

11,821

12,479

34,314

37,196

Other expenses, net

4,411

5,780

14,323

13,624

Total operating expenses

191,200

195,527

564,117

590,696

a

Interest income

2,824

2,712

8,615

7,768

Interest expense

(42,011
)

(45,492
)

(122,961
)

(143,193
)
Gain on dispositions of real estate and the Asset Management business

1,146

626,232

356,929

679,738

Other, net

288

(283
)

591

141

Income before income tax benefit (expense)

874

630,123

363,319

694,146

Income tax benefit (expense)

3,096

(26,206
)

1,942

12,617

Net income

3,970

603,917

365,261

706,763

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

58

(1,794
)

(103
)

(8,045
)
Net income attributable to the Aimco Operating Partnership

4,028

602,123

365,158

698,718

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

(1,933
)

(4,082
)

(13,135
)

(12,250
)
Net loss (income) attributable to participating securities

43

(941
)

(429
)

(1,145
)
Net income attributable to the Aimco Operating Partnership’s common
   unitholders

$
2,138

$
597,100

$
351,594

$
685,323

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

$
0.01

$
3.73

$
2.26

$
4.29

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

$
0.01

$
3.72

$
2.26

$
4.29

Weighted average common units outstanding – basic

156,618

160,088

155,644

159,622

Weighted average common units outstanding – diluted

156,879

160,328

155,971

159,787

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
REVENUES
Rental and other property revenues	$	218,808		$	224,200		$	443,360		$	454,435

OPERATING EXPENSES
Property operating expenses		74,123			75,647			149,603			154,606
Depreciation and amortization		97,689			91,924			198,165			185,489
General and administrative expenses		9,696			11,498			19,804			21,327
Investment management expenses		1,121			1,406			2,305			2,738
Other expenses, net		4,239			3,621			5,881			8,757
Total operating expenses		186,868			184,096			375,758			372,917

Interest income		2,843			3,065			7,366			5,791
Interest expense		(48,802	)		(39,541	)		(90,138	)		(80,950	)
Gain on dispositions of real estate		47,238			64,310			47,204			355,783
Mezzanine investment income, net		6,936			—			13,683			—
Income from unconsolidated real estate partnerships		170			231			352			303
Income before income tax benefit (expense)		40,325			68,169			46,069			362,445
Income tax benefit (expense)		2,879			1,827			6,112			(1,154	)
Net income		43,204			69,996			52,181			361,291
Net loss (income) attributable to noncontrolling interests in consolidated real estate partnerships		17			(70	)		(1	)		(161	)
Net income attributable to the Aimco Operating Partnership		43,221			69,926			52,180			361,130
Net income attributable to the Aimco Operating Partnership’s preferred unitholders		(1,859	)		(7,120	)		(3,728	)		(11,202	)
Net income attributable to participating securities		(43	)		11			(86	)		(472	)
Net income attributable to the Aimco Operating Partnership’s common unitholders	$	41,319		$	62,817		$	48,366		$	349,456
Net income attributable to the Aimco Operating Partnership per common unit – basic and diluted	$	0.26		$	0.40		$	0.31		$	2.25

Weighted-average common units outstanding – basic		156,509			156,637			156,584			155,158
Weighted-average common units outstanding – diluted		156,527			157,018			156,802			155,517

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
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Net income

$
3,970

$
603,917

$
365,261

$
706,763

Other comprehensive income:

Unrealized (losses) gains on available for sale debt securities

(402
)

979

(325
)

(72
)
Losses on interest rate swaps reclassified into earnings from
accumulated other comprehensive loss

—

757

—

1,391

Other comprehensive (loss) income

(402
)

1,736

(325
)

1,319

Comprehensive income

3,568

605,653

364,936

708,082

Comprehensive loss (income) attributable to noncontrolling interests

58

(1,794
)

(103
)

(8,045
)
Comprehensive income attributable to the Aimco Operating
Partnership common unitholders

$
3,626

$
603,859

$
364,833

$
700,037

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income	$	43,204		$	69,996		$	52,181		$	361,291
Unrealized (losses) gains on available for sale debt securities		(355	)		16			(415	)		77
Comprehensive income		42,849			70,012			51,766			361,368
Comprehensive loss (income) attributable to noncontrolling interests		17			(70	)		(1	)		(161	)
Comprehensive income attributable to the Aimco Operating Partnership	$	42,866		$	69,942		$	51,765		$	361,207

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 ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

(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 June 30, 2018
$
125,000

$
1,489,941

$
42,828

$
1,657,769

$
(2,984
)

$
1,654,785

Redemption of partnership units held
     by non-Aimco partners

—

—

(847
)

(847
)

—

(847
)
Amortization of share-based
     compensation

—

1,804

456

2,260

—

2,260

Effect of changes in ownership of
     partnership units

—

(753
)

753

—

—

—

Other, net

—

(2
)

—

(2
)

—

(2
)
Net income

—

569,991

30,198

600,189

1,794

601,983

Change in accumulated other
     comprehensive income

—

1,642

94

1,736

—

1,736

Distributions paid to common unitholders

—

(59,793
)

(3,429
)

(63,222
)

—

(63,222
)
Distributions paid to preferred
     unitholders

—

(2,148
)

—

(2,148
)

—

(2,148
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

—

—

(415
)

(415
)
Balances at September 30, 2018
$
125,000

$
2,000,682

$
70,053

$
2,195,735

$
(1,605
)

$
2,194,130

Balances at June 30, 2019
$
—

$
1,763,218

$
82,366

$
1,845,584

$
(2,718
)

$
1,842,866

Redemption of partnership units held
     by non-Aimco partners

—

2,821

(3,647
)

(826
)

—

(826
)
Amortization of share-based
     compensation

—

1,163

795

1,958

—

1,958

Effect of changes in ownership of
     partnership units and consolidated
     entities

—

(5,104
)

2,789

(2,315
)

2,315

—

Contribution from noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

4,911

4,911

Purchase of noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

(2,863
)

(2,863
)
Other, net

—

(175
)

—

(175
)

—

(175
)
Net income

—

1,979

116

2,095

(58
)

2,037

Change in accumulated other
     comprehensive income

—

(378
)

(24
)

(402
)

—

(402
)
Distributions paid to common unitholders

—

(58,065
)

(3,280
)

(61,345
)

—

(61,345
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

—

—

(87
)

(87
)
Balances at September 30, 2019
$
—

$
1,705,459

$
79,115

$
1,784,574

$
1,500

$
1,786,074

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

Balances at March 31, 2020	$	—		$	1,717,455		$	81,502		$	1,798,957		$	(3,409	)	$	1,795,548
Redemption of Aimco Operating Partnership units		—			5,137			(5,423	)		(286	)		—			(286	)
Amortization of share-based compensation cost		—			1,080			1,051			2,131			—			2,131
Effect of changes in ownership of consolidated entities		—			(3,579	)		3,543			(36	)		36			—
Change in accumulated other comprehensive income		—			(332	)		(23	)		(355	)		—			(355	)
Net income		—			39,255			2,107			41,362			107			41,469
Distributions to common unitholders		—			(61,034	)		(3,343	)		(64,377	)		—			(64,377	)
Distributions to noncontrolling interests		—			—			—			—			(35	)		(35	)
Other, net		—			30			—			30			111			141
Balances at June 30, 2020	$	—		$	1,698,012		$	79,414		$	1,777,426		$	(3,190	)	$	1,774,236

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

(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

—

—

(8,458
)

(8,458
)

—

(8,458
)
Amortization of share-based
     compensation

—

6,285

1,236

7,521

—

7,521

Effect of changes in ownership of
     partnership units

—

(18,137
)

8,036

(10,101
)

—

(10,101
)
Other, net

—

119

—

119

—

119

Net income

—

658,820

34,093

692,913

8,045

700,958

Change in accumulated other
     comprehensive income

—

1,247

72

1,319

—

1,319

Distributions paid to common unitholders

—

(179,351
)

(9,402
)

(188,753
)

—

(188,753
)
Distributions paid to preferred
     unitholders

—

(6,445
)

—

(6,445
)

—

(6,445
)
Distributions paid to noncontrolling
     interests in consolidated real
     estate partnerships

—

—

—

—

(7,934
)

(7,934
)
Balances at September 30, 2018
$
125,000

$
2,000,682

$
70,053

$
2,195,735

$
(1,605
)

$
2,194,130

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

—

6,244

(11,202
)

(4,958
)

—

(4,958
)
Amortization of share-based
     compensation

—

4,795

2,387

7,182

—

7,182

Effect of changes in ownership of
     partnership units and consolidated
     entities

—

(12,123
)

8,766

(3,357
)

3,357

—

Contribution from noncontrolling interest in
    consolidated real estate partnerships

—

—

—

—

4,911

4,911

Purchase of noncontrolling interest in
      consolidated real estate partnerships

—

—

—

—

(3,780
)

(3,780
)
Other, net

—

(117
)

—

(117
)

19

(98
)
Net income

—

340,571

18,787

359,358

103

359,461

Change in accumulated other
     comprehensive income

—

(306
)

(19
)

(325
)

—

(325
)
Distributions paid to common unitholders

—

(183,579
)

(9,827
)

(193,406
)

—

(193,406
)
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

—

—

—

—

(143
)

(143
)
Balances at September 30, 2019
$
—

$
1,705,459

$
79,115

$
1,784,574

$
1,500

$
1,786,074

	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 preferred units		(125,000	)		—			—			(125,000	)		—			(125,000	)
Issuance of Aimco Operating Partnership units		—			—			3,034			3,034			—			3,034
Redemption of Aimco Operating Partnership units		—			3,423			(7,555	)		(4,132	)		—			(4,132	)
Amortization of share-based compensation cost		—			3,632			1,592			5,224			—			5,224
Effect of changes in ownership of consolidated entities		—			(7,019	)		5,977			(1,042	)		1,042			—
Purchase of noncontrolling interest in consolidated real estate partnerships		—			—			—			—			(917	)		(917	)
Change in accumulated other comprehensive income		—			72			5			77			—			77
Net income		—			338,592			18,671			357,263			161			357,424
Distributions to common unitholders		—			(125,514	)		—			(125,514	)		—			(125,514	)
Common partnership units issued to common unitholders in special distribution		—			(516	)		—			(516	)		—			(516	)
Distributions 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	)
Other, net		—			58			—			58			19			77
Balances at June 30, 2019	$	—		$	1,763,218		$	82,366		$	1,845,584		$	(2,718	)	$	1,842,866

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		—			5,137			(6,392	)		(1,255	)		—			(1,255	)
Amortization of share-based compensation cost		—			3,009			2,102			5,111			—			5,111
Effect of changes in ownership of consolidated entities		—			(4,348	)		4,312			(36	)		36			—
Cumulative effect of a change in accounting principle		—			(277	)		—			(277	)		—			(277	)
Change in accumulated other comprehensive income		—			(388	)		(27	)		(415	)		—			(415	)
Net income		—			45,977			2,475			48,452			225			48,677
Distributions to common unitholders		—			(121,859	)		(6,498	)		(128,357	)		—			(128,357	)
Distributions to noncontrolling interests		—			—			—			—			(108	)		(108	)
Other, net		—			116			—			116			(47	)		69
Balances at June 30, 2020	$	—		$	1,698,012		$	79,414		$	1,777,426		$	(3,190	)	$	1,774,236

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO PROPERTIES, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30,						Six Months Ended June 30,
	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	365,261		$	706,763		$	52,181		$	361,291
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		283,027			286,439			198,165			185,489
Gain on dispositions of real estate and the Asset Management business		(356,929	)		(679,738	)
Income tax benefit		(1,942	)		(12,617	)
Gain on dispositions of real estate								(47,204	)		(355,783	)
Income tax (benefit) expense								(6,112	)		1,154
Other adjustments		10,429			11,762			7,411			6,443
Net changes in operating assets and operating liabilities		(21,098	)		(9,683	)		(20,084	)		(28,555	)
Net cash provided by operating activities		278,748			302,926			184,357			170,039
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate and deposits related to purchases of real estate		(131,613	)		(212,358	)		(7,794	)		(43,743	)
Capital expenditures		(292,749	)		(253,149	)		(182,348	)		(176,488	)
Proceeds from dispositions of real estate		422,463			708,464			36,869			422,456
Purchases of corporate assets		(14,825	)		(5,530	)		(8,743	)		(7,186	)
Proceeds from repayments on notes receivable		111			3,242
Other investing activities		608			(1,547	)		1,946			2,486
Net cash (used in) provided by investing activities		(16,005	)		239,122			(160,070	)		197,525
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of non-recourse property debt		667,965			360,613
Principal repayments of non-recourse property debt		(390,346	)		(403,141	)
Repayment of term loan		—			(250,000	)
Net repayments on revolving credit facility		(160,360	)		(67,160	)
Repurchases of common partnership units held by Aimco		(20,682	)		—
Redemption of preferred units held by Aimco		(125,000	)		—
Payment of distributions to Aimco		(183,319	)		(178,937	)
Proceeds from non-recourse property debt								608,756			—
Principal repayments on non-recourse property debt								(274,347	)		(207,790	)
Proceeds from term loan								350,000			—
Net (repayments of) borrowings on revolving credit facility								(275,000	)		134,600
Repurchases of common partnership units held by General Partner and Special Limited Partner								(10,004	)		(20,682	)
Redemption of preferred units from Aimco								—			(125,000	)
Payment of distributions to General Partner and Special Limited Partner								(122,058	)		(125,350	)
Payment of distributions to Limited Partners		(10,211	)		(8,810	)		(6,793	)		(7,014	)
Payment of distributions to preferred unitholders		(9,047	)		(12,250	)
Payment of distributions to noncontrolling interests in consolidated real estate partnerships		(309	)		(7,934	)
Redemptions of partnership units held by non-Aimco partners		(5,071	)		(8,675	)
Contributions from noncontrolling interests in consolidated real estate partnerships		4,911			—
Payment of distributions to preferred OP Units								(3,728	)		(7,114	)
Payment of distributions to noncontrolling interests								(118	)		(56	)
Redemption of common and preferred OP Units								(1,870	)		(4,244	)
Purchases of noncontrolling interests in consolidated real estate partnerships		(3,780	)		(3,581	)		—			(917	)
Other financing activities		(6,864	)		(415	)		(24,319	)		(10,685	)
Net cash used in financing activities		(242,113	)		(580,290	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		20,630			(38,242	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		72,595			142,541
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	93,225		$	104,299
Net cash provided by (used in) financing activities								240,519			(374,252	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH								264,806			(6,688	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD								177,702			72,595
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD							$	442,508		$	65,907

See notes to condensed consolidated financial statements.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO PROPERTIES, L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2019~~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 ~~September~~June 30, ~~2019,~~2020, after elimination of units held by consolidated subsidiaries, the Aimco Operating Partnership had ~~158,447,276~~159,195,031 common ~~partnership units~~OP Units outstanding. As of ~~September~~June 30, ~~2019,~~2020, Aimco owned ~~148,884,686~~148,865,047 of the common ~~partnership units, or 94.0%,~~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 93.5% legal interest in the Aimco Operating Partnership and a 94.9% 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 ~~September~~June 30, ~~2019, we owned an equity interest in 128~~2020, our portfolio included 125 apartment communities with ~~33,824~~32,938 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~~121 of these apartment communities with ~~33,682~~32,796 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 ~~nine~~six months ended ~~September~~June 30, ~~2019~~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 atas of 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.~~ All significant intercompany balances and transactions have been eliminated in consolidation.

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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 June 30, 2020, and December 31, 2019, Aimco consolidated 5 and 6 VIEs, respectively, 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 $275.0 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 $293.4 million, reflected in mezzanine investment in our condensed consolidated balance sheets, consists primarily 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 September 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 June 30, 2020 (in thousands):

Balance, December 31, 2018

$
101,291

Distributions to holders of preferred OP Units

(5,800
)
Redemption of preferred OP Units and other

(113
)
Net income attributable to preferred OP Units

5,800

Balance, September 30, 2019

$
101,178

Balance at December 31, 2019	$	97,064
Preferred distributions		(3,728	)
Redemption of preferred units		(615	)
Net income		3,728
Balance at June 30, 2020	$	96,449

The Aimco Operating Partnership has outstanding various classes of redeemable preferred OP Units. As of June 30, 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 $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 and six months ended June 30, 2020 and 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Fixed lease income	$	205,736		$	209,890	$	419,152		$	425,471
Variable lease income		12,649			13,608		26,264			27,752
Straight-line rent write-off (1)		(19	)		—		(2,927	)		—
Total lease income	$	218,366		$	223,498	$	442,489		$	453,223

(1)

We monitor the collectability of all unpaid rent amounts. The onset of COVID-19 and the anticipated economic slowdown resulted in a $2.9 million write-off of accrued straight-line rent during the three months ended March 31, 2020. Additionally, we wrote-off the related deferred leasing costs of $2.2 million during the three months ended March 31, 2020. The write-offs of deferred leasing costs are recorded in depreciation and amortization in our condensed consolidated statements of operations.

In response to the economic effects of the COVID-19 pandemic, some jurisdictions where our communities are located, such as Los Angeles, Philadelphia, and New York City, have enacted protections for residents and commercial tenants, including government mandated rent deferrals, rent freezes, repayment extensions, fee abatement measures or concessions, and prohibitions on lease terminations or evictions for tenants. Some states and municipalities are also implementing rental assistance programs and encouraging landlord-tenant negotiations.

On April 10, 2020, the Financial Accounting Standards Board, or 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.

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Consequently, in accordance with the Staff Q&A issued by the FASB, we may elect to record rent relief when granted rather than over the remaining term of the lease. Our commercial tenants represent 3.1% of revenue for the three months ended June 30, 2020. For the three and six months ended June 30, 2020, we granted to commercial tenants $0.4 million in rent relief and elected to record this as a reduction of variable 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~~For the ~~2018~~2020 presentation of our condensed consolidated ~~financial~~ statements of operations, we have ~~been~~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 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 and the Asset Management business as a component of income before income tax benefit (expense) in our condensed consolidated statements of operations, as follows (in thousands):

Three Months Ended September 30, 2018

Nine Months Ended September 30, 2018

As Previously
Reported

Adjustments

As Revised

As Previously
Reported

Adjustments

As Revised

Income tax benefit (expense)

$
27,941

$
(54,147
)

$
(26,206
)

$
69,724

$
(57,107
)

$
12,617

Gain on dispositions of real estate
and the Asset Management
business

572,085

54,147

626,232

622,631

57,107

679,738

During the nine months ended September 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~~On January 1, ~~2019,~~2020, we adopted ~~the lease accounting standard~~ASC 326, Financial Instruments – Credit Losses, 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.

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In 2018, the Securities Exchange Commission, or SEC, amended its rules to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amendments are intended to simplify compliance without significantly changing the total mix of information provided to investors. The amendments created a requirement to report changes in equity and dividends per share in interim periods on a comparative basis for both quarter-to-date and year-to-date periods presented. We have presented comparative interim statements of stockholders’ and partners’ equity in our condensed consolidated financial statements for the three and nine months ended September 30, 2019 and 2018.

~~Recent Accounting Pronouncements~~

~~In 2016, the~~ FASB ~~issued a new standard for accounting for financial instruments and credit losses thereon,~~ which changes the method and timing of the recognition of credit losses on financial assets. The standard ~~will require~~requires us to estimate and record credit losses over the life of a 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. ~~Financial instruments, including 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

~~Acquisition of 1001 Brickell Bay Drive~~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 three months ended September 30, 2019, we acquired a 95% interest in 1001 Brickell Bay Drive, a 1.8-acre waterfront parcel in Miami, Florida, currently improved with an office building. 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.

Purchase price

$
156,750

Capitalized transaction costs

2,339

Noncontrolling interests in consolidated real estate partnerships

8,250

Total consideration (1)

$
167,339

Acquisition costs allocated to land

$
145,648

Acquisition costs allocated to building and improvements

153,241

Acquisition costs allocated to intangible assets

16,500

Acquisition costs allocated to intangible liabilities

(6,519
)
Deferred tax liability assumed (2)

(141,531
)
Total consideration

$
167,339

~~(1)~~

~~Total consideration includes $66.8 million of debt assumed.~~

~~(2)~~

The deferred tax liability of $141.5 million resulted from the corporate structure utilized to complete the acquisition and is due to the difference between the purchase price determined in accordance with GAAP and the tax basis of the property. For the three and nine months ended September 30, 2019, we recorded an income tax benefit of $1.7 million related to this property.

~~Acquisitions of Apartment Communities~~

During the nine months ended September 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):

Number of apartment homes

110

Purchase price (1)

$
65,833

Capitalized transaction costs

892

Total consideration

$
66,725

Acquisition costs allocated to land

$
4,929

Acquisition costs allocated to building (2)

61,271

Acquisition costs allocated to furniture and fixtures (2)

525

Total consideration

$
66,725

~~(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.

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~~(2)~~

~~Amounts are included within the buildings and improvements line item in our condensed consolidated balance sheets.~~

Dispositions of Apartment Communities

During the ~~nine~~three and six months ended ~~September~~June 30, ~~2019,~~2020, we sold 1 apartment ~~communities as summarized below (dollars in thousands):~~

Apartment communities sold

8

Apartment homes sold

2,605

Gain on dispositions of real estate

$
356,929

community with 219 apartment homes for a gain on disposition of $47.2 million. The apartment ~~communities~~community sold ~~were predominantly located outside of our primary markets or~~ in 2020 was in a lower-rated ~~locations~~location within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

~~In addition to~~During the three months ended June 30, 2019, we sold 1 apartment community with 399 apartment homes for a gain on disposition of $64.3 million. During the six months ended June 30, 2019, we sold 8 apartment communities ~~we sold during the current period, from~~with 2,605 apartment homes for a gain on dispositions of $355.8 million.

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 ~~September~~June 30, ~~2019,~~2020, 0 apartment communities were classified as held for sale. Subsequent to June 30, 2020, we received a $5.0 million non-refundable deposit on a community to be sold for approximately $126 million later in 2020.

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 nine months ended September 30, 2019, our total lease income was comprised of the following amounts for all operating leases (in thousands):

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

Fixed lease income

$
213,945

$
639,359

Variable lease income

15,005

42,814

Total lease income

$
228,950

$
682,173

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, excluding such extension options, are as follows (in thousands):

October 1, 2019 to December 31, 2019

$
7,200

2020

26,861

2021

23,391

2022

19,910

2023

16,081

Thereafter

65,583

Total

$
159,026

Generally, our residential leases do not provide extension options and, as of September 30, 2019, have an average remaining term of 10.3 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 we 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 nine months ended September 30, 2019, our total lease cost for ground leases was $1.3 million and $5.8 million, respectively, and for office leases was $1.1 million and $2.4 million, respectively.

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As of September 30, 2019, the ground and office leases have weighted average remaining terms of 79.3 years and 8.5 years, respectively, and weighted average discount rates of 4.12% and 3.22%, 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

October 1, 2019 to December 31, 2019

$
852

$
529

$
1,381

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

21,438

432,471

453,909

Less: Discount

(3,091
)

(354,941
)

(358,032
)
Total lease liability

$
18,347

$
77,530

$
95,877

~~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 ~~September~~June 30, ~~2019,~~2020, our commitments related to these capital activities totaled approximately ~~$308.9~~$179 million, most of which we expect to incur during the next 12 months.

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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.

~~Income Taxes~~

In 2014, the Internal Revenue Service initiated an audit of the Aimco Operating Partnership’s 2011 and 2012 tax years. This audit was concluded during the three months ended September 30, 2019, with no material effect on our tax benefits, financial condition or results of operations.

Legal Matters

In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

Environmental

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

We are engaged in discussions with the Environmental Protection Agency, or EPA, 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 ~~identify options for clean-up~~formulate a scope of work and agreed order to finish clean up of the ~~site.~~

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site outside the Superfund program. Although the outcome of ~~these processes are~~this process is uncertain, we do not expect ~~their~~the 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 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~~appealed the final order, ~~while simultaneously complying with it.~~and on June 1, 2020, the court vacated the Order against us. However, there are still civil suits pending related to this contingent liability. Although the outcome of this process is uncertain, we do not expect ~~its~~the 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 ~~September~~June 30, ~~2019,~~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~~weighted-average number of shares of Common Stock and common partnership units ~~outstanding and excludes participating securities. Diluted~~outstanding. 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

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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 effect of ~~our time-based restricted stock awards is included~~participating securities 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 ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018, were~~are as follows (in ~~thousands)~~thousands, except per share and per unit data):

	Three Months Ended		Nine Months Ended		Three Months Ended June 30,				Six Months Ended June 30,
	September 30, 2019	September 30, 2018	September 30, 2019	September 30, 2018	2020		2019		2020		2019
Earnings per share
Numerator:
Basic and dilutive net income attributable to Aimco common stockholders					$	39,212	$	59,234	$	45,891	$	330,802

Denominator – shares:
Basic weighted-average Common Stock outstanding						148,535		148,367		148,527		146,994
Dilutive share equivalents outstanding	202	222	218	158		18		232		143		226
Dilutive weighted-average Common Stock outstanding						148,553		148,599		148,670		147,220

Earnings per share – basic and diluted					$	0.26	$	0.40	$	0.31	$	2.25

Non-dilutive share equivalents outstanding						8,929		—		8,260		—

Earnings per unit
Numerator:
Basic and dilutive net income attributable to the Aimco Operating Partnership's common unitholders					$	41,319	$	62,817	$	48,366	$	349,456

Denominator – units
Basic weighted-average common partnership units outstanding						156,509		156,637		156,584		155,158
Dilutive partnership unit equivalents outstanding	261	240	327	165		18		381		218		359
Non-dilutive share equivalents outstanding	—	184	—	184
Dilutive weighted-average common partnership units outstanding						156,527		157,018		156,802		155,517

Earnings per unit – basic and diluted					$	0.26	$	0.40	$	0.31	$	2.25

Non-dilutive partnership unit equivalents outstanding	—	421	—	421		2,081		—		1,214		—
Unvested restricted participating shares and partnership units	189	250	189	250

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 ~~September~~June 30, ~~2019,~~2020, these preferred OP Units were potentially redeemable for approximately ~~1.9~~2.6 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.

~~Table of Contents~~

During the three and ~~nine~~six months ended ~~September~~June 30, 2020, we paid $0.41 and $0.82, respectively, in dividends and distributions per share and per unit. During the three and six months ended June 30, 2019, we paid $0.39 and ~~$2.80,~~$2.41, respectively, in dividends and distributions per share and per unit. Of the ~~$2.80~~$2.41 paid in dividends and distributions in 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~~

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In connection with the special dividend and distribution, the Board of Directors authorized a reverse stock split during the three ~~and nine~~ months ended ~~September 30, 2018, we paid $0.38~~March 31, 2019. The reverse split combined every 1.03119 common shares and ~~$1.14, 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.

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 ~~September~~June 30, ~~2019,~~2020, was approximately ~~1.7~~1.1 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 ~~$88.3~~$93.5 million and ~~$83.6~~$90.0 million as of ~~September~~June 30, ~~2019~~2020, and December 31, ~~2018, respectively. We estimated the fair value of these investments to be $92.9 million and $88.5 million as of September 30,~~ 2019, ~~and December 31, 2018,~~ respectively.

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

During the three months ended June 30, 2020, we paid an upfront premium of $12.1 million for the option to enter into an interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk and is intended to mitigate interest rate increases between now and 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68% strike price. The amount of future cash settlement is limited if the prevailing interest rate exceeds 2.78%. Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement.

We measure at fair value on a recurring basis our interest rate option, which is presented in other assets in our condensed consolidated balance sheets. Our interest rate option is classified within Level 2 of the GAAP fair value hierarchy, and we estimate its fair value using pricing models that rely on observable market information, including contractual terms, market prices, and interest rate yield curves. The fair value adjustment is included in earnings in other expense, net, in our condensed consolidated statements of operations. Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, and the upfront premium is reflected in other financing in our condensed consolidated statements of cash flows.

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

	As of June 30, 2020								As of December 31, 2019
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
AFS debt securities	$	97,311	$	—	$	97,311	$	—	$	94,251	$	—	$	94,251	$	—
Interest rate option	$	11,008	$	—	$	11,008	$	—	$	—	$	—	$	—	$	—

Fair Value Disclosures

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 ~~September~~June 30, ~~2019~~2020, and December 31, ~~2018,~~2019, due to their relatively short-term nature and high probability of realization. The carrying amounts of ~~longer~~notes receivable, the term ~~seller financing notes receivable~~loan, and the revolving credit facility also approximated their estimated fair value as of ~~September~~June 30, ~~2019~~2020, and December 31, ~~2018. The carrying amount of our total indebtedness approximated its estimated fair value as of September 30, 2019 and December 31, 2018.~~2019. 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~~fair value hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.

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

	As of June 30, 2020				As of December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Non-recourse property debt	$	4,565,673	$	4,656,612	$	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 4~~3 segments: (i) Same Store, (ii) Redevelopment and Development, and (iii) 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 and Other Real Estate segment ~~includes apartment~~includes: (i) communities that we have acquired since the beginning of a two-year comparable ~~period. Our Other Real Estate segment primarily includes apartment~~period; (ii) communities that are subject to limitations on rent ~~increases,~~increases; (iii) communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for ~~sale,~~sale; (iv) communities that we expect to redevelop; and (v) certain ~~retail spaces and 1001 Brickell Bay Drive.~~commercial spaces.

~~Table of Contents~~

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, net of utility reimbursements, for consolidated ~~apartment~~ communities. We exclude from rental and other property revenues the amount of utility costs reimbursed by residents and reflect such amount as a reduction of the related utility expense within property operating expenses in our evaluation of segment results. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP.

As of ~~September~~June 30, ~~2019,~~2020, our Same Store segment included 9594 consolidated apartment communities with ~~27,640~~27,876 apartment homes; our Redevelopment and Development segment included 78 consolidated ~~apartment~~ communities with ~~3,137 apartment~~2,521 homes; and our Acquisition ~~segment included 7 consolidated apartment communities with 1,590 apartment homes;~~ and ~~our~~ Other Real Estate segment included ~~15 apartment~~19 communities with ~~1,315 apartment~~2,399 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 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 September 30, 2019~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 (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			Same Store		Redevelopment and Development		Acquisition and Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended September 30, 2019:
Total revenues	$	179,056	$	17,891	$	10,656	$	13,389	$	8,832	$	3		$	229,827
Property operating expenses attributable to real estate		48,220		7,469		3,317		5,149		8,234		5,041			77,430
Three months ended June 30, 2020:
Rental and other property revenues																	$	180,779	$	11,589	$	17,415	$	8,519	$	506		$	218,808
Property operating expenses																		48,720		4,912		6,485		7,931		6,075			74,123
Other operating expenses not allocated to segments (3)		—		—		—		—		—		113,770			113,770			—		—		—		—		112,745			112,745
Total operating expenses		48,220		7,469		3,317		5,149		8,234		118,811			191,200			48,720		4,912		6,485		7,931		118,820			186,868
Proportionate property net operating income		130,836		10,422		7,339		8,240		598		(118,808	)		38,627
Proportionate property net operating income (loss)																		132,059		6,677		10,930		588		(118,314	)		31,940
Other items included in income before income tax benefit (4)		—		—		—		—		—		(37,753	)		(37,753	)		—		—		—		—		8,385			8,385
Income before income tax benefit	$	130,836	$	10,422	$	7,339	$	8,240	$	598	$	(156,561	)	$	874		$	132,059	$	6,677	$	10,930	$	588	$	(109,929	)	$	40,325

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 September 30, 2018:

Total revenues
$
172,426

$
19,876

$
10,630

$
9,475

$
8,335

$
21,739

$
242,481

Property operating expenses attributable
   to real estate

46,751

7,242

2,826

3,652

7,826

9,957

78,254

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

117,273

117,273

Total operating expenses

46,751

7,242

2,826

3,652

7,826

127,230

195,527

Proportionate property net operating
   income

125,675

12,634

7,804

5,823

509

(105,491
)

46,954

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

—

—

—

—

—

583,169

583,169

Income before income tax expense
$
125,675

$
12,634

$
7,804

$
5,823

$
509

$
477,678

$
630,123

	Same Store		Redevelopment and Development		Acquisition and Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended June 30, 2019:
Rental and other property revenues	$	182,816	$	12,695	$	14,097	$	7,905	$	6,687		$	224,200
Property operating expenses		48,893		4,990		5,431		7,378		8,955			75,647
Other operating expenses not allocated to segments (3)		—		—		—		—		108,449			108,449
Total operating expenses		48,893		4,990		5,431		7,378		117,404			184,096
Proportionate property net operating income (loss)		133,923		7,705		8,666		527		(110,717	)		40,104
Other items included in income before income tax benefit (4)		—		—		—		—		28,065			28,065
Income before income tax benefit	$	133,923	$	7,705	$	8,666	$	527	$	(82,652	)	$	68,169

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Same
Store

Redevelopment
and
Development

Acquisition

Other Real
Estate

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments (2)

Consolidated

Nine months ended September 30, 2019:

Total revenues
$
529,550

$
57,408

$
30,886

$
32,130

$
25,715

$
8,573

$
684,262

Property operating expenses
   attributable to real estate

142,124

21,786

9,144

12,940

24,025

22,434

232,453

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

331,664

331,664

Total operating expenses

142,124

21,786

9,144

12,940

24,025

354,098

564,117

Proportionate property net operating
   income

387,426

35,622

21,742

19,190

1,690

(345,525
)

120,145

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

—

—

—

—

—

243,174

243,174

Income before income tax benefit
$
387,426

$
35,622

$
21,742

$
19,190

$
1,690

$
(102,351
)

$
363,319

	Same Store		Redevelopment and Development		Acquisition and Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Six months ended June 30, 2020:
Rental and other property revenues	$	367,564	$	23,502	$	36,174	$	17,215	$	(1,095	)	$	443,360
Property operating expenses		97,154		9,599		13,061		15,989		13,800			149,603
Other operating expenses not allocated to segments (3)		—		—		—		—		226,155			226,155
Total operating expenses		97,154		9,599		13,061		15,989		239,955			375,758
Proportionate property net operating income (loss)		270,410		13,903		23,113		1,226		(241,050	)		67,602
Other items included in income before income tax benefit (4)		—		—		—		—		(21,533	)		(21,533	)
Income before income tax benefit	$	270,410	$	13,903	$	23,113	$	1,226	$	(262,583	)	$	46,069

Same
Store

Redevelopment
and
Development

Acquisition

Other Real
Estate

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments (2)

Consolidated

Nine months ended September 30, 2018:

Total revenues
$
509,357

$
56,436

$
18,567

$
28,164

$
24,103

$
103,761

$
740,388

Property operating expenses
   attributable to real estate

139,417

20,678

5,224

11,179

22,551

33,523

232,572

Other operating expenses not allocated
   to segments (3)

—

—

—

—

—

358,124

358,124

Total operating expenses

139,417

20,678

5,224

11,179

22,551

391,647

590,696

Proportionate property net operating
   income

369,940

35,758

13,343

16,985

1,552

(287,886
)

149,692

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

—

—

—

—

—

544,454

544,454

Income before income tax benefit
$
369,940

$
35,758

$
13,343

$
16,985

$
1,552

$
256,568

$
694,146

	Same Store		Redevelopment and Development		Acquisition and Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Six months ended June 30, 2019:
Rental and other property revenues	$	363,187	$	26,708	$	28,210	$	16,068	$	20,262		$	454,435
Property operating expenses		97,519		10,245		10,547		14,983		21,312			154,606
Other operating expenses not allocated to segments (3)		—		—		—		—		218,311			218,311
Total operating expenses		97,519		10,245		10,547		14,983		239,623			372,917
Proportionate property net operating income (loss)		265,668		16,463		17,663		1,085		(219,361	)		81,518
Other items included in income before income tax expense (4)		—		—		—		—		280,927			280,927
Income before income tax expense	$	265,668	$	16,463	$	17,663	$	1,085	$	61,566		$	362,445

(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. The write-off of straight-line rent receivables, recognized due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, are included in consolidated rental and property revenues and are not included in our measurement of segment performance for the three and six months ended June 30, 2020.

(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, which may include provision for real estate impairment loss and write-offs of deferred leasing commissions, 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 on dispositions of real estate, ~~and the Asset Management business~~mezzanine investment income, interest income, and interest expense.

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

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Same Store	$	4,083,389	$	4,131,494	$	4,592,960	$	4,669,022
Redevelopment and Development		899,628		792,126		826,200		716,750
Acquisition		633,462		507,190
Other Real Estate		643,645		327,099
Acquisition and Other Real Estate						795,039		803,777
Corporate and other assets (1)		279,054		432,095		906,948		639,190
Total consolidated assets	$	6,539,178	$	6,190,004	$	7,121,147	$	6,828,739

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

~~Table of Contents~~

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

	2019		2018		2020		2019
Same Store	$	121,069	$	126,140	$	51,608	$	85,280
Redevelopment and Development		147,582		98,191		115,140		78,089
Acquisition		22,398		9,731
Other Real Estate		12,692		4,194
Acquisition and Other Real Estate						12,376		14,433
Total capital additions	$	303,741	$	238,256	$	179,124	$	177,802

~~Note 9 — Variable Interest Entities~~

Generally, a variable interest entity, or VIE, is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

Aimco consolidates the Aimco Operating Partnership, 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:

September 30, 2019

December 31, 2018

VIEs with interests in apartment communities

6

9

Apartment communities owned by VIEs

6

9

Apartment homes in communities owned by VIEs

2,056

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):

September 30, 2019

December 31, 2018

Assets

Net real estate

$
203,443

$
488,127

Cash and cash equivalents

5,604

15,416

Restricted cash

1,884

4,461

Other assets

26,433

3,973

Liabilities

Non-recourse property debt secured by Aimco communities, net

176,840

322,685

Accrued liabilities and other

32,378

13,576

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~~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.

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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.

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

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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.

~~Our business is organized around five areas~~Over our first 25 years as a public company, our Economic Income compounded at an annual rate of ~~strategic focus: operational excellence; redevelopment~~14%.

Impacts of COVID-19 and ~~development; portfolio management; balance sheet;~~Government Lockdown

The impact of the COVID-19 pandemic and Government Lockdown continued into the second quarter of 2020. As discussed in our Quarterly Report on Form 10-Q for the three months ended March 31, 2020, we formed a cross-functional committee that meets weekly to adjust to the changing conditions in order to keep our team and ~~culture.~~ our residents safe. We continued our commitment to employees by allowing flexible work arrangements, undertook to pay all costs associated with COVID-19 testing and treatment, kept our team intact without layoffs or pay cuts, and continued clear and frequent communication. Utilizing our previous investment in technology and artificial intelligence, paired with policies providing flexibility, our team continued to lease apartments and fulfill service requests in a safe environment for both the team and our residents.

We also implemented enhanced cleaning procedures and physical distancing measures during the second quarter.

Seeing residents as individuals, each impacted differently by the pandemic and lockdown, our teammates have undertaken to speak to every resident in need, to listen, and to help each solve his or her problems.

We also seek to assist the communities where our residents and employees live and work. Since March, we have provided free temporary furnished housing for healthcare providers at 21 Fitzsimons on the Anschutz Medical Campus, Parc Mosaic near Boulder Community Health, and River Club near Newark University Hospital.

During the three months ended June 30, 2020, we estimate that we incurred $8.0 million of incremental costs related to additional interest costs resulting from our increased liquidity; incremental bad debt expense; lower commercial revenue; local restrictions on our ability to charge late fees; and enhanced cleaning and safety procedures and other COVID-19 related items.

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Since the outbreak of the COVID-19 pandemic and government lockdown, we have sold one community and entered into a contract to sell another, both at values greater than their respective gross asset value one year ago. We continue to monitor economic and market conditions and can provide no assurance that a prolonged recession will not result in lower property values and non-cash impairment losses.

As of June 30, 2020, we had $1.2 billion of cash and available credit, providing increased liquidity and financial flexibility.

Residential Rent Collection Update

In response to the economic effects of the COVID-19 pandemic and government lockdown, some jurisdictions where our communities are located, including Los Angeles, Philadelphia, and New York City, have enacted laws seeking to suspend contractual obligations of residents, including government-mandated deferrals, rent freezes, repayment extensions, fee abatement measures or concessions, and prohibitions on lease terminations or evictions for tenants. Some states and municipalities are also implementing rental assistance programs and encouraging landlord-tenant negotiations.

We measure residential rent collection as the amount of payments received as a percentage of all residential amounts billed. The table below represents the percentage of residential billed amounts for the three months ended June 30, 2020, and the month ended July 31, 2020.

	Three months ended			2020
	June 30, 2020			April			May			June			July
Payments received during the period		95.3	%		95.6	%		95.1	%		95.0	%		95.8	%
Payments received after period close		1.9	%		3.1	%		1.7	%		1.1	%	n/a
Total payments received as of July 31, 2020		97.2	%		98.7	%		96.8	%		96.1	%		95.8	%

During the three months ended June 30, 2020, we recognized 98.4% of all residential revenue, treating the balance of 1.6% as bad debt. Of the 98.4% of residential revenue recognized, we collected in cash all but 120 basis points. The amounts uncollected and not reserved as bad debt include balances collateralized by security deposits of approximately 70 basis points, or those considered collectable based on our review of individual customers’ credit of approximately 50 basis points, or $1.0 million.

In July, we recognized 98.4% of all residential revenue, treating the balance of 1.6% as bad debt. Of the 98.4% of residential revenue recognized, we collected 95.8% in cash, 30 basis points is collateralized by security deposits, and $1.6 million, or 2.3%, is expected to be collected in future periods, half of which is expected to be collected in August.

Results for the Three Months Ended June 30, 2020

The results from the execution of our business plan during the three months ended ~~September~~June 30, ~~2019,~~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 September~~As of June 30, ~~2019,~~2020, our portfolio included ~~128~~125 apartment communities with ~~33,824~~32,938 apartment homes in which we held an average ownership of approximately 99%.

Our property operations team, adapting to changing guidelines and regulations due to COVID-19, produced solid results for our portfolio for the three months ended ~~September~~June 30, ~~2019. Highlights~~2020. Same Store highlights include:

•

~~Same Store portfolio average daily occupancy~~Renewal rents increased 5.1%, whereas new lease rents decreased 2.4%, for a weighted-average increase of ~~96.8%, a 40 basis point increase over the same period in 2018;~~1.8%;

•

~~Same Store net operating income increased 4.1% with a net~~Net operating income margin ~~of 73.1%, a 20~~declined approximately 30 basis ~~point increase~~points year-over-year to 73.0% due to elevated bad debt expense and lower commercial revenue resulting from COVID-19 and the government lockdown, but increased approximately 40 basis points over the ~~three~~six months ended ~~September~~June 30, ~~2018;~~2020, as compared to 2019; and

•

~~Same Store rent increases on renewals~~Average daily occupancy of 95.5%, a year-over-year decline of approximately 140 basis points due primarily to reduced demand resulting from COVID-19 and ~~new leases averaged 4.6% and 2.5%, respectively, for a weighted average increase of 3.6%.~~the government lockdown.

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

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of negative 0.2%. During the three months ended June 30, 2020, Same Store controllable operating expenses decreased 6.3% compared to the three months ended June 30, 2019, due primarily to the timing of repairs, which were slowed during the lockdown.

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.

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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.

~~During the three months ended September 30, 2019,~~We execute redevelopments using a range of approaches. We prefer to limit risk by executing redevelopments using a short-cycle approach, in which we ~~invested $71.3 million~~renovate an apartment community in ~~redevelopment and development. We continued:~~

•

~~phased redevelopment activities at Bay Parc in Miami;~~

•

~~the full redevelopment of the North Tower at Flamingo Point in Miami Beach, Florida, 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 Elm Creek Townhomes in Elmhurst, Illinois.~~

At Parc Mosaic, we delivered the first building in August and, as of September 30, has leased 91% of its apartment homes. In late October, we completed construction of the second building and had leased more than half of its apartment homes. The remaining buildings are on schedule to be delivered by year end.

~~At 707 Leahy, we are on schedule to deliver the first building in the first quarter of 2020, and preleasing is underway.~~

~~At Flamingo Point, we began the full renovation of the North Tower and are on schedule to complete construction on the entryway, retail, and amenities by year end.~~

~~When possible, we prefer~~stages. These short-cycle redevelopments ~~that~~ can be completed one ~~unit~~apartment home at a time, when that ~~unit~~home is vacated and available for renovation, or one floor at a time, thereby limiting the number of down ~~units~~homes and lease-up risk. ~~During~~As a result, short-cycle redevelopments provide us the ~~three months ended September 30, 2019, we completed 71 units at six smaller phase projects throughout our portfolio with another 15 units under construction as of September 30, 2019. As~~flexibility to maintain current earnings while aligning the timing of the ~~nine months ended September 30, 2019,~~completed apartment homes with market demand. When short-cycle redevelopments are not possible, we ~~completed 129 units at~~may engage in redevelopment activities where an entire building or community is vacated. We refer to these ~~projects.~~as long-cycle redevelopments. 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 ~~September~~June 30, ~~2019,~~2020, we invested $62.3 million in redevelopment and development. We continued five long-cycle redevelopment and development projects already under construction, including the full redevelopment of the North Tower at Flamingo Point and 707 Leahy; and ground-up construction at The Fremont on the Anschutz Medical Campus; Eldridge Townhomes; and Prism. Our estimated cost to complete these projects is $151.0 million, an amount readily funded from our liquidity.

In the first quarter, we announced plans to pause our short-cycle redevelopments in response to COVID-19 and the government lockdown, and their potential economic ramifications. In June, with the economy beginning to reopen, we resumed short-cycle redevelopments at Bay Parc and the Center Tower at Flamingo Point. Our estimated cost to complete these projects is $13.4 million.

The following table summarizes our significant redevelopment and development communities as of June 30, 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		90		75		67	$	27.7	$	26.4	N/A	N/A
Flamingo Point Center Tower	Miami Beach, FL		58		18		13		16.0		3.9	N/A	N/A
Long-cycle redevelopments:
707 Leahy (4)	Redwood City, CA		110		12		41		25.0		21.7	1Q 2020	2Q 2022
Eldridge Townhomes (5)	Elmhurst, IL		58		18		29		35.1		31.0	2Q 2020	4Q 2022
Flamingo Point North Tower	Miami Beach, FL		366		—		—		171.0		64.4	4Q 2021	2Q 2024
The Fremont (6)	Denver, CO (MSA)		253		21		37		87.0		81.1	3Q 2020	1Q 2023
Parc Mosaic (7)	Boulder, CO		226		226		175		124.6		123.6	3Q 2019	1Q 2022
Prism (8)	Cambridge, MA		136		—		1		73.2		42.1	1Q 2021	3Q 2023
Total			1,297		370		363	$	559.6	$	394.2

(1)	Planned investment relates to the current phase of the redevelopment or development.

(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.

(4)	In May 2020, construction resumed following a five-week county-mandated work stoppage. We have completed construction on 43 apartment homes and leased 77% of those completed.

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(5)	As of July 31, 2020, 23 townhomes have been delivered and 91% of those have been leased. Construction is on track to deliver the remaining 35 townhomes by year end.

(6)	As of July 31, 2020, 86 apartment homes have been delivered and 49% have been leased. Completion is expected in the fourth quarter 2020.

(7)	Construction is substantially complete. As of July 31, 2020, we had leased 84% of the apartment homes at rents exceeding underwriting.

(8)	In June 2020, COVID-19 related construction bans by The City of Cambridge were lifted, allowing construction activities to resume. Completion of this community is expected in the first quarter of 2021.

As of June 30, 2020, our total estimated net investment at redevelopment and development communities is $559.6 million, of which we have funded $394.2 million. We expect to fund the remaining estimated net investment of $165.4 million on these communities in 2020 and future years, on a leverage-neutral basis, with proceeds from sales of apartment communities with lower forecasted free cash flow, or FCF, internal rates of return.

During the three months ended June 30, 2020, we leased ~~117~~59 redeveloped or newly developed apartment ~~homes at redevelopment communities.~~homes. As of ~~September~~June 30, ~~2019,~~2020, our exposure to lease-up at ~~active~~long-cycle redevelopment and development communities was ~~approximately 894~~809 apartment homes; 44 homes ~~or less than 3%~~where construction is complete, 289 homes expected to be delivered during the remainder of ~~our portfolio.~~2020, and 476 homes expected to be delivered in 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 nine months ended September 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 June 30, 2020:

Three Months Ended September 30,

2019

2018

Average revenue per Aimco apartment home (1)

$
2,262

$
2,131

Portfolio average rents as a percentage of local market average rents

113
%

113
%
Percentage A (3Q 2019 average revenue per Aimco apartment home $2,976)

52
%

51
%
Percentage B (3Q 2019 average revenue per Aimco apartment home $1,979)

30
%

33
%
Percentage C+ (3Q 2019 average revenue per Aimco apartment home $1,782)

18
%

16
%

Average revenue per Aimco apartment home (1)	$	2,254
Portfolio average rents as a percentage of local market average rents		112	%
Percentage A (average revenue per Aimco apartment home $2,942)		53	%
Percentage B (average revenue per Aimco apartment home $1,987)		29	%
Percentage C+ (average revenue per Aimco apartment home $1,758)		18	%

(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.

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Our average monthly revenue per apartment home was ~~$2,262~~$2,254 for the three months ended ~~September~~June 30, ~~2019, a 6%~~2020, representing an increase of approximately 2% compared to ~~2018.~~the same period in 2019. This increase is due primarily to growth in Same Store ~~revenue for the three months ended September 30, 2019 compared to 2018, as well as our acquisition activities,~~rent, lease-up of ~~redevelopment communities,~~redeveloped apartment homes, and ~~sales~~the sale of communities with average monthly ~~revenues~~rent per apartment home lower than those of the retained ~~portfolio.~~portfolio, offset partially by lower average fees and other revenue per home.

~~During the nine months ended September 30, 2019, we have reallocated capital from slower-growth markets such as Chicago and reinvested the proceeds~~We follow a disciplined paired trade policy in ~~higher-growth market such as Miami, Denver, and Boston.~~

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.

As we execute our portfolio strategy, we expect to increase average revenue per Aimco apartment home at a rate greater than market rent ~~growth;~~growth, increase ~~Free Cash Flow margins;~~FCF margins, and maintain sufficient geographic and price point diversification to limit volatility and concentration risk.

~~Acquisitions~~27

~~We evaluate potential acquisitions with an eye for unique and opportunistic investments, for example real estate transactions where the land is a significant percentage~~

Table of ~~the total value, and fund acquisitions pursuant to our strict “paired trade” discipline.~~Contents

Acquisitions

During the three months ended ~~September~~June 30, ~~2019,~~2020, we ~~acquired for $157 million a 95% ownership in 1001 Brickell Bay Drive, the 350,000 square foot office building and land contiguous to our Yacht Club Apartments.~~

Combined, Yacht Club and 1001 Brickell Bay Drive give us 4.25 acres, 600 linear feet of bay frontage, and the ability to increase density by 10% over what could be developed on the individual parcels. We are evaluating options to maximize returns and minimize risk on the monetization of our investment. In the meantime, we will earn income from the office building operations in excess of the lost income for those properties being sold to fund the investment.

Year-to-date, we have acquired three properties: One Ardmore in Ardmore, Pennsylvania; 50 Rogers Street, a community under construction in Cambridge, Massachusetts; and 1001 Brickell Bay Drive in Miami, Florida. These acquisitions have an expected weighted-average Free Cash Flow internal rate of return of approximately 9%, approximately 300 basis points better than expected from the properties being sold in paired trades to fund themade no acquisitions.

Dispositions

~~No dispositions were made during~~During the three months ended ~~September~~June 30, ~~2019.~~2020, we sold one apartment community located in Annandale, Virginia with 219 homes at a price of $58.9 million, 3% better than its estimated gross asset value one year prior. Net sales proceeds from this transaction were $36.9 million.

~~Year-to-date,~~In July, we ~~have~~accepted a non-refundable deposit on a community to be sold ~~eight properties generating net proceeds~~later in 2020, and agreed to sell this community at a price of ~~$418~~approximately $126 million, 3% better than its estimated gross asset value as of December 31, 2019. Proceeds from this transaction are expected to be used to ~~fund acquisitions, redevelopment and development, the repurchase of common shares in the fourth quarter of 2018, and general corporate uses.~~reduce leverage.

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, our term loan, and ~~outstanding preferred equity.~~

~~We are responding~~other leverage. Please refer to ~~today’s interest rates to extend duration, reduce refinancing risk, and lower our cost of debt.~~

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

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~~Leverage Ratios~~section for additional information regarding our leverage. Other leverage includes mezzanine equity instruments, including preferred OP Units and redeemable noncontrolling interests in a 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 September 30, 2019, are presented below:~~

		~~Leverage Ratios~~
~~Proportionate Debt to Adjusted EBITDAre~~		~~7.3x~~
~~Proportionate Debt and Preferred Equity to Adjusted EBITDAre~~		~~7.5x~~
~~Adjusted EBITDAre to Adjusted Interest Expense~~		~~3.6x~~
~~Adjusted EBITDAre to Adjusted Interest Expense and Preferred Dividends~~		~~3.5x~~

We calculate Adjusted EBITDAre and Adjusted Interest Expense used in our leverage ratios based on the most recent ~~three month~~three-month amounts, annualized. Our leverage ~~to EBITDAre~~ ratios ~~while above target,~~for the three months ended June 30, 2020, are ~~consistent with plan and expected to be 6.8x and 7.0x, respectively, by year end.~~presented below:

Proportionate Debt to Adjusted EBITDAre		7.9x
Net Leverage to Adjusted EBITDAre		8.1x
Adjusted EBITDAre to Adjusted Interest Expense		3.5x
Adjusted EBITDAre to Adjusted Interest Expense and Preferred Distributions		3.3x

~~In 2019, we retitled our Adjusted EBITDA measure~~Net Leverage to Adjusted EBITDAre increased by 0.4x from March 31, 2020, due primarily to a $6.1 million reduction in ~~our calculation of leverage ratios. The computation of~~quarterly Adjusted EBITDAre ~~has been modified~~primarily as a result of COVID-19 and the government lockdown.

We expect to meet our leverage target through a combination of property net operating income growth, including the $30 million of incremental net operating income we expect to receive from our ~~prior measure~~long-cycle redevelopment communities now underway, and through approximately $350 million of property sales, including the previously mentioned under-contract community, expected to ~~include amortization~~close in 2020. Depending upon the communities sold and the timing of ~~debt issuance costs~~sales, taxable gains may exceed our regular quarterly dividend. If so, our Board of Directors may declare a taxable stock dividend.

Under our revolving credit facility and term loan, we have agreed to maintain a fixed charge coverage ratio of 1.40x, as ~~a component of interest expense~~well as other covenants customary for similar revolving credit arrangements. For the trailing twelve months ended June 30, 2020, our fixed charge coverage ratio was 2.02x. We expect to remain 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. compliance with these covenants.

Please refer to the Leverage Ratios subsection of the Non-GAAP Measures section ~~below.~~

~~Refinancing Activity~~

~~During~~for further information about the ~~three months ended September 30, 2019, we financed $668.0 million~~calculation of ~~new non-recourse, fixed-rate property debt. These loans have a weighted-average interest rate of 3.34%, a weighted-average term to maturity of 11.4 years, and lower~~ our ~~annual cost of~~ leverage by approximately 10 basis points. We also rate-locked a $100.0 million fixed-rate, non-recourse, property loan with an eleven-year maturity and an interest rate of 3.21%, which is expected to close during the three months ending December 31, 2019.ratios.

Liquidity

~~We use our credit facility primarily for working capital and other short-term purposes and to secure letters of credit.~~ Our $1.2 billion liquidity consists of cash and restricted cash balances and available capacity on our revolving ~~line of credit.~~credit facility. As of ~~September~~June 30, ~~2019,~~2020, we had cash and restricted cash, excluding amounts related to tenant security deposits, of ~~$93.2~~$428.4 million and had the capacity to borrow up to ~~$792.8~~$793.5 million on our revolving credit facility, after consideration of ~~$7.2~~$6.5 million of letters of credit backed by the facility.

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We manage our financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt. ~~At September~~As of June 30, ~~2019,~~2020, we held unencumbered ~~apartment~~ communities with an estimated fair ~~market~~ value of approximately ~~$2.4~~$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.

Financing Activity

During the three months ended June 30, 2020, we placed $608.8 million of new property debt, generating incremental proceeds of $370.6 million, and closed the refinancing of another $79.9 million in July 2020. The loans have a weighted-average term to maturity of 9.3 years and a weighted-average interest rate of 2.9%, lowering our weighted-average borrowing cost of leverage to 3.69%. We addressed all of our 2020 loan maturities and reduced 2021 to 2024 maturities by 18%, resulting in average annual maturities of $262 million remaining for the four years.

Also during the three months ended June 30, 2020, we secured a $350.0 million term loan. Proceeds from the loan were primarily used to repay borrowings on our $800.0 million revolving credit facility. Please refer to the Leverage and Capital Resources section for further information about the terms of our term loan.

Equity Capital Activities

On ~~October 29, 2019,~~July 28, 2020, our Board of Directors declared a quarterly cash ~~dividends~~dividend of ~~$0.39~~$0.41 per share of ~~Class A~~ Common Stock, ~~for the quarter ended September 30, 2019, representing~~ an increase of 3%5% compared to the regular quarterly dividends paid in ~~2018.~~2019. This amount is payable on ~~November 29, 2019,~~August 28, 2020, to stockholders of record on ~~November 15, 2019.~~August 14, 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~~2020, we were one of only ~~seven~~six recognized as a “Top ~~Place to Work”~~Workplace” in Colorado for each of the past ~~seven years. Aimco was also recognized as a Top Workplace in the Bay Area in 2019. Also in 2019, Aimco was the~~eight years, and were one of only two real estate ~~company~~companies to receive a BEST award from the Association for Talent Development in recognition of our company-wide success in talent development, marking our ~~second~~third consecutive year receiving this award.

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~~Key Financial Indicators~~

The key financial indicators that we use in managing our business and in evaluating our operating performance are Economic Income, our measure of long-term total return, and 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.

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, on a dilutive basis, decreased by $0.14 during the three months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018,~~2019, due primarily ~~due~~ to ~~lower~~fewer gains from ~~dispositions.~~dispositions and more prepayment penalties incurred during second quarter refinancing activity undertaken to increase liquidity and to benefit from current interest rates.

Pro forma FFO per share ~~was up $0.01~~increased $0.03 during the three months ended June 30, 2020, compared to 2019, due primarily to the contribution from communities in lease-up, the net contribution from the Parkmerced mezzanine loan, and lower general and administrative expenses; offset partially by impacts of the pandemic and government lockdown mentioned previously and by “drag”, or lower contribution, from Redevelopment communities under construction.

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We have not excluded from Pro forma FFO and AFFO $8.0 million, or $0.05 per share, for the following COVID-19 related impacts: $2.6 million of net incremental interest expense primarily on our $350.0 million term loan, which we secured to increase liquidity; $2.5 million of incremental bad debt expense; $1.5 million of lower commercial revenue; $0.6 million of lower other income, resulting from local restrictions on our contractual right to charge late fees; and $0.8 million of other amounts resulting from COVID-19. Additionally, we have not excluded from Pro forma FFO and AFFO for the six months ended June 30, 2020, the write-off of $2.9 million of our straight-line rent receivables for certain commercial tenants for which collectability of future rent is uncertain and $2.2 million of deferred broker commissions related to the same commercial tenants.

AFFO per share increased $0.04 for the three months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018~~2019, due primarily to the ~~following items:~~

•

~~$0.03 contribution from Same Store property net operating income growth of 4.1%, driven by a 3.8% increase in revenue, offset by a 3.1% increase in expenses;~~

•

~~$0.02 lower cost of leverage; offset by~~

•

~~($0.02) contribution eliminated following the 2018 Asset Management business paired trade, net of the benefit of reinvestment in apartment communities with higher long-term growth prospects; and~~

•

($0.02) other net items, including contributions from investments in accretive acquisitions, redevelopment, and development, offset by sales of lower-growth apartment communities to fund these investments, and reduced tax benefit.

~~AFFO per share was flat for the three months ended September 30, 2019 compared to 2018 due to the $0.01~~$0.03 increase in Pro forma FFO per share ~~offset by a~~and $0.01 ~~increase in~~due to lower capital replacement spending. For the year ended December 31, 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.

Detailed Results of Operations for the Three and Six Months Ended ~~September~~June 30, ~~2019~~2020, Compared to ~~September~~June 30, ~~2018~~2019

Net income ~~attributable to Aimco~~ decreased by ~~$568.0~~$26.8 million and $309.1 million during the three and six months ended ~~September~~June 30, ~~2019 as~~2020, compared to ~~2018. Net income attributable to the Aimco Operating Partnership decreased by $598.1 million during the three months ended September 30,~~ 2019, respectively, as ~~compared to 2018. Details regarding the decreases in net income are~~ described more fully below.

Property Operations

~~As further described below, we~~We have ~~four~~three segments: (i) Same Store, (ii) Redevelopment and Development, and (iii) 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 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 and Other Real Estate segment ~~includes those~~includes: (i) communities that we have acquired since the beginning of a two-year comparable ~~period. Our Other Real Estate segment primarily includes apartment~~period; (ii) communities that are subject to limitations on rent ~~increases,~~increases; (iii) communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for ~~sale,~~sale; (iv) communities that we expect to redevelop; and (v) certain ~~retail spaces and 1001 Brickell Bay Drive.~~commercial spaces.

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As of ~~September~~June 30, ~~2019,~~2020, our Same Store segment included ~~95 Same Store~~94 apartment communities with ~~27,640~~27,876 apartment homes.

From December 31, ~~2018~~2019, to ~~September~~June 30, ~~2019,~~2020, on a net basis, our Same Store segment increased by ~~two~~three apartment communities and ~~1,735~~1,227 apartment homes. These changes consisted of:

•

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~~reduction of ~~one~~three apartment ~~community~~communities 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~~974 apartment homes that we ~~separated into a newly branded stand-alone community from an existing community that was previously~~have classified in ~~the Redevelopment~~Acquisition 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~~Other Real Estate, as we ~~commenced redevelopment during the period~~are planning to redevelop these communities; and ~~were reclassified to the Redevelopment and Development segment;~~

•

the reduction of one apartment community with 78219 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 apartment communities with 1,823 apartment homes that were~~was sold as of ~~September~~June 30, ~~2019.~~2020.

As of ~~September~~June 30, ~~2019:~~2020, our Redevelopment and Development segment included ~~seven~~eight apartment communities with ~~3,137~~2,521 apartment ~~homes;~~homes, and our Acquisition ~~segment included seven apartment communities with 1,590 apartment homes;~~ and ~~our~~ Other Real Estate segment included 1519 apartment communities with ~~1,315~~2,399 apartment homes and one office building.

We use proportionate property net operating income to assess the operating performance of our communities. Proportionate property net operating income reflects our share of rental and other property revenues, excluding ~~resident~~ utility ~~reimbursement,~~reimbursements, less direct property operating expenses, net of ~~resident~~ utility ~~reimbursement,~~reimbursements, for consolidated communities. Accordingly, the results of operations of our segments discussed below are presented on a proportionate basis and exclude the results of four apartment 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.~~expenses.

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Proportionate Property Net Operating Income

The results of our segments for the three months ended June 30, 2020 and 2019, as presented below, are based on segment classifications as of June 30, 2020.

	Three Months Ended June 30,
(in thousands)	2020		2019		$ Change			% Change
Rental and other property revenues, before utility reimbursements:
Same Store	$	180,779	$	182,816	$	(2,037	)		(1.1	%)
Redevelopment and Development		11,589		12,695		(1,106	)		(8.7	%)
Acquisition and Other Real Estate		17,415		14,097		3,318			23.5	%
Total		209,783		209,608		175			0.1	%
Property operating expenses, net of utility reimbursements:
Same Store		48,720		48,893		(173	)		(0.4	%)
Redevelopment and Development		4,912		4,990		(78	)		(1.6	%)
Acquisition and Other Real Estate		6,485		5,431		1,054			19.4	%
Total		60,117		59,314		803			1.4	%
Proportionate property net operating income:
Same Store		132,059		133,923		(1,864	)		(1.4	%)
Redevelopment and Development		6,677		7,705		(1,028	)		(13.3	%)
Acquisition and Other Real Estate		10,930		8,666		2,264			26.1	%
Total	$	149,666	$	150,294	$	(628	)		(0.4	%)

For the three months ended June 30, 2020, compared to 2019, our Same Store proportionate property net operating income decreased by $1.9 million, or 1.4%. This decrease was attributable primarily to a $2.0 million, or 1.1%, decrease in rental and other property revenues due to $2.1 million, or 120 basis point, increase in bad debt and $1.1 million, or 70 basis point, reduction in other rental income due to local restrictions on our contractual right to charge late fees, and an approximately 140-basis point decrease in average daily occupancy. This decrease was offset partially by a 250 basis point increase in average residential rents. Same Store property operating expenses decreased $0.2 million for the three months ended June 30, 2020, compared to 2019, due primarily to a $1.6, or 6.3%, decrease in controllable operating expenses, which exclude utility costs, real estate taxes, and insurance.

Redevelopment and Development proportionate property net operating income decreased by $1.0 million, or 13.3%, for the three months ended June 30, 2020, compared to 2019. This decrease was attributable primarily to de-leasing in 2019 at Flamingo Point and 707 Leahy in preparation for redevelopment, offset partially by increased occupancy driven by the lease-up at Parc Mosaic.

Acquisition and Other Real Estate proportionate property net operating income increased by $2.3 million, or 26.1%, for the three months ended June 30, 2020, compared to 2019, due to the lease-up of One Ardmore acquired in April 2019 and the acquisition of 1001 Brickell Bay Drive in July 2019, offset partially by a decrease in revenues related to commercial tenants due to the economic impacts of COVID-19 and the government lockdown.

The results of our segments for the six months ended June 30, 2020 and 2019, as presented below, are based on segment classifications as of June 30, 2020.

	Six Months Ended June 30,
(in thousands)	2020		2019		$ Change			% Change
Rental and other property revenues, before utility reimbursements:
Same Store	$	367,564	$	363,187	$	4,377			1.2	%
Redevelopment and Development		23,502		26,708		(3,206	)		(12.0	%)
Acquisition and Other Real Estate		36,174		28,210		7,964			28.2	%
Total		427,240		418,105		9,135			2.2	%
Property operating expenses, net of utility reimbursements:
Same Store		97,154		97,519		(365	)		(0.4	%)
Redevelopment and Development		9,599		10,245		(646	)		(6.3	%)
Acquisition and Other Real Estate		13,061		10,547		2,514			23.8	%
Total		119,814		118,311		1,503			1.3	%
Proportionate property net operating income:
Same Store		270,410		265,668		4,742			1.8	%
Redevelopment and Development		13,903		16,463		(2,560	)		(15.6	%)
Acquisition and Other Real Estate		23,113		17,663		5,450			30.9	%
Total	$	307,426	$	299,794	$	7,632			2.5	%

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

Three Months Ended September 30,

(in thousands)
2019

2018

$ Change

% Change

Rental and other property revenues, before utility reimbursements:

Same Store
$
179,056

$
172,426

$
6,630

3.8
%
Redevelopment and Development

17,891

19,876

(1,985
)

(10.0
%)
Acquisition

10,656

10,630

26

0.2
%
Other Real Estate

13,389

9,475

3,914

41.3
%
Total

220,992

212,407

8,585

4.0
%
Property operating expenses, net of utility reimbursements:

Same Store

48,220

46,751

1,469

3.1
%
Redevelopment and Development

7,469

7,242

227

3.1
%
Acquisition

3,317

2,826

491

17.4
%
Other Real Estate

5,149

3,652

1,497

41.0
%
Total

64,155

60,471

3,684

6.1
%
Proportionate property net operating income:

Same Store

130,836

125,675

5,161

4.1
%
Redevelopment and Development

10,422

12,634

(2,212
)

(17.5
%)
Acquisition

7,339

7,804

(465
)

(6.0
%)
Other Real Estate

8,240

5,823

2,417

41.5
%
Total
$
156,837

$
151,936

$
4,901

3.2
%

~~For the three months ended September 30, 2019~~2020, compared to ~~2018,~~2019, our Same Store proportionate property net operating income increased by ~~$5.2~~$4.7 million, or ~~4.1%~~1.8%. This increase was attributable primarily ~~attributable~~ to a ~~$6.6~~$4.4 million, or ~~3.8%~~1.2%, increase in rental and other property revenues due primarily to ~~higher~~a 270 basis point increase in average ~~revenues of $72 per Aimco apartment home comprised of increases~~residential rents, offset partially by a 60 basis point increase in ~~rental rates~~bad debt and a 40 basis point ~~increase~~reduction in ~~average daily occupancy. Renewal rents, which is the rent paid by an existing resident who renewed a lease compared~~other rental income due to ~~the rent paid prior~~local restrictions on our contractual right to renewal, were up 4.6%, 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 2.5%, resulting in a weighted-average increase of 3.6%. The increase incharge late fees. Same Store ~~rental and other property revenues was partially offset by a $1.5 million, or 3.1%, increase in~~ property operating expenses ~~primarily due~~decreased by $0.4 million, contributing to ~~higher real estate taxes, partially offset~~the proportionate property net operating income growth, driven by a $2.4 million, or 4.9%, decrease in ~~utilities expense, net. During the three months ended September 30, 2019 compared to 2018,~~ controllable operating expenses, ~~which exclude utility costs,~~offset primarily by an increase in real estate taxes and ~~insurance, decreased by $0.2 million, or 0.8%.~~insurance.

Redevelopment and Development proportionate property net operating income decreased by ~~$2.2~~$2.6 million, or ~~17.5%~~15.6%, for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018.~~2019. This decrease was attributable primarily ~~attributable~~ to de-leasing in 2019 at Flamingo Point and 707 Leahy in preparation for redevelopment, offset partially ~~offset~~ by increased occupancy ~~and higher average revenue per apartment home~~ driven by the lease-up at ~~Park Towne Place.~~Parc Mosaic.

Acquisition and Other Real Estate proportionate property net operating income increased by ~~$2.4~~$5.5 million, or ~~41.5%~~30.9%, for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018 primarily~~2019, due to the ~~acquisition~~lease-up of ~~the 1001 Brickell Bay Drive property in July 2019.~~

~~Detailed Results of Operations for the Nine Months Ended September 30, 2019 Compared to September 30, 2018~~

Net income attributable to Aimco decreased by $318.2 million during the nine months ended September 30, 2019 as compared to 2018. Net income attributable to the Aimco Operating Partnership decreased by $333.6 million during the nine months ended September 30, 2019 as compared to 2018. Details regarding the decreases in net income are described more fully below.

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

Nine Months Ended September 30,

(in thousands)
2019

2018

$ Change

% Change

Rental and other property revenues, before utility reimbursements:

Same Store
$
529,550

$
509,357

$
20,193

4.0
%
Redevelopment and Development

57,408

56,436

972

1.7
%
Acquisition

30,886

18,567

12,319

66.3
%
Other Real Estate

32,130

28,164

3,966

14.1
%
Total

649,974

612,524

37,450

6.1
%
Property operating expenses, net of utility reimbursements:

Same Store

142,124

139,417

2,707

1.9
%
Redevelopment and Development

21,786

20,678

1,108

5.4
%
Acquisition

9,144

5,224

3,920

75.0
%
Other Real Estate

12,940

11,179

1,761

15.8
%
Total

185,994

176,498

9,496

5.4
%
Proportionate property net operating income:

Same Store

387,426

369,940

17,486

4.7
%
Redevelopment and Development

35,622

35,758

(136
)

(0.4
%)
Acquisition

21,742

13,343

8,399

62.9
%
Other Real Estate

19,190

16,985

2,205

13.0
%
Total
$
463,980

$
436,026

$
27,954

6.4
%

For the nine months ended September 30, 2019 compared to 2018, our Same Store proportionate property net operating income increased by $17.5 million, or 4.7%. This increase was primarily attributable to a $20.2 million, or 4.0%, increase in rental and other property revenues due to higher average revenues of $69 per Aimco apartment home comprised of increases in rental rates and an 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 4.9% 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 3.5%. The increase in Same Store rental and other property revenues was partially offset by a $2.7 million, or 1.9%, 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 nine months ended September 30, 2019 compared to 2018, controllable operating expenses, which exclude utility costs, real estate taxes and insurance, decreased by $0.3 million, or 0.4%.

Acquisition proportionate property net operating income increased by $8.4 million or 62.9%, for the nine months ended September 30, 2019 compared to 2018. This increase was primarily attributable to a full period of operating activity at communitiesOne Ardmore acquired in ~~2018~~April 2019 and ~~2019, compared to five months of operations for the four Philadelphia communities during the nine months ended September 30, 2018.~~

~~Other Real Estate proportionate property net operating income increased by $2.2 million, or 13.0%, for the nine months ended September 30, 2019 compared to 2018, primarily due to~~ the acquisition of 1001 Brickell Bay Drive in July 2019, offset partially ~~offset~~ by ~~increases~~a decrease in ~~repairs~~revenues related to commercial tenants due to the economic impacts of COVID-19 and ~~maintenance expense, real estate taxes, and personnel expenses.~~government lockdown.

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~~

During the six months ended June 30, 2020, we recognized a $2.9 million write-off of straight-line rent receivables due to the ~~condensed consolidated financial statements~~impact of COVID-19 and government lockdown, and the resulting economic impact on our commercial tenants. No similar write-off was recognized in ~~Item 1.~~2019.

~~For the three months ended September 30, 2019 and September 30, 2018, casualty losses totaled $0.5 million and $0.8 million, respectively, and included several minor claims.~~

For the nine months ended September 30, 2019, casualty losses totaled $4.5 million and included large claims related to fires and water and winter storm damage, and several minor claims. For the nine months ended September 30, 2018, casualty losses totaled $2.4 million and included several claims primarily related to winter storm damage, partially offset by recovery from insurance carriers for insured losses in excess of policy limits.

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Net operating income decreased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018,~~2019, by ~~$8.4~~$4.0 million and ~~$30.1~~$11.7 million, respectively, due to the sale of apartment communities in ~~2018~~2020 and 2019.

For the three and nine months ended September 30, 2019 compared to 2018, net operating income decreased by $5.8 million and $29.0 million, respectively, due to the 2018 sale of our Asset Management business.

Depreciation and Amortization

For the three and six months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018,~~2019, depreciation and amortization expense increased by ~~$1.1~~$5.8 million, or ~~1.2%~~6.3%, and $12.7 million, or 6.8%, respectively, due primarily ~~due~~ to ~~depreciation and amortization related to properties~~communities acquired in ~~2018 and~~ 2019, ~~and renovated~~redeveloped apartment homes placed in service after completion of construction, and the write-off of deferred leasing costs. This increase was offset partially ~~offset~~ by ~~the reduction of~~decreases in depreciation associated with apartment communities sold and assets fully depreciated in ~~2018~~2020 and 2019. For the nine months ended September 30, 2019 compared to 2018, depreciation and amortization decreased by $3.4 million, or 1.2%, primarily due to the reduction of depreciation expense associated with communities owned by partnerships served by our Asset Management business, which was sold in 2018, and depreciation associated with apartment communities sold 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 ~~nine~~three and six months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018,~~2019, general and administrative expenses decreased ~~$2.9~~by $1.8 million, or ~~7.7%~~15.7%, and $1.5 million, or 7.1%, respectively, due primarily ~~due~~ to ~~timing of~~a decrease in personnel ~~costs, partially offset by an increase in travel expenses.~~costs.

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 three months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018,~~2019, other expenses, net, were relatively flat.

For the six months ended June 30, 2020, compared to 2019, other expenses, net decreased by ~~$1.4~~$2.9 million, or ~~23.7%~~32.8%, due primarily to a favorable incremental cash receipt in the first quarter of 2020 related to a previous settlement and lower ground lease expense, offset partially by unrealized losses on our interest rate derivative.

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Interest Income

Interest income for the three months ended June 30, 2020, compared to 2019, was relatively flat.

Interest income for six months ended June 30, 2020, compared to 2019, increased $1.6 million, or 27.2%, due primarily to ~~reduced legal fees associated with 2018 Airbnb litigation.~~a gain recognized on the early payoff of a seller financing note.

Interest Expense

For the three ~~and nine~~ months ended ~~September~~June 30, ~~2019~~2020, compared to ~~2018,~~2019, interest expense ~~which includes the amortization of debt issuance costs, decreased $3.5~~increased by $9.3 million, or ~~7.7%~~23.4%, due primarily to refinancing activity and ~~$20.2~~interest expense related to our term loan. As a result of our refinancing activity, we incurred prepayment penalties, offset partially by more favorable interest rates on refinanced fixed rate debt.

For the six months ended June 30, 2020, compared to 2019, interest expense increased by $9.2 million, or ~~14.1%~~11.4%, ~~respectively,~~ due primarily to ~~lower~~refinancing activity and interest ~~on property-level debt following refinancing and debt payoff activity, including the 2018 repayment of~~expense related to our term loan, offset partially ~~offset~~ by an increase in capitalized interest related to our active redevelopments and developments. As a result of our refinancing activity, we incurred prepayment penalties, ~~and~~offset partially by more favorable interest rates on ~~property-level debt assumed in connection with our acquisition of 1001 Brickell Bay Drive and the Philadelphia portfolio.~~refinanced fixed rate debt.

Gain on Dispositions of Real Estate ~~and the Asset Management Business~~

~~The table below summarizes dispositions of apartment communities from our portfolio during~~During the three and ~~nine~~six months ended ~~September~~June 30, 2020, we sold one apartment community with 219 apartment homes for a gain on disposition of $47.2 million and net proceeds of $36.9 million.

During the three months ended June 30, 2019, we sold one apartment community with 399 apartment homes for a gain on disposition of $64.3 million and ~~2018 (dollars~~net proceeds of $78.1 million. During the six months ended June 30, 2019, we sold eight apartment communities with 2,605 apartment homes for a gain on dispositions of $355.8 million and net proceeds of $418.3 million.

The apartment community sold in ~~millions):~~2020 was in a lower-rated location within our primary markets and had average revenues per apartment home significantly below those of our retained portfolio.

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Number of apartment communities sold

—

1

8

4

Gross proceeds

$
—

$
170.4

$
487.6

$
242.3

Net proceeds (1)

—

165.5

418.3

235.9

Gain on dispositions (2)

1.1

122.6

356.9

175.9

~~(1)~~

Mezzanine Investment Income, Net

On November 26, 2019, we loaned $275.0 million to the partnership owning Parkmerced Apartments. During the three and six months ended June 30, 2020, we recognized $6.9 million and $13.7 million, respectively, of income in connection with the mezzanine loan. For the six months ended June 30, 2020, we have received a cash payment of $0.6 million.

We have accrued all interest amounts due as required by GAAP. Our loan is secured by approximately $300 million of borrower equity junior to our loan. In the event we determine that a portion of the loan or accrued interest is not collectable, we will cease income recognition and, if appropriate, recognize an impairment.

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

~~(2)~~

~~During the three months ended September 30, 2019, gain on dispositions includes the expiration of indemnification liabilities related to the sale of our Asset Management business.~~

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

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business ~~and four Hunters Point apartment communities~~ that offset REIT taxable income, primarily from retained capital gains; and (c) historic tax credits that offset income tax obligations of our TRS entities. Income taxes related to these items, 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 ~~September~~June 30, ~~2019,~~2020, we ~~incurred~~recognized income tax benefit of ~~$3.1~~$2.9 million, compared to a $1.8 million benefit during the same period in 2019. The change is due primarily to income tax benefit associated with 1001 Brickell Bay Drive, offset partially by decreased benefit due to lower net operating losses at communities held by TRS entities.

For the six months ended June 30, 2020, we recognized income tax benefit of $6.1 million, compared to income tax ~~expense~~provision of ~~$26.2~~$1.2 million during the same period in ~~2018.~~2019. The change is due primarily ~~due~~ to income tax provision on the gain ~~related to the 2018 sale~~on dispositions of ~~the Asset Management business and lower historic tax credits generated~~real estate in 2019 ~~partially offset by the release of a previously established valuation allowance as a result of the sale. For the nine months ended September 30, 2019 compared to 2018,~~and an income tax benefit associated with 1001 Brickell Bay Drive, offset partially by decreased ~~by $10.7 million primarily~~benefit due to ~~a tax benefit recognized in connection with a 2018 intercompany transfer~~lower net operating losses at communities held by TRS entities.

Table of assets related to our Asset Management business and the release of the valuation allowance described above, partially offset by tax on 2018 dispositions and lower historic tax credits generated in 2019.Contents

~~Noncontrolling Interests in Consolidated Real Estate Partnerships~~

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

The amount of net income 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 three months ended September 30, 2019, we attributed net loss of $0.1 million, and we attributed net income of $1.8 million for the same period during 2018. The amounts attributed to noncontrolling interests resulting from operations of the consolidated apartment communities were $0.1 million net loss and $0.1 million net income for the three months ended September 30, 2019 and 2018, respectively. Additionally, we attributed the gain on the sale of an apartment community to noncontrolling interests totaling $1.7 million during the three months ended September 30, 2018.

For the nine months ended September 30, 2019 and 2018, we attributed net income of $0.1 million and $8.0 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 $0.1 million and $0.2 million for the nine months ended September 30, 2019 and 2018, respectively. Additionally, we attributed the gain on the sales of apartment communities to noncontrolling interests totaling $7.8 million during the nine months ended September 30, 2018.

~~Noncontrolling Interests 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 September 30, 2019 compared to 2018, net income attributed to noncontrolling interests in the Aimco Operating Partnership decreased by $30.1 million. For the nine months ended September 30, 2019 compared to 2018, net income attributed to noncontrolling interests in the Aimco Operating Partnership decreased by $15.3 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 increased due to the issuance of OP Units as partial consideration for the acquisition of apartment 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.

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.

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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.

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.

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 2020 Pro forma FFO, we made the following adjustments to Nareit FFO:

•

Prepayment penalties: as a result of debt refinancing activity, we incurred debt extinguishment costs. We excluded these costs from Pro forma FFO because we believe these costs are not representative of ongoing operating performance.

•

Straight-line rent: in 2018, we assumed a 99-year ground lease with scheduled rent increases. Due to the terms of the lease, GAAP rent expense will exceed cash rent payments until 2076. We include the cash rent payments for this

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

•

Severance costs, litigation, and other, net: during the three months ended June 30, 2020, we incurred an unrealized loss on a derivative agreement and incurred other non-recurring costs. We excluded the unrealized loss and other costs from Pro forma FFO because we believe they are not representative of current operating performance. The unrealized loss and costs are included in other expenses, net, on our condensed consolidated statements of operations.

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

•

Preferred equity redemption related costs: Onon 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 and other: In 2018, we assumed a 99-year ground lease with scheduled rent increases. Due to the terms of the lease, GAAP rent expense will exceed cash rent payments until 2076. We include the cash rent payments for this ground lease in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. The rent expense for this lease is included in other expenses, net, in our condensed consolidated statements of operations. Straight-line rent and other also includes other insignificant costs not representative of ongoing operating performance.rent: as described above.

•

~~Litigation: During 2018, we were engaged~~Severance costs, litigation, and other, net: 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 are included in other expenses, net, in our condensed consolidated statements of operations.

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•

~~Severance and restructuring costs: In~~ 2019, we incurred severance and restructuring costs, ~~in connection~~and costs related to our litigation with ~~office closures.~~Airbnb. We excluded ~~such costs~~these amounts from Pro forma FFO because we believe these costs are not representative of operating performance.

•

Prepayment penalties: As a result of refinancing activity in 2019, we incurred debt extinguishment costs. We excluded such costs from Pro forma FFO because we believe these costs are not representative of ongoing operating performance.

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

•

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

•

Tax benefit due to valuation allowance release: Due to the sale of the Asset Management business in 2018, we determined that a valuation allowance was no longer necessary. We excluded the effect of the establishment of the valuation allowance from Pro forma FFO and, as such, excluded the benefit from its release.

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 toat 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.

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net income attributable to Aimco common stockholders (1)

$
2,003

$
567,029

$
332,805

$
651,371

Adjustments:

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

95,199

94,166

276,353

279,798

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

(1,146
)

(624,521
)

(356,929
)

(671,761
)
Income tax adjustments related to gain on dispositions and
   other tax-related items (2)

415

54,448

7,151

23,813

Common noncontrolling interests in Aimco Operating
   Partnership’s share of above adjustments

(4,931
)

24,130

3,962

18,963

Amounts allocable to participating securities

(142
)

626

101

529

Nareit FFO attributable to Aimco common stockholders – diluted

$
91,398

$
115,878

$
263,443

$
302,713

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

     Preferred equity redemption related amounts

—

—

3,864

—

     Litigation

—

2,727

147

4,633

     Severance and restructuring costs

1,226

67

1,699

1,282

     Prepayment penalties

1,604

—

1,604

—

     Tax benefit due to valuation allowance release

—

(19,349
)

—

(19,349
)
     Change in lease accounting

—

(870
)

—

(2,239
)
     Straight-line rent and other

874

—

3,815

—

Pro forma FFO attributable to Aimco common stockholders –
   diluted

$
95,102

$
98,453

$
274,572

$
287,040

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

(11,434
)

(9,898
)

(34,273
)

(30,006
)
AFFO attributable to Aimco common stockholders – diluted

$
83,668

$
88,555

$
240,299

$
257,034

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

148,636

152,193

147,692

152,086

     Adjustment to weight reverse stock split (4)

—

4,745

828

4,750

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

148,636

156,938

148,520

156,836

     Net income attributable to Aimco per common share – diluted

$
0.01

$
3.73

$
2.26

$
4.28

     FFO per share – diluted

$
0.61

$
0.76

$
1.78

$
1.99

     Pro forma FFO per share – diluted

$
0.64

$
0.63

$
1.85

$
1.83

     AFFO per share – diluted

$
0.56

$
0.56

$
1.62

$
1.64

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income attributable to Aimco common stockholders (1)	$	39,212		$	59,234		$	45,891		$	330,802
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest		95,109			89,780			192,901			181,154
Gain on dispositions and other, net of noncontrolling partners’ interest		(47,238	)		(64,310	)		(47,204	)		(355,783	)
Income tax adjustments related to gain on dispositions and other tax-related items		152			210			378			6,736
Common noncontrolling interests in Aimco Operating Partnership’s share of above adjustments		(2,446	)		(1,356	)		(7,542	)		8,893
Amounts allocable to participating securities		(15	)		(73	)		(54	)		243
Nareit FFO attributable to Aimco common stockholders	$	84,774		$	83,485		$	184,370		$	172,045
Adjustments, all net of common noncontrolling interests in Aimco Operating Partnership and participating securities:
Prepayment penalties		6,203			—			6,203			—
Straight-line rent		633			634			1,268			2,946
Preferred equity redemption related amounts		—			3,864			—			3,864
Severance costs, litigation, and other, net		1,731			595			1,731			620
Pro forma FFO attributable to Aimco common stockholders	$	93,341		$	88,578		$	193,572		$	179,475
Capital Replacements, net of common noncontrolling interests in Aimco Operating Partnership and participating securities		(11,403	)		(13,134	)		(23,008	)		(22,845	)
AFFO attributable to Aimco common stockholders	$	81,938		$	75,444		$	170,564		$	156,630

Total share and dilutive share equivalents used to calculate Net income and Nareit FFO per share (2)		148,553			148,599			148,670			147,220
Adjustment to weight reverse stock split (3)		—			—			—			1,242
Pro forma shares and dilutive share equivalents used to calculate Pro forma FFO and AFFO per share		148,553			148,599			148,670			148,462

Net income attributable to Aimco per common share – diluted	$	0.26		$	0.40		$	0.31		$	2.25
Nareit FFO per share – diluted	$	0.57		$	0.56		$	1.24		$	1.17
Pro forma FFO per share – diluted	$	0.63		$	0.60		$	1.30		$	1.21
AFFO per share – diluted	$	0.55		$	0.51		$	1.15		$	1.06

(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 tax-related items for the three months ended September 30, 2018, included the reversal of a $33.3 million deferred tax asset related to an intercompany transfer of assets, which was realized upon the sale of the Asset Management business. The remaining income tax provision of $21.1 million related to the tax on the gain on the sale. For the nine months ended September 30, 2018, income tax related to gain on dispositions and other tax-related items included tax on the gain on the 2018 sale of the Asset Management business, as well as tax on the gain on the sale of apartment communities during the nine months ended September 30, 2018.

~~(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 nine months ended September 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.

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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.~~

~~Please refer to the Liquidity and Capital Resources section for further information regarding our capital investing activities, including Capital Replacements.~~2019.

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.

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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.~~facility, and our term loan. 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 ~~September~~June 30, ~~2019,~~2020, is as follows (in thousands):

				June 30, 2020
Total indebtedness	$	4,254,710		$	4,892,183
Adjustments:
Debt issue costs related to non-recourse property debt		21,701
Debt issuance costs related to non-recourse property debt and term loan					23,490
Proportionate share adjustments related to debt obligations of consolidated and unconsolidated partnerships		(11,150	)		(7,639	)
Cash and restricted cash		(93,225	)		(442,508	)
Tenant security deposits included in restricted cash					14,074
Proportionate share adjustments related to cash and restricted cash held by consolidated and unconsolidated partnerships		1,139			874
Securitization trust investment		(92,892	)
Securitization trust investment and other					(97,311	)
Proportionate Debt	$	4,080,283		$	4,383,163

Preferred Equity		101,178
Proportionate Debt and Preferred Equity	$	4,181,461
Preferred OP Units					96,449
Redeemable noncontrolling interests in consolidated real estate partnership					4,492
Net Leverage				$	4,484,104

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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

•

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

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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 ~~September~~June 30, ~~2019,~~2020, as used in our leverage ratios, is as follows (in thousands):

				Three Months Ended
				June 30, 2020
Net income	$	3,970		$	43,204
Adjustments:
Interest expense		42,011			48,802
Income tax benefit		(3,096	)		(2,879	)
Depreciation and amortization		97,538			97,689
Gain on disposition of real estate		(1,146	)
Gain on dispositions of real estate					(47,238	)
Adjustment related to EBITDAre of unconsolidated partnerships		212			212
EBITDAre	$	139,489		$	139,790
Net income attributable to noncontrolling interests in Aimco Operating Partnership		58
Net loss attributable to noncontrolling interests in consolidated real estate partnerships					17
EBITDAre adjustments attributable to noncontrolling interests		(649	)		(513	)
Interest income received on securitization investment		(2,084	)		(2,216	)
Straight-line rent and other (1)		924
Severance and restructuring costs (2)		1,296
Non-cash straight-line rent					633
Pro forma adjustments, net (1)					1,491
Adjusted EBITDAre	$	139,034		$	139,202
Annualized Adjusted EBITDAre	$	556,136		$	556,808

(1)	~~Straight-line rent and other also includes other costs excluded from~~ Adjusted EBITDAre ~~that we believe are not representative~~has been calculated on a pro forma basis to reflect the disposition of ~~ongoing operating performance.~~

~~(2)~~

We incurred severance and restructuring costs in connection with office closures in 2019. We excluded such costs from Adjusted EBITDAre because we believe these costs are not representative of operating performance.one apartment community during the period as if the transaction closed on April 1, 2020, as well as other items affecting quarterly results for which annualization would distort results.

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We ~~calculate~~calculated 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.~~borrowings and term loan. 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.

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.

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

				Three Months Ended
				June 30, 2020
Interest expense	$	42,011		$	48,802
Adjustments:
Proportionate share adjustments related to interest of consolidated and unconsolidated partnerships		(104	)		(84	)
Debt prepayment penalties and other non-interest items		(1,703	)
Debt prepayment penalties					(6,537	)
Interest income earned on securitization trust investment		(2,084	)		(2,216	)
Adjusted Interest Expense	$	38,120		$	39,965
Preferred dividends		1,933
Adjusted Interest Expense and Preferred Dividends	$	40,053
Preferred distributions					1,859
Adjusted Interest Expense and Preferred Distributions				$	41,824
Annualized Adjusted Interest Expense	$	152,480		$	159,860
Annualized Adjusted Interest Expense and Preferred Dividends	$	160,212
Annualized Adjusted Interest Expense and Preferred Distributions				$	167,296

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.

As of June 30, 2020, our available liquidity was approximately $1.2 billion. We have commitments for, and expect to spend, $151 million on long-cycle redevelopment and development projects underway.

Our ~~principal uses~~available liquidity consists of:

•

$398.4 million in cash and cash equivalents;

•

$30.0 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

•

$793.5 million of available capacity to borrow under our revolving credit facility after consideration of $6.5 million of letters of credit backed by the facility.

Additional liquidity may also be provided through property debt financing at properties unencumbered by debt. As of June 30, 2020, we held unencumbered communities with an estimated fair market value of approximately $2.3 billion.

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. Additionally, we expect to meet our liquidity requirements associated with our debt maturities. Our revolving credit facility matures on January 22, 2022, and our term loan matures on April 20, 2021, prior to consideration of its one-year extension option.

AsThe following table summarizes the payments due under our non-recourse property debt commitments, excluding debt issuance costs, as of ~~September~~June 30, ~~2019, our primary sources of liquidity were as follows:~~2020 (in thousands):

•

~~$58.7~~ ~~million in cash and cash equivalents;~~

•

~~$34.5~~ ~~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~~

•

~~$792.8~~ ~~million of capacity to borrow under our revolving credit facility.~~

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

4,565,673

123,707

873,971

577,229

2,990,766

~~As of September 30, 2019, we held unencumbered apartment communities with an estimated fair market value of approximately $2.4 billion.~~

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During the six months ended June 30, 2020, we placed $608.8 million of new property debt and refinanced another $79.9 million in July. These financings generated incremental proceeds of $370.6 million.

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 ~~September~~June 30, ~~2019,~~2020, approximately ~~97.7%~~91% of our leverage consisted of property-level, non-recourse, long-dated, amortizing debt. Approximately ~~96.0%~~99% 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 ~~8.1~~7.7 years. On average, ~~6.7%~~6.2% of our unpaid principal balances will mature each year from ~~2020~~2021 through ~~2022.~~2023.

During the three months ended September 30, 2019, we financed $668.0 million of new non-recourse, fixed-rate property debt. These loans have a weighted-average interest rate of 3.34%, a weighted-average term to maturity of 11.4 years, and lower our annual cost of leverage by approximately 10 basis points. We also rate-locked a $100.0 million fixed-rate, non-recourse, property loan with an eleven-year maturity and an interest rate of 3.21%, which is expected to close during the three months ended December 31, 2019.

~~The following table summarizes the payments due under our non-recourse property debt commitments, excluding debt issue costs, as of September 30, 2019 (in thousands):~~

Total

Less than One Year

1-3 Years

3-5 Years

More than Five Years

Non-recourse property debt
$
4,276,411

$
21,999

$
1,192,676

$
1,016,171

$
2,045,565

While our primary source of leverage is property-level, non-recourse, long-dated, fixed-rate, amortizing debt, we also have a credit facility with a syndicate of financial institutions. As of ~~September~~June 30, ~~2019,~~2020, we had no outstanding borrowings under our revolving credit facility and had capacity to borrow up to ~~$792.8~~$793.5 million after consideration of ~~$7.2~~$6.5 million of letters of credit backed by the facility.

During the three months ended June 30, 2020, we amended our Second Amended and Restated Senior Secured Credit Agreement to include a $350.0 million term loan. The term loan represents approximately 7% of our total leverage, includes a one-year extension option, and bears interest at 30-day LIBOR plus 185-basis points with a 50-basis point LIBOR floor.

As of ~~September~~June 30, ~~2019,~~2020, our outstanding preferred OP Units represented approximately ~~2.3%~~2% 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.~~ units.

The combination of non-recourse property-level debt, borrowings under our revolving credit facility, ~~and~~term loan, 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 ~~8.8~~7.3 years as of ~~September~~June 30, ~~2019.~~2020.

Under the revolving credit facility and term loan, 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 ~~September~~June 30, ~~2019,~~2020, our Fixed Charge Coverage ratio was ~~2.12x, compared to a ratio of 2.01x for the trailing twelve month period ended September 30, 2018.~~2.02x. We expect to remain in compliance with this covenant during the next 12 months.

We like the discipline of financing our investments in real estate through the use of fixed-rate, amortizing, non-recourse property debt, as the amortization gradually reduces our leverage and reduces our refunding risk, and the fixed-rate provides a hedge against increases in interest rates, and the non-recourse feature avoids entity risk.

Changes in Cash, Cash Equivalents, and Restricted Cash

The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing and financing activities, which are presented in our condensed consolidated statements of cash flows ~~included~~ in Item 1 of this report.

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Operating Activities

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, net cash provided by operating activities was ~~$278.7~~$184.4 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 ~~nine~~six months ended ~~September~~June 30, ~~2019 decreased~~2020, increased by ~~$24.2~~$14.3 million

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compared to ~~2018,~~2019, due to higher contribution from our Same Store, Acquisition, and Other Real Estate communities, offset partially by lower net operating income associated with ~~apartment~~ communities sold and the Asset Management business sold in 2018, offset by improved operating results of our Same Store communities and increased contribution from our Acquisition and Other Real Estate communities.sold.

Investing Activities

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, our net cash used in investing activities of ~~$16.0~~$160.1 million consisted primarily of capital expenditures, partially offset by proceeds from the disposition of ~~eight~~one apartment community.

Total capital additions at apartment communities ~~partially offset by the acquisitions of 1001 Brickell Bay Drive, One Ardmore and 50 Rogers and capital expenditures.~~

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

~~Capital additions for our segments~~ totaled ~~$303.7~~$177.5 million and ~~$238.3~~$177.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, 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.

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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 ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, are presented below (in thousands):

	Nine Months Ended September 30,						Six Months Ended June 30,
	2019			2018			2020		2019
Capital replacements	$	29,601		$	22,089		$	18,521	$	18,886
Capital improvements		17,550			8,771			4,648		6,100
Capital enhancements		67,642			75,235			16,683		41,057
Redevelopment additions		74,732			94,566
Development additions		93,462			30,229
Redevelopment								69,512		41,240
Development								60,198		55,611
Initial capital expenditures		15,279			2,631			2,203		11,052
Casualty capital additions		5,475			4,735
Total capital additions		303,741			238,256
Plus: additions related to consolidated Asset Management communities and apartment communities sold or held for sale		958			16,827
Casualty								5,709		3,750
Total apartment community capital additions							$	177,474	$	177,696
Plus: additions related to commercial spaces								1,650		106
Plus: additions related to apartment communities sold or held for sale								49		3,550
Consolidated capital additions		304,699			255,083		$	179,173	$	181,352
Plus: net change in accrued capital spending and capitalized stock compensation		(11,950	)		(1,934	)
Plus: net change in accrued capital spending								3,175		(4,864	)
Capital expenditures per condensed consolidated statement of cash flows	$	292,749		$	253,149		$	182,348	$	176,488

For the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we capitalized ~~$8.0~~$7.1 million and ~~$5.7~~$4.5 million ~~respectively,~~ of interest costs, respectively, and ~~$26.9~~$18.1 million and ~~$26.8~~$17.6 million ~~respectively,~~ of other direct and indirect ~~costs.~~costs, respectively.

We invested ~~$67.6~~$16.7 million in capital enhancements ~~during the nine months ended September 30, 2019,~~ and ~~we anticipate a full year investment ranging from $85 million to $95 million.~~

~~Redevelopment and Development~~

Our total estimated incremental net investment in approved and active redevelopment and development is $577.5 million with a projected weighted average net operating income yield on these investments of 5.3%, assuming untrended rents. Of this total, $264.2 million has been funded. We expect to fund the remaining redevelopment and development investment through a combination of leverage and proceeds from community sales.

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 September 30, 2019 (dollars in millions):

Location

Apartment
Homes
Approved for
Redevelopment

Estimated
Net
Redevelopment
Investment

Inception
-to-Date
Net Investment

Bay Parc

Miami, FL

105

$
28.3

$
24.1

When possible, we prefer redevelopments that can be completed one unit at a time, when that unit is vacated and available for renovation, or one floor at a time, thereby limiting the number of down units and lease-up risk. During the three months ended September 30, 2019, we completed 71 units at six smaller phase projects throughout our portfolio with another 15 units under construction as of September 30, 2019. As of the nine months ended September 30, 2019, we completed 129 units at these projects.

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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 September 30, 2019 (dollars in millions):

Location

Apartment
Homes Approved
for Redevelopment
or Development

Estimated
Net
Redevelopment
Investment

Inception
-to-Date
Net
Investment

Expected
Stabilized
Occupancy

Expected
NOI
Stabilization
707 Leahy

Redwood City, CA

110

$
23.7

$
6.6

3Q 2020

4Q 2021
Elm Creek Townhomes

Elmhurst, IL

58

35.1

12.2

2Q 2021

3Q 2022
Flamingo Point

Miami Beach, FL

886

280.0

57.9

4Q 2022

1Q 2024
The Fremont

Denver, CO (MSA)

253

87.0

49.4

3Q 2021

4Q 2022
Parc Mosaic

Boulder, CO

226

123.4

114.0

4Q 2020

1Q 2022
Total

1,533

$
549.2

$
240.1

Net investment represents the total actual or estimated investment, net of tax and other credits earned as a direct result of our redevelopment or development of the community. For phased redevelopments, potential net investment relates to the current phase of the redevelopment.

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

~~NOI Stabilization represents the period in which we expect the communities to achieve stabilized rents and operating costs, generally five quarters after occupancy stabilization.~~

~~During the nine months ended September 30, 2019, we invested $168.2~~$129.7 million in redevelopment and ~~development. We continued:~~

•

~~phased redevelopment activities at Bay Parc~~development during the six months ended June 30, 2020. Capital enhancement spend decreased $24.4 million for the six months ended June 30, 2020, compared to 2019, due primarily to the delay of certain capital projects in response to the potential economic impacts of COVID-19 and the government lockdown. The increase in ~~Miami;~~

•

~~the full~~ redevelopment spending is driven by the full redevelopments of ~~the North Tower at~~ Flamingo Point ~~in Miami Beach, Florida, and 707 Leahy in Redwood City, CA; 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.~~

At Parc Mosaic, we delivered the first building in August and, as of September 30, had leased 91% of its apartment homes. In late October, we completed construction of the second building and had leased more than half of its apartment homes. The remaining buildings are on schedule to be delivered by year end.

~~At 707 Leahy, we are on schedule to deliver the first building in the first quarter 2020, and preleasing is underway.~~

~~At Flamingo Point, we began the full renovation of the~~ North Tower and ~~are on schedule to complete construction on the entryway, retail, and amenities by year end.~~

~~During the nine months ended September 30, 2019, we leased 176 apartment homes at redevelopment communities. As of September 30, 2019,~~707 Leahy. Further details regarding our ~~exposure to lease-up at active~~ redevelopment and development activities, including apartment communities ~~was approximately 894 apartment homes, or less than 3%~~constructed and delivered as of ~~our portfolio.~~June 30, 2020, is discussed in the Executive Overview section above.

Financing Activities

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, our net cash ~~used in~~provided by financing activities of ~~$242.1~~$240.5 million was attributed to the items discussed ~~below.~~

~~Net repayments on our revolving credit facility of $160.4 million primarily relate to the timing of apartment community acquisitions and dispositions and of property debt financing activities.~~

~~Principal payments on property loans during the period totaled $390.3 million, consisting of scheduled principal amortization of $58.0 million and repayments of $332.3 million.~~below:

Proceeds from non-recourse property debt ~~borrowings~~ during the period consisted of the closing of nine fixed-rate, amortizing, non-recourse property loans totaling ~~$668.0~~$608.8 million.

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~~Redemption of Preferred Stock of $125.0 million represents the cash paid upon redemption of our Class A Perpetual Preferred Stock~~Principal payments on non-recourse property debt during the ~~nine~~period totaled $274.3 million, consisting of $45.1 million of scheduled principal amortization and $229.2 million of repayments.

Proceeds of $350.0 million from the term loan that closed during the three months ended ~~September~~June 30, ~~2019.~~2020.

Net repayments on our revolving credit facility of $275.0 million are due primarily to proceeds from our term loan and property debt financing activities.

Aimco common share repurchases during the six months ended June 30, 2020, totaled $10.0 million.

Net cash ~~used in~~provided by financing activities also includes ~~$202.9~~$132.7 million of payments to equity holders, as further detailed in the ~~table~~tables below.

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Equity and Partners’ Capital Transactions

The following table presents the Aimco Operating Partnership’s distribution activity (including distributions paid to Aimco) during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 (in thousands):

Cash distributions paid by the Aimco Operating Partnership to preferred unitholders ~~(1)~~	$	9,047	$	3,728
Cash distributions paid by the Aimco Operating Partnership to common unitholders ~~(2)~~(1)		193,530		128,851
Cash distributions paid to holders of noncontrolling interests in consolidate real estate partnerships		309
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships				118
Total cash distributions paid by the Aimco Operating Partnership	$	202,886	$	132,697

(1)	$~~3.2~~122.1 million represented distributions to Aimco, and ~~$5.8~~$6.8 million represented distributions paid to holders of ~~OP Units.~~

~~(2)~~

~~$183.3 million represented distributions to Aimco, and $10.2 million represented distributions paid to holders of~~common OP Units.

The following table presents Aimco’s ~~dividends paid to Aimco stockholders~~dividend and ~~OP Unit holders~~distribution activity during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 (in thousands):

Cash distributions paid to holders of OP Units	$	16,011	$	10,521
Cash distributions paid to holders of noncontrolling interests in consolidated real estate partnerships		309		118
Cash dividends paid by Aimco to preferred stockholders		3,247
Cash dividends paid by Aimco to common stockholders		183,319		122,058
Total cash dividends and distributions paid by Aimco	$	202,886	$	132,697

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~~June 30, 2020, on a consolidated basis, we had approximately $69.5 million of ~~this report, there have been no material changes from the market~~variable-rate property-level debt outstanding in addition to our $350.0 million term loan. 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 $4.2 million on an annual basis.

As of June 30, 2020, we had approximately $442.5 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 ~~third~~second 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

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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

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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 ~~third~~second 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.

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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, exceptions to contractual obligations 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 operations or those of entities in which we hold a partial interest (including our interest in the partnership that owns Parkmerced Apartments), 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 control incremental costs associated with COVID-19;

•

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, our communities, and the operations of entities in which we hold a partial interest (including our interest in the partnership that owns Parkmerced Apartments), 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 September 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 ~~September~~June 30, ~~2019, approximately 57,000~~2020, Aimco issued 158,938 shares of Common Stock ~~were issued~~ in exchange for ~~common~~ OP Units in these transactions. ~~All~~

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 repurchases by Aimco of its common equity securities during the three months ended ~~September~~June 30, ~~2019.~~2020. Aimco’s Board of Directors has, from time to time, authorized Aimco to repurchase shares of its outstanding ~~capital stock.~~Common Stock. As of ~~September~~June 30, ~~2019,~~2020, Aimco was authorized to repurchase approximately ~~10.6~~10.4 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

The Aimco Operating Partnership did not issue any unregistered OP ~~Units~~units during the three months ended ~~September~~June 30, ~~2019.~~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 ~~September~~June 30, ~~2019,~~2020, approximately ~~57,000~~158,938 common OP Units were redeemed in exchange for shares of 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 for the three months ended ~~September~~June 30, ~~2019.~~

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)
July 1, 2019 - July 31, 2019

8,249

$
50.77

N/A

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

4,624

$
50.78

N/A

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

3,419

$
50.75

N/A

N/A
Total

16,292

$
50.77

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, 2020 ‒ April 30, 2020		24	$	43.59	N/A	N/A
May 1, 2020 ‒ May 31, 2020		7,407		36.52	N/A	N/A
June 1, 2020 ‒ June 30, 2020		19		38.56	N/A	N/A
Total		7,450	$	36.55

(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.

~~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,~~FFO 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.

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~~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)

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 ~~September~~June 30, ~~2019,~~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 equity and partners’ capital; (v) condensed consolidated statements of cash flows; and ~~(v)~~(vi) 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~~

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SIGNATURES

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

	APARTMENT INVESTMENT AND MANAGEMENT COMPANY

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

	AIMCO PROPERTIES, L.P.

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

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

Date: ~~November~~August 4, ~~2019~~2020

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	3,970		$	603,917		$	365,261		$	706,763
Other comprehensive income:
Unrealized (losses) gains on available for sale debt securities		(402	)		979			(325	)		(72	)
Losses on interest rate swaps reclassified into earnings from accumulated other comprehensive loss		—			757			—			1,391
Other comprehensive (loss) income		(402	)		1,736			(325	)		1,319
Comprehensive income		3,568			605,653			364,936			708,082
Comprehensive income attributable to noncontrolling interests		(1,967	)		(34,020	)		(24,671	)		(48,015	)
Comprehensive income attributable to Aimco common stockholders	$	1,601		$	571,633		$	340,265		$	660,067

	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 June 30, 2018	$	125,000	$	1,489,941		$	42,828		$	1,657,769		$	(2,984	)	$	1,654,785
Redemption of partnership units held by non-Aimco partners		—		—			(847	)		(847	)		—			(847	)
Amortization of share-based compensation		—		1,804			456			2,260			—			2,260
Effect of changes in ownership of partnership units		—		(753	)		753			—			—			—
Other, net		—		(2	)		—			(2	)		—			(2	)
Net income		—		569,991			30,198			600,189			1,794			601,983
Change in accumulated other comprehensive income		—		1,642			94			1,736			—			1,736
Distributions paid to common unitholders		—		(59,793	)		(3,429	)		(63,222	)		—			(63,222	)
Distributions paid to preferred unitholders		—		(2,148	)		—			(2,148	)		—			(2,148	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—		—			—			—			(415	)		(415	)
Balances at September 30, 2018	$	125,000	$	2,000,682		$	70,053		$	2,195,735		$	(1,605	)	$	2,194,130

Balances at June 30, 2019	$	—	$	1,763,218		$	82,366		$	1,845,584		$	(2,718	)	$	1,842,866
Redemption of partnership units held by non-Aimco partners		—		2,821			(3,647	)		(826	)		—			(826	)
Amortization of share-based compensation		—		1,163			795			1,958			—			1,958
Effect of changes in ownership of partnership units and consolidated entities		—		(5,104	)		2,789			(2,315	)		2,315			—
Contribution from noncontrolling interest in consolidated real estate partnerships		—		—			—			—			4,911			4,911
Purchase of noncontrolling interest in consolidated real estate partnerships		—		—			—			—			(2,863	)		(2,863	)
Other, net		—		(175	)		—			(175	)		—			(175	)
Net income		—		1,979			116			2,095			(58	)		2,037
Change in accumulated other comprehensive income		—		(378	)		(24	)		(402	)		—			(402	)
Distributions paid to common unitholders		—		(58,065	)		(3,280	)		(61,345	)		—			(61,345	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—		—			—			—			(87	)		(87	)
Balances at September 30, 2019	$	—	$	1,705,459		$	79,115		$	1,784,574		$	1,500		$	1,786,074

	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		—			—			(8,458	)		(8,458	)		—			(8,458	)
Amortization of share-based compensation		—			6,285			1,236			7,521			—			7,521
Effect of changes in ownership of partnership units		—			(18,137	)		8,036			(10,101	)		—			(10,101	)
Other, net		—			119			—			119			—			119
Net income		—			658,820			34,093			692,913			8,045			700,958
Change in accumulated other comprehensive income		—			1,247			72			1,319			—			1,319
Distributions paid to common unitholders		—			(179,351	)		(9,402	)		(188,753	)		—			(188,753	)
Distributions paid to preferred unitholders		—			(6,445	)		—			(6,445	)		—			(6,445	)
Distributions paid to noncontrolling interests in consolidated real estate partnerships		—			—			—			—			(7,934	)		(7,934	)
Balances at September 30, 2018	$	125,000		$	2,000,682		$	70,053		$	2,195,735		$	(1,605	)	$	2,194,130

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		—			6,244			(11,202	)		(4,958	)		—			(4,958	)
Amortization of share-based compensation		—			4,795			2,387			7,182			—			7,182
Effect of changes in ownership of partnership units and consolidated entities		—			(12,123	)		8,766			(3,357	)		3,357			—
Contribution from noncontrolling interest in consolidated real estate partnerships		—			—			—			—			4,911			4,911
Purchase of noncontrolling interest in consolidated real estate partnerships		—			—			—			—			(3,780	)		(3,780	)
Other, net		—			(117	)		—			(117	)		19			(98	)
Net income		—			340,571			18,787			359,358			103			359,461
Change in accumulated other comprehensive income		—			(306	)		(19	)		(325	)		—			(325	)
Distributions paid to common unitholders		—			(183,579	)		(9,827	)		(193,406	)		—			(193,406	)
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		—			—			—			—			(143	)		(143	)
Balances at September 30, 2019	$	—		$	1,705,459		$	79,115		$	1,784,574		$	1,500		$	1,786,074

Balance, December 31, 2018	$	101,291
Distributions to holders of preferred OP Units		(5,800	)
Redemption of preferred OP Units and other		(113	)
Net income attributable to preferred OP Units		5,800
Balance, September 30, 2019	$	101,178

	Three Months Ended September 30, 2018										Nine Months Ended September 30, 2018
	As Previously Reported		Adjustments				As Revised				As Previously Reported			Adjustments				As Revised
Income tax benefit (expense)	$	27,941		$	(54,147	)		$	(26,206	)		$	69,724		$	(57,107	)		$	12,617
Gain on dispositions of real estate and the Asset Management business		572,085			54,147				626,232				622,631			57,107				679,738

Purchase price	$	156,750
Capitalized transaction costs		2,339
Noncontrolling interests in consolidated real estate partnerships		8,250
Total consideration (1)	$	167,339

Acquisition costs allocated to land	$	145,648
Acquisition costs allocated to building and improvements		153,241
Acquisition costs allocated to intangible assets		16,500
Acquisition costs allocated to intangible liabilities		(6,519	)
Deferred tax liability assumed (2)		(141,531	)
Total consideration	$	167,339

Number of apartment homes		110

Purchase price (1)	$	65,833
Capitalized transaction costs		892
Total consideration	$	66,725

Acquisition costs allocated to land	$	4,929
Acquisition costs allocated to building (2)		61,271
Acquisition costs allocated to furniture and fixtures (2)		525
Total consideration	$	66,725

Apartment communities sold		8
Apartment homes sold		2,605
Gain on dispositions of real estate	$	356,929

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Fixed lease income	$	213,945	$	639,359
Variable lease income		15,005		42,814
Total lease income	$	228,950	$	682,173

October 1, 2019 to December 31, 2019	$	7,200
2020		26,861
2021		23,391
2022		19,910
2023		16,081
Thereafter		65,583
Total	$	159,026

	Office Lease Future Minimum Rent			Ground Lease Future Minimum Rent			Total Operating Lease Future Minimum Rent
October 1, 2019 to December 31, 2019	$	852		$	529		$	1,381
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		21,438			432,471			453,909
Less: Discount		(3,091	)		(354,941	)		(358,032	)
Total lease liability	$	18,347		$	77,530		$	95,877

	September 30, 2019		December 31, 2018
VIEs with interests in apartment communities		6		9
Apartment communities owned by VIEs		6		9
Apartment homes in communities owned by VIEs		2,056		3,592

	Three Months Ended September 30,
	2019			2018
Average revenue per Aimco apartment home (1)	$	2,262		$	2,131
Portfolio average rents as a percentage of local market average rents		113	%		113	%
Percentage A (3Q 2019 average revenue per Aimco apartment home $2,976)		52	%		51	%
Percentage B (3Q 2019 average revenue per Aimco apartment home $1,979)		30	%		33	%
Percentage C+ (3Q 2019 average revenue per Aimco apartment home $1,782)		18	%		16	%

	Total				Less than One Year				1-3 Years				3-5 Years				More than Five Years
Non-recourse property debt	$	4,276,411			$	21,999			$	1,192,676			$	1,016,171			$	2,045,565

	Location	Apartment Homes Approved for Redevelopment or Development		Estimated Net Redevelopment Investment		Inception -to-Date Net Investment		Expected Stabilized Occupancy	Expected NOI Stabilization
707 Leahy	Redwood City, CA		110	$	23.7	$	6.6	3Q 2020	4Q 2021
Elm Creek Townhomes	Elmhurst, IL		58		35.1		12.2	2Q 2021	3Q 2022
Flamingo Point	Miami Beach, FL		886		280.0		57.9	4Q 2022	1Q 2024
The Fremont	Denver, CO (MSA)		253		87.0		49.4	3Q 2021	4Q 2022
Parc Mosaic	Boulder, CO		226		123.4		114.0	4Q 2020	1Q 2022
Total			1,533	$	549.2	$	240.1