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 30, ~~2021~~ 2022


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

For the transition period from to

Commission File Number: 1-13232 (Apartment Investment and Management Company)

Commission File Number: 0-56223 (Aimco OP L.P.)

Apartment Investment and Management Company

Aimco OP L.P.

(Exact name of registrant as specified in its charter)


Maryland (Apartment Investment and Management Company)		84-1259577
Delaware (Aimco OP L.P.)		85-2460835
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)	��	Identification No.)

4582 South Ulster Street, Suite 1450
Denver, Colorado		80237
(Address of principal executive offices)		(Zip Code)

~~(303)~~ (303) 224-7900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

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


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

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

None (Apartment Investment and Management Company)

Partnership Common Units (Aimco OP L.P.)

(title of each class)

Indicate by check mark 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~~ ☒Yes ☒ No ☐		Aimco OP L.P.: ~~Yes~~ ☒Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Apartment Investment and Management Company: ~~Yes~~ ☒Yes ☒ No ☐		Aimco OP L.P.: ~~Yes~~ ☒Yes ☒ No ☐

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

Apartment Investment and Management Company:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

Aimco OP L.P.:


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

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


Apartment Investment and Management Company:	☐		Aimco OP L.P.:	☒

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

~~Table of Contents~~


Apartment Investment and Management Company: Yes ☐ No ☒		Aimco OP L.P.: Yes ☐ No ☒

The number of shares of Apartment Investment and Management Company Class A Common Stock outstanding as of November ~~8, 2021: 152,237,788~~4, 2022: 151,632,179

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EXPLANATORY NOTE

~~On December 15, 2020,~~

Apartment Investment and Management Company (“Aimco” or “the Company”), a Maryland corporation, is a self-administered and self-managed real estate investment trust, or REIT. On December 15, 2020, Aimco completed the separation of its business into two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp. (“AIR”). The separation was effected by way of a pro rata distribution, in which stockholders of Aimco received one share of Class A common stock of AIR for every one share of Class A common stock of Aimco held as of the close of business on December 5, 2020. Apartment Income REIT,, L.P. (“AIR Operating Partnership”), formerly known as “Aimco Properties, L.P.” until July 7, 2021, also completed a pro rata distribution of all of the outstanding common limited partnership units of Aimco OP L.P. (“Aimco Operating Partnership” and such units, ~~“Aimco OP~~“OP Units”) to holders of AIR Operating Partnership common limited partnership units and AIR Operating Partnership Class I High Performance partnership units as of the close of business on December 5, 2020. The transactions described in this paragraph are collectively referred to as the “Separation” and are governed by the terms of the Separation and Distribution Agreement (the “Separation Agreement”).

Notwithstanding the legal form of the Separation, for accounting and financial reporting purposes, Aimco is presented as being spun-off from AIR. This presentation is in accordance with generally accepted accounting principles in the United States and is due primarily to the relative significance of Aimco’s business, as measured in terms of revenue, net income, assets, and other relevant indicators, as compared to those indicators for AIR before the Separation. Therefore, Aimco is considered “spun” for accounting purposes and AIR is considered the divesting entity and treated as the accounting spinner, or accounting predecessor. A separate capital structure did not exist since the assets, liabilities and operations of Aimco prior to the Separation (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”) were spread across multiple legal entities. Events noted in this filing as occurring before December 15, 2020 were those entered into by Aimco Predecessor. The historical financial statements of Aimco do not represent the financial position and results of operations of one legal entity, but rather a combination of entities under common control that have been “carved out” from Aimco Predecessor’s financial statements.

This filing combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 2021, of Aimco and Aimco Operating Partnership. Where it is important to distinguish between the two entities, we refer to them specifically. Otherwise, references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.

~~Aimco, a Maryland corporation, is a self-administered and self-managed real estate investment trust, or REIT.~~ Aimco, through a ~~wholly-owned~~wholly owned subsidiary, is the general partner and directly is the special limited partner of Aimco Operating Partnership. As of September 30, ~~2021,~~2022, Aimco owned ~~93.1%~~92.7% of the legal interest in the common partnership units of Aimco Operating Partnership and 95.0% of the economic interest in Aimco Operating Partnership. The remaining ~~6.9%~~7.3% legal interest is owned by limited partners. As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.

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

This filing combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 2022, of Aimco and Aimco Operating Partnership. Where it is important to distinguish between the two entities, we refer to them specifically. Otherwise, references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.

We believe combining the periodic reports of Aimco and Aimco Operating Partnership into this single report provides the following benefits:

•

We present our business as a whole, in the same manner our management views and operates the business;

•

We eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosures apply to both Aimco and Aimco Operating Partnership; and

•

We save time and cost through the preparation of a single combined report rather than two separate reports.

•

~~We present our business as a whole, in the same manner our management views and operates the business;~~

•

~~We eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosures apply to both Aimco and Aimco Operating Partnership; and~~

•

~~We save time and cost through the preparation of a single combined report rather than two separate reports.~~

We operate Aimco and Aimco Operating Partnership as one enterprise; the management of Aimco directs the management and operations of Aimco Operating Partnership; and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, is managed by Aimco.

We believe it is important to understand the few differences between Aimco and Aimco Operating Partnership in the context of how Aimco and Aimco Operating Partnership operate as a consolidated company. Aimco has no assets or liabilities other than its investment in Aimco Operating Partnership. Also, Aimco is a corporation that issues publicly traded equity from time to time, whereas Aimco Operating Partnership is a partnership that has no publicly traded equity. Except for the net proceeds from stock offerings by Aimco, which are contributed to Aimco Operating Partnership in exchange for additional

~~Table of Contents~~

limited partnership interests (of a similar type and in an amount equal to the shares of stock sold in the offering), Aimco Operating Partnership generates all remaining capital required by its business. These sources include Aimco Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility, the issuance of debt and equity securities, including additional partnership units, and proceeds received from the sale of real estate.

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Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the condensed consolidated financial statements of Aimco and those of Aimco Operating Partnership. Interests in Aimco Operating Partnership held by entities other than Aimco, which we refer to as ~~Aimco~~ OP Units, are classified within partners’ capital in Aimco Operating Partnership’s condensed consolidated financial statements and as noncontrolling interests in Aimco’s condensed consolidated financial statements.

To help investors understand the differences between Aimco and Aimco Operating Partnership, this report provides: separate condensed consolidated financial statements for Aimco and Aimco Operating Partnership; a single set of condensed consolidated notes to such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, and earnings per share or earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for Aimco and Aimco Operating Partnership in order to establish that the requisite certifications have been made and that Aimco and Aimco Operating Partnership are both compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO OP L.P.

TABLE OF CONTENTS

FORM 10-Q


		Page
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Apartment Investment and Management Company:
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Aimco OP L.P.:
	Condensed Consolidated Balance Sheets (Unaudited)	9
	Condensed Consolidated Statements of Operations (Unaudited)	10
	Condensed Consolidated Statements of Partners’ Capital (Unaudited)	11
	Condensed Consolidated Statements of Cash Flows (Unaudited)	13
	Notes to the Condensed Consolidated Financial Statements of Apartment Investment and Management Company and Aimco OP L.P. (Unaudited)	14
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	29
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4041
ITEM 4.	CONTROLS AND PROCEDURES	4041
	PART II. OTHER INFORMATION
ITEM 1A.	RISK FACTORS	4243
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4243
ITEM 6.	EXHIBITS	4445
Signatures		4547

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	September 30,			December 31,
	2021			2020			September 30, 2022			December 31, 2021
ASSETS
Buildings and improvements	$	1,202,279		$	995,116		$	1,248,005		$	1,257,214
Land		534,092			505,153			639,272			534,285
Total real estate		1,736,371			1,500,269			1,887,277			1,791,499
Accumulated depreciation		(545,499	)		(495,010	)		(516,857	)		(561,115	)
Net real estate		1,190,872			1,005,259			1,370,420			1,230,384
Cash and cash equivalents		253,138			289,582			206,366			233,374
Restricted cash		9,623			9,153			19,075			11,208
Mezzanine investment		330,016			307,362			362,788			337,797
Interest rate options								61,448			25,657
Right-of-use lease assets		439,229			98,280			95,506			429,768
Other assets, net		171,317			130,856			180,641			165,913
Total assets	$	2,394,195		$	1,840,492		$	2,296,244		$	2,434,101

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	485,116		$	447,967		$	859,593		$	483,137
Construction loans, net		138,439			0			80,816			163,570
Notes payable to AIR		534,127			534,127			—			534,127
Total indebtedness		1,157,682			982,094			940,409			1,180,834
Deferred tax liabilities		126,851			131,560			121,344			124,747
Lease liabilities		448,886			100,496			98,467			435,093
Accrued liabilities and other		95,943			62,988			125,132			97,400
Total liabilities		1,829,362			1,277,138			1,285,352			1,838,074

Redeemable noncontrolling interest in consolidated real estate partnership		4,304			4,263
Redeemable noncontrolling interests in consolidated real estate partnerships								158,135			33,794
Commitments and contingencies (Note 4)
Equity:
Common Stock, $0.01 par value, 510,587,500 shares authorized, 149,803,000 and 149,036,263 shares issued/outstanding at September 30, 2021 and December 31, 2020, respectively		1,498			1,490
Common Stock, $0.01 par value, 510,587,500 shares authorized at both September 30, 2022 and December 31, 2021, and 149,124,466 and 149,818,021 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively								1,492			1,498
Additional paid-in capital		518,913			515,127			514,341			521,842
Accumulated deficit		(21,377	)		(16,839	)
Retained Earnings (accumulated deficit)								250,996			(22,775	)
Total Aimco equity		499,034			499,778			766,829			500,565
Noncontrolling interests in consolidated real estate partnerships		35,014			31,877			45,517			35,213
Common noncontrolling interests in Aimco Operating Partnership		26,481			27,436			40,411			26,455
Total equity		560,529			559,091			852,757			562,233
Total liabilities and equity	$	2,394,195		$	1,840,492		$	2,296,244		$	2,434,101

See notes to condensed consolidated financial statements.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

REVENUES

Rental and other property revenues

$
42,893

$
37,328

$
123,115

$
112,802

OPERATING EXPENSES

Property operating expenses

18,155

15,151

51,500

45,822

Depreciation and amortization

21,709

19,296

63,065

57,673

General and administrative expenses

8,868

1,552

22,562

4,939

   Total operating expenses

48,732

35,999

137,127

108,434

Interest expense

(12,680
)

(7,103
)

(37,995
)

(18,563
)
Mezzanine investment income, net

7,636

6,870

22,654

20,553

Unrealized gains (losses) on interest rate options

2,231

(998
)

10,608

(2,078
)
Other income (expense), net

1,785

(775
)

5,066

(1,344
)
   (Loss) income before income tax benefit

(6,867
)

(677
)

(13,679
)

2,936

Income tax benefit

2,021

2,673

9,881

6,728

   Net (loss) income

(4,846
)

1,996

(3,798
)

9,664

Noncontrolling interests:

      Net (income) loss attributable to redeemable noncontrolling
         interest in consolidated real estate partnership

(127
)

121

(41
)

349

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

(296
)

1

(862
)

(4
)
      Net (income) loss attributable to common noncontrolling
         interests in Aimco Operating Partnership

253

(107
)

209

(507
)
   Net (loss) income attributable to Aimco

$
(5,016
)

$
2,011

$
(4,492
)

$
9,502

Net (loss) income attributable to Aimco per common share – basic (Note 6)

$
(0.03
)

$
0.01

$
(0.03
)

$
0.06

Net (loss) income attributable to Aimco per common share – diluted (Note 6)

$
(0.03
)

$
0.01

$
(0.03
)

$
0.06

   Weighted average common shares outstanding – basic

149,762

148,549

149,517

148,549

   Weighted average common shares outstanding – diluted

149,762

148,569

149,517

148,569


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
REVENUES
Rental and other property revenues	$	47,683		$	42,893		$	148,375		$	123,115

OPERATING EXPENSES
Property operating expenses		17,455			18,155			56,384			51,500
Depreciation and amortization		85,438			21,709			143,420			63,065
General and administrative expenses		10,809			8,868			29,243			22,562
Total operating expenses		113,702			48,732			229,047			137,127

Interest expense		(9,719	)		(12,680	)		(65,865	)		(37,995	)
Mezzanine investment income, net		8,423			7,636			24,990			22,654
Realized and unrealized gains (losses) on interest rate options		9,209			2,231			48,005			10,608
Realized and unrealized gains (losses) on equity investments		(2,145	)		1,233			20,152			2,107
Gains on dispositions of real estate		75,539			—			170,004			—
Lease modification income		1,577			—			206,963			—
Other income (expense), net		(255	)		552			(1,743	)		2,959
Income (loss) before income tax		16,610			(6,867	)		321,834			(13,679	)
Income tax benefit (expense)		17,563			2,021			(24,338	)		9,881
Net income (loss)		34,173			(4,846	)		297,496			(3,798	)
Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships		(2,907	)		(127	)		(5,446	)		(41	)
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships		(240	)		(296	)		(585	)		(862	)
Net (income) loss attributable to common noncontrolling interests in Aimco Operating Partnership		(1,554	)		253			(14,648	)		209
Net income (loss) attributable to Aimco	$	29,472		$	(5,016	)	$	276,817		$	(4,492	)

Net income (loss) attributable to Aimco per common share – basic (Note 6)	$	0.19		$	(0.03	)	$	1.82		$	(0.03	)
Net income (loss) attributable to Aimco per common share – diluted (Note 6)	$	0.19		$	(0.03	)	$	1.81		$	(0.03	)

Weighted-average common shares outstanding – basic		149,611			149,762			149,706			149,517
Weighted-average common shares outstanding – diluted		151,197			149,762			151,076			149,517

See notes to condensed consolidated financial statements.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

(In thousands)

(Unaudited)

Common Stock

Noncontrolling
Interests in

Common
Noncontrolling
Interests in

Shares
Issued

Amount

Additional
Paid-
in Capital

Retained Earnings
(Accumulated Deficit)

Aimco Predecessor Equity

Total Aimco
Equity

Consolidated
Real Estate
Partnerships

Aimco
Operating
Partnership

Total
Equity

Balances at June 30, 2020

—

$
—

$
—

$
—

$
520,762

$
520,762

$
113

$
589

$
521,464

Net income attributable to Aimco Predecessor

—

—

—

—

2,011

2,011

—

—

2,011

Net loss attributable to noncontrolling interests in consolidated partnerships

—

—

—

—

—

—

(1
)

—

(1
)
Net income attributable to common noncontrolling interests in Aimco Operating Partnership

—

—

—

—

—

—

—

107

107

Contributions from Aimco Predecessor, net

—

—

—

—

123,150

123,150

—

—

123,150

Balances at September 30, 2020

—

$
—

$
—

$
—

$
645,923

$
645,923

$
112

$
696

$
646,731

Balances at June 30, 2021

149,663

$
1,496

$
517,540

$
(16,315
)

$
—

$
502,721

$
31,847

$
26,654

$
561,222

Redemption of Aimco Operating Partnership units

140

1

354

—

—

355

—

(355
)

—

Cash paid on redemption of Aimco Operating Partnership units

—

—

—

—

—

—

—

(6
)

(6
)
Share-based compensation expense

—

—

1,019

—

—

1,019

—

441

1,460

Distribution to noncontrolling interests in consolidated real estate partnerships

—

—

—

—

—

—

(287
)

—

(287
)
Contributions to noncontrolling interests in consolidated real estate partnerships

—

—

—

—

—

—

3,158

—

3,158

Net income attributable to noncontrolling interests in consolidated partnerships

—

—

—

—

—

—

296

—

296

Net loss attributable to common noncontrolling interests in Aimco Operating Partnership

—

—

—

—

—

—

—

(253
)

(253
)
Net loss attributable to Aimco

—

—

—

(5,016
)

—

(5,016
)

—

—

(5,016
)
Other, net

—

1

—

(46
)

—

(45
)

—

—

(45
)
Balances at September 30, 2021

149,803

$
1,498

$
518,913

$
(21,377
)

$
—

$
499,034

$
35,014

$
26,481

$
560,529


	Common Stock															Noncontrolling Interests in			Common Noncontrolling Interests in
	Shares Issued			Amount			Additional Paid- in Capital			Retained Earnings (Accumulated Deficit)			Total Aimco Equity			Consolidated Real Estate Partnerships			Aimco Operating Partnership			Total Equity
Balances at June 30, 2021		149,663		$	1,496		$	517,540		$	(16,315	)	$	502,721		$	31,847		$	26,654		$	561,222
Net income (loss)		—			—			—			(5,016	)		(5,016	)		296			(253	)		(4,973	)
Redemption of OP Units		140			1			354			—			355			—			(361	)		(6	)
Share-based compensation expense		—			—			1,019			—			1,019			—			441			1,460
Contributions from noncontrolling interests		—			—			—			—			—			3,158			—			3,158
Distributions to noncontrolling interests		—			—			—			—			—			(287	)		—			(287	)
Other, net		—			1			—			(46	)		(45	)		—			—			(45	)
Balances at September 30, 2021		149,803		$	1,498		$	518,913		$	(21,377	)	$	499,034		$	35,014		$	26,481		$	560,529

Balances at June 30, 2022		149,097		$	1,492		$	515,065		$	224,567		$	741,124		$	44,665		$	39,233		$	825,022
Net income (loss)		—			—			—			29,472			29,472			240			1,554			31,266
Redemption of OP Units		26			—			398			—			398			—			(474	)		(76	)
Share-based compensation expense		—			—			1,454			—			1,454			—			258			1,712
Distributions to noncontrolling interests		—			—			—			—			—			(287	)		(160	)		(447	)
Contributions from noncontrolling interests		—			—			—			—			—			898			—			898
Purchase of noncontrolling interests in consolidated real estate partnerships		—			—			155			—			155			—			—			155
Common stock repurchased		(73	)		(1	)		(525	)		—			(526	)		—			—			(526	)
Cash Dividends		—			—			—			(3,043	)		(3,043	)		—			—			(3,043	)
Other, net		74			1			(2,206	)		—			(2,205	)		1			—			(2,204	)
Balances at September 30, 2022		149,124		$	1,492		$	514,341		$	250,996		$	766,829		$	45,517		$	40,411		$	852,757

See notes to condensed consolidated financial statements.

Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

(In thousands)

(Unaudited)

Common Stock

Noncontrolling
Interests in

Common
Noncontrolling
Interests in

Shares
Issued

Amount

Additional
Paid-
in Capital

Accumulated Deficit

Aimco Predecessor Equity

Total Aimco
Equity

Consolidated
Real Estate
Partnerships

Aimco
Operating
Partnership

Total
Equity

Balances at December 31, 2019

—

$
—

$
—

$
—

$
513,264

$
513,264

$
108

$
188

$
513,560

Net income attributable to Aimco Predecessor

—

—

—

—

9,502

9,502

—

—

9,502

Net income attributable to noncontrolling interests in consolidated partnerships

—

—

—

—

—

—

4

—

4

Net income attributable to common noncontrolling interests in Aimco Operating Partnership

—

—

—

—

—

—

—

507

507

Contributions from Aimco Predecessor, net

—

—

—

—

123,157

123,157

—

1

123,158

Balances at September 30, 2020

—

$
-

$
-

$
-

$
645,923

$
645,923

$
112

$
696

$
646,731

Balances at December 31, 2020

149,036

$
1,490

$
515,127

$
(16,839
)

$
—

$
499,778

$
31,877

$
27,436

$
559,091

Redemption of Aimco Operating Partnership units

580

6

1,252

—

—

1,258

—

(1,258
)

—

Cash paid on redemption of Aimco Operating Partnership units

—

—

—

—

—

—

—

(47
)

(47
)
Issuance of common stock in connection with share-base arrangements

232

2

1,069

—

—

1,071

—

—

1,071

Share-based compensation expense

—

—

1,770

—

—

1,770

—

559

2,329

Distribution to noncontrolling interests in consolidated real estate partnerships

—

—

—

—

—

—

(869
)

—

(869
)
Contributions from noncontrolling interests in consolidated real estate partnerships

—

—

—

—

—

—

3,158

—

3,158

Net income attributable to noncontrolling interests in consolidated real estate
partnerships

—

—

—

—

—

—

862

—

862

Net loss attributable to common noncontrolling interests in Aimco Operating Partnership

—

—

—

—

—

—

—

(209
)

(209
)
Net loss attributable to Aimco

—

(4,492
)

(4,492
)

—

—

(4,492
)
Other, net

(45
)

—

(305
)

(46
)

—

(351
)

(14
)

(365
)
Balances at September 30, 2021

149,803

$
1,498

$
518,913

$
(21,377
)

$
—

$
499,034

$
35,014

$
26,481

$
560,529


	Common Stock															Noncontrolling Interests in			Common Noncontrolling Interests in
	Shares Issued			Amount			Additional Paid- in Capital			Retained Earnings (Accumulated Deficit)			Total Aimco Equity			Consolidated Real Estate Partnerships			Aimco Operating Partnership			Total Equity
Balances at December 31, 2020		149,036		$	1,490		$	515,127		$	(16,839	)	$	499,778		$	31,877		$	27,436		$	559,091
Net income (loss)		—			—			—			(4,492	)		(4,492	)		862			(209	)		(3,839	)
Redemption of OP Units		580			6			1,252			—			1,258			—			(1,305	)		(47	)
Share-based compensation expense		—			—			1,770			—			1,770			—			559			2,329
Contributions from noncontrolling interests		—			—			—			—			—			3,158			—			3,158
Distributions to noncontrolling interests		—			—			—			—			—			(869	)		—			(869	)
Other common stock issuances		232			2			1,069			—			1,071			—			—			1,071
Other, net		(45	)		—			(305	)		(46	)		(351	)		(14	)		—			(365	)
Balances at September 30, 2021		149,803		$	1,498		$	518,913		$	(21,377	)	$	499,034		$	35,014		$	26,481		$	560,529

Balances at December 31, 2021		149,818		$	1,498		$	521,842		$	(22,775	)	$	500,565		$	35,213		$	26,455		$	562,233
Net income (loss)		—			—			—			276,817			276,817			585			14,648			292,050
Redemption of OP Units		65			1			1,932			—			1,933			—			(2,152	)		(219	)
Share-based compensation expense		—			—			4,234			—			4,234			—			1,515			5,749
Distributions to noncontrolling interests		—			—			—			—			—			(892	)		(160	)		(1,052	)
Contributions from noncontrolling interests		—			—			—			—			—			10,616			—			10,616
Purchase of noncontrolling interests in consolidated real estate partnerships		—			—			(7,088	)		—			(7,088	)		—			—			(7,088	)
Common stock repurchased		(816	)		(8	)		(4,937	)		—			(4,945	)		—			—			(4,945	)
Other Common Stock issuances		106			1			851			—			852			—			—			852
Redemption of redeemable noncontrolling interests in consolidated real estate partnerships		—			—			(183	)		—			(183	)		—			—			(183	)
Cash Dividends		—			—			—			(3,043	)		(3,043	)		—			—			(3,043	)
Other, net		(49	)		—			(2,310	)		(3	)		(2,313	)		(5	)		105			(2,213	)
Balances at September 30, 2022		149,124		$	1,492		$	514,341		$	250,996		$	766,829		$	45,517		$	40,411		$	852,757

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,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	297,496		$	(3,798	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		143,420			63,065
Income from unconsolidated real estate partnerships		(459	)		(743	)
Realized and unrealized gains on interest rate options		(48,005	)		(10,608	)
Income tax expense (benefit)		24,338			(9,881	)
Amortization of debt issuance costs and other		2,149			801
Mezzanine investment, net		(24,990	)		(22,654	)
Loss on extinguishment of debt, net		28,901			—
Lease modification income		(206,963	)		—
Realized and unrealized gains (losses) on equity investments		(20,152	)		—
Gain on disposition of real estate		(170,004	)		—
Share-based compensation		6,462			3,750
Changes in operating assets and operating liabilities:
Other assets, net		5,904			(10,930	)
Net cash received from development property lease terminations		195,789			—
Accrued liabilities and other		(5,634	)		13,083
Total adjustments		(69,244	)		25,883
Net cash provided by operating activities		228,252			22,085
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate		(130,122	)		(69,601	)
Capital expenditures (1)		(184,048	)		(134,855	)
Proceeds from disposition of real estate		243,134			—
Investment in IQHQ		(14,227	)		(12,091	)
Redemption of IQHQ investment		16,473
Investment in unconsolidated real estate partnerships		(12,878	)		—
Other investing activities		(1,293	)		(96	)
Net cash used in investing activities		(82,961	)		(216,643	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse property debt		674,720			59,757
Proceeds from construction loans		54,286			142,305
Payments of deferred loan costs		(8,244	)		(6,634	)
Principal repayments on non-recourse property debt		(284,562	)		(22,307	)
Principal repayments on construction loans		(138,404	)		—
Principal repayments on Notes Payable to AIR		(534,127	)		—
Purchase of interest rate options		(3,223	)		(5,905	)
Proceeds from interest rate option		15,465			—
Payments on finance leases		(25,797	)		(7,773	)
Payments of prepayment premiums		(25,740	)		—
Common stock repurchased		(4,419	)		—
Dividend paid on common stock		(3,043	)
Distributions to noncontrolling interests		(1,052	)		—
Distributions to redeemable noncontrolling interests		(917	)
Contributions from noncontrolling interests		10,616			—
Contributions from redeemable noncontrolling interests		122,413			—
Redemption of common and preferred OP units		(209	)		—
Redemption of noncontrolling interests		(7,088	)		—
Redemption of redeemable noncontrolling interests		(5,094	)		—
Other financing activities		(13	)		(859	)
Net cash provided by (used in) financing activities		(164,432	)		158,584
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(19,141	)		(35,974	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD		244,582			298,735
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	225,441		$	262,761

(1) Accrued capital expenditures were $31.4 million and $19.4 million as of September 30, 2022 and 2021, respectively.

Nine Months Ended September 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income
$
(3,798
)

$
9,664

Adjustments to reconcile net (loss) to net cash provided by operating activities:

   Depreciation and amortization

63,065

57,673

Income from unconsolidated real estate partnerships

(743
)

(629
)
Unrealized (gains) losses on interest rate options

(10,608
)

2,078

Income tax benefit

(9,881
)

(6,728
)
Mezzanine investment income, net

(22,654
)

(20,553
)
Share based compensation

3,750

—

   Amortization of debt issuance costs and other

801

335

Changes in operating assets and operating liabilities:

   Other assets, net

(10,930
)

(1,717
)
   Accounts payable, accrued liabilities and other

13,083

1,209

Net cash provided by operating activities

22,085

41,332

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of real estate

(69,601
)

(92,286
)
Capital expenditures (1)

(134,855
)

(15,317
)
Other investing activities (2)

(12,187
)

(38
)
Net cash used in investing activities

(216,643
)

(107,641
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from construction loans

142,305

—

Proceeds from non-recourse debt

59,757

—

Payments of deferred loan costs

(6,634
)

—

Principal repayments on non-recourse property debt

(22,307
)

(42,816
)
Principal payments on finance leases

(7,773
)

—

Purchase of interest rate option

(5,905
)

(12,245
)
Change in Aimco Predecessor investment, net

—

122,265

Other financing activities

(859
)

(1,849
)
Net cash provided by financing activities

158,584

65,355

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(35,974
)

(954
)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD

298,735

10,120

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD
$
262,761

$
9,166

~~(1)~~

~~Capital expenditures net of accrued capital costs of $17.7 million and $0.6 million for the nine months ended September 30, 2021 and 2020, respectively.~~

~~(2)~~

~~Includes the acquisition of additional IQHQ shares.~~

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO OP L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	September 30,			December 31,
	2021			2020			September 30, 2022			December 31, 2021
ASSETS
Buildings and improvements	$	1,202,279		$	995,116		$	1,248,005		$	1,257,214
Land		534,092			505,153			639,272			534,285
Total real estate		1,736,371			1,500,269			1,887,277			1,791,499
Accumulated depreciation		(545,499	)		(495,010	)		(516,857	)		(561,115	)
Net real estate		1,190,872			1,005,259			1,370,420			1,230,384
Cash and cash equivalents		253,138			289,582			206,366			233,374
Restricted cash		9,623			9,153			19,075			11,208
Mezzanine investment		330,016			307,362			362,788			337,797
Interest rate options								61,448			25,657
Right-of-use lease assets		439,229			98,280			95,506			429,768
Other assets, net		171,317			130,856			180,641			165,913
Total assets	$	2,394,195		$	1,840,492		$	2,296,244		$	2,434,101

LIABILITIES AND EQUITY
Non-recourse property debt, net	$	485,116		$	447,967		$	859,593		$	483,137
Construction loans, net		138,439			—			80,816			163,570
Notes payable to AIR		534,127			534,127			—			534,127
Total indebtedness		1,157,682			982,094			940,409			1,180,834
Deferred tax liabilities		126,851			131,560			121,344			124,747
Lease liabilities		448,886			100,496			98,467			435,093
Accrued liabilities and other		95,943			62,988			125,132			97,400
Total liabilities		1,829,362			1,277,138			1,285,352			1,838,074

Redeemable noncontrolling interest in consolidated real estate partnership		4,304			4,263
Redeemable noncontrolling interests in consolidated real estate partnerships								158,135			33,794
Commitments and contingencies (Note 4)
Partners’ capital:
General Partner and Special Limited Partner		499,034			499,778			766,829			500,565
Limited Partners		26,481			27,436			40,411			26,455
Partners’ capital attributable to Aimco Operating Partnership		525,515			527,214			807,240			527,020
Noncontrolling interests in consolidated real estate partnerships		35,014			31,877			45,517			35,213
Total partners’ capital		560,529			559,091			852,757			562,233
Total liabilities and partners’ capital	$	2,394,195		$	1,840,492		$	2,296,244		$	2,434,101

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
REVENUES
Rental and other property revenues	$	42,893		$	37,328		$	123,115		$	112,802		$	47,683		$	42,893		$	148,375		$	123,115

OPERATING EXPENSES
Property operating expenses		18,155			15,151			51,500			45,822			17,455			18,155			56,384			51,500
Depreciation and amortization		21,709			19,296			63,065			57,673			85,438			21,709			143,420			63,065
General and administrative expenses		8,868			1,552			22,562			4,939			10,809			8,868			29,243			22,562
Total operating expenses		48,732			35,999			137,127			108,434			113,702			48,732			229,047			137,127

Interest expense		(12,680	)		(7,103	)		(37,995	)		(18,563	)		(9,719	)		(12,680	)		(65,865	)		(37,995	)
Mezzanine investment income, net		7,636			6,870			22,654			20,553			8,423			7,636			24,990			22,654
Unrealized gains (losses) on interest rate options		2,231			(998	)		10,608			(2,078	)
Realized and unrealized gains (losses) on interest rate options														9,209			2,231			48,005			10,608
Realized and unrealized gains (losses) on equity investments														(2,145	)		1,233			20,152			2,107
Gains on dispositions of real estate														75,539			-			170,004			-
Lease modification income														1,577			-			206,963			-
Other income (expense), net		1,785			(775	)		5,066			(1,344	)		(255	)		552			(1,743	)		2,959
(Loss) Income before income tax benefit		(6,867	)		(677	)		(13,679	)		2,936
Income tax benefit		2,021			2,673			9,881			6,728
Net (loss) income		(4,846	)		1,996			(3,798	)		9,664
Net (income) loss attributable to redeemable noncontrolling interest in consolidated real estate partnership		(127	)		121			(41	)		349
Income (loss) before income tax														16,610			(6,867	)		321,834			(13,679	)
Income tax benefit (expense)														17,563			2,021			(24,338	)		9,881
Net income (loss)														34,173			(4,846	)		297,496			(3,798	)
Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships														(2,907	)		(127	)		(5,446	)		(41	)
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships		(296	)		1			(862	)		(4	)		(240	)		(296	)		(585	)		(862	)
Net (loss) income attributable to the Aimco Operating Partnership	$	(5,269	)	$	2,118		$	(4,701	)	$	10,009
Net (loss) income attributable to the Aimco Operating Partnership per common unit – basic (Note 6)	$	(0.03	)	$	0.01		$	(0.03	)	$	0.06
Net (loss) income attributable to the Aimco Operating Partnership per common unit – diluted (Note 6)	$	(0.03	)	$	0.01		$	(0.03	)	$	0.06
Net income (loss) attributable to Aimco Operating Partnership													$	31,026		$	(5,269	)	$	291,465		$	(4,701	)

Net income (loss) attributable to Aimco Operating Partnership per common unit – basic (Note 6)													$	0.19		$	(0.03	)	$	1.82		$	(0.03	)
Net income (loss) attributable to Aimco Operating Partnership per common unit – diluted (Note 6)													$	0.19		$	(0.03	)	$	1.81		$	(0.03	)

Weighted-average common units outstanding – basic		157,806			156,480			157,873			156,480			157,530			157,806			157,627			157,873
Weighted-average common units outstanding – diluted		157,806			156,500			157,873			156,500			159,136			157,806			159,017			157,873

See notes to condensed consolidated financial statements.

Table of Contents

AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the ~~Three Months Ended~~three months ended September 30, ~~2021~~2022 and ~~2020~~2021

(In thousands)

(Unaudited)

General Partner
and Special
Limited Partner

Limited Partners

Partners’ Capital
Attributable to
the Aimco
Operating
Partnership

Noncontrolling
Interests in
Consolidated
Real Estate
Partnerships

Aimco Predecessor Capital

Total Partners’
Capital

Balances at June 30, 2020

$
—

$
589

$
589

$
113

$
520,762

$
521,464

Net income attributable to Aimco Predecessor

—

107

107

—

2,011

2,118

Net loss attributable to noncontrolling interests in
   consolidated real estate partnerships

—

—

—

(1
)

—

(1
)
Contributions from Aimco Predecessor, net

—

—

—

—

123,150

123,150

Balances at September 30, 2020

$
—

$
696

$
696

$
112

$
645,923

$
646,731

Balances at June 30, 2021

$
502,721

$
26,654

$
529,375

$
31,847

$
—

$
561,222

Redemption of Aimco Operating Partnership units

355

(355
)

—

—

—

—

Cash paid on redemption of Aimco Operating Partnership units

—

(6
)

(6
)

—

—

(6
)
Share-based compensation expense

1,019

441

1,460

—

—

1,460

Distribution to noncontrolling interests in consolidated
   real estate partnerships

—

—

—

(287
)

—

(287
)
Contributions from noncontrolling interests in consolidated partnerships

—

—

—

3,158

—

3,158

Net income attributable to noncontrolling interests in
   consolidated real estate partnerships

—

—

—

296

—

296

Net loss attributable to the Aimco Operating Partnership

(5,016
)

(253
)

(5,269
)

—

—

(5,269
)
Other, net

(45
)

—

(45
)

—

—

(45
)
Balances at September 30, 2021

$
499,034

$
26,481

$
525,515

$
35,014

$
—

$
560,529


	General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Total Partners’ Capital
Balances at June 30, 2021	$	502,721		$	26,654		$	529,375		$	31,847		$	561,222
Net income (loss)		(5,016	)		(253	)		(5,269	)		296			(4,973	)
Redemption of OP Units		355			(361	)		(6	)		—			(6	)
Share-based compensation expense		1,019			441			1,460			—			1,460
Contributions from noncontrolling interests		—			—			—			3,158			3,158
Distributions to noncontrolling interests		—			—			—			(287	)		(287	)
Other, net		(45	)		—			(45	)		—			(45	)
Balances at September 30, 2021	$	499,034		$	26,481		$	525,515		$	35,014		$	560,529

Balances at June 30, 2022	$	741,124		$	39,233		$	780,357		$	44,665		$	825,022
Net income (loss)		29,472			1,554			31,026			240			31,266
Redemption of OP Units		398			(474	)		(76	)		—			(76	)
Share-based compensation expense		1,454			258			1,712			—			1,712
Distributions to noncontrolling interests		—			(160	)		(160	)		(287	)		(447	)
Contributions from noncontrolling interests		—			—			—			898			898
Purchase of noncontrolling interests in consolidated real estate partnerships		155			—			155			—			155
Repurchases of OP Units held by Aimco		(526	)		—			(526	)		—			(526	)
Cash Dividends		(3,043	)		—			(3,043	)		—			(3,043	)
Other, net		(2,205	)		—			(2,205	)		1			(2,204	)
Balances at September 30, 2022	$	766,829		$	40,411		$	807,240		$	45,517		$	852,757

See notes to condensed consolidated financial statements.

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AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

For the ~~Nine Months Ended~~nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

(In thousands)

(Unaudited)

General Partner
and Special
Limited Partner

Limited Partners

Partners’ Capital
Attributable to
the Aimco
Operating
Partnership

Noncontrolling
Interests in
Consolidated
Real Estate
Partnerships

Aimco Predecessor Capital

Total Partners’
Capital

Balances at December 31, 2019

$
—

$
188

$
188

$
108

$
513,264

$
513,560

Net income attributable to Aimco Predecessor

—

507

507

—

9,502

10,009

Net income attributable to noncontrolling interests in consolidated real estate partnerships

—

—

—

4

—

4

Contributions from Aimco Predecessor, net

—

1

1

—

123,157

123,158

Balances at September 30, 2020

$
—

$
696

$
696

$
112

$
645,923

$
646,731

Balances at December 31, 2020

$
499,778

$
27,436

$
527,214

$
31,877

$
—

$
559,091

Redemption of Aimco Operating Partnership units

1,258

(1,258
)

—

—

—

—

Cash paid on redemption of Operating Partnership units

—

(47
)

(47
)

—

—

(47
)
Issuance of common stock in connection with share-base arrangements

1,071

—

1,071

—

—

1,071

Share-based compensation expense

1,770

559

2,329

—

2,329

Distribution to noncontrolling interests in consolidated
real estate partnerships

—

—

—

(869
)

—

(869
)
Contributions from noncontrolling interests in consolidated partnerships

—

—

—

3,158

—

3,158

Net loss attributable to noncontrolling interests in
consolidated real estate partnerships

—

—

—

862

—

862

Net loss attributable to the Aimco Operating Partnership

(4,492
)

(209
)

(4,701
)

—

—

(4,701
)
Other, net

(351
)

—

(351
)

(14
)

—

(365
)
Balances at September 30, 2021

$
499,034

$
26,481

$
525,515

$
35,014

$
—

$
560,529


	General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Total Partners’ Capital
Balances at December 31, 2020	$	499,778		$	27,436		$	527,214		$	31,877		$	559,091
Net income (loss)		(4,492	)		(209	)		(4,701	)		862			(3,839	)
Redemption of OP Units		1,258			(1,305	)		(47	)		—			(47	)
Other common stock issuances		1,071			—			1,071			—			1,071
Share-based compensation expense		1,770			559			2,329			—			2,329
Contribution from noncontrolling interests		—			—			—			3,158			3,158
Distributions to noncontrolling interests		—			—			—			(869	)		(869	)
Other, net		(351	)		—			(351	)		(14	)		(365	)
Balances at September 30, 2021	$	499,034		$	26,481		$	525,515		$	35,014		$	560,529

Balances at December 31, 2021	$	500,565		$	26,455		$	527,020		$	35,213		$	562,233
Net income (loss)		276,817			14,648			291,465			585			292,050
Redemption of OP Units		1,933			(2,152	)		(219	)		—			(219	)
Share-based compensation expense		4,234			1,515			5,749			—			5,749
Distributions to noncontrolling interests		—			(160	)		(160	)		(892	)		(1,052	)
Contributions from noncontrolling interests		—			—			—			10,616			10,616
Purchase of noncontrolling interests in consolidated real estate partnerships		(7,088	)		—			(7,088	)		—			(7,088	)
Repurchases of OP Units held by Aimco		(4,945	)		—			(4,945	)		—			(4,945	)
Other OP Unit issuances		852			109			961			—			961
Redemption of redeemable noncontrolling interests in consolidated real estate partnerships		(183	)		—			(183	)		—			(183	)
Cash dividends		(3,043	)		—			(3,043	)		—			(3,043	)
Other, net		(2,313	)		(4	)		(2,317	)		(5	)		(2,322	)
Balances at September 30, 2022	$	766,829		$	40,411		$	807,240		$	45,517		$	852,757

See notes to condensed consolidated financial statements.

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AIMCO OP L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	297,496		$	(3,798	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		143,420			63,065
Income from unconsolidated real estate partnerships		(459	)		(743	)
Realized and unrealized gains on interest rate options		(48,005	)		(10,608	)
Income tax expense (benefit)		24,338			(9,881	)
Amortization of debt issuance costs and other		2,149			801
Mezzanine investment, net		(24,990	)		(22,654	)
Loss on extinguishment of debt, net		28,901			—
Lease modification income		(206,963	)		—
Realized and unrealized gains (losses) on equity investments		(20,152	)		—
Gain on disposition of real estate		(170,004	)		—
Share-based compensation		6,462			3,750
Changes in operating assets and operating liabilities:
Other assets, net		5,904			(10,930	)
Net cash received from development property lease terminations		195,789			—
Accrued liabilities and other		(5,634	)		13,083
Total adjustments		(69,244	)		25,883
Net cash provided by operating activities		228,252			22,085
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate		(130,122	)		(69,601	)
Capital expenditures (1)		(184,048	)		(134,855	)
Proceeds from disposition of real estate		243,134			—
Investment in IQHQ		(14,227	)		(12,091	)
Redemption of IQHQ investment		16,473
Investment in unconsolidated real estate partnerships		(12,878	)		—
Other investing activities		(1,293	)		(96	)
Net cash used in investing activities		(82,961	)		(216,643	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse property debt		674,720			59,757
Proceeds from construction loans		54,286			142,305
Payments of deferred loan costs		(8,244	)		(6,634	)
Principal repayments on non-recourse property debt		(284,562	)		(22,307	)
Principal repayments on construction loans		(138,404	)		—
Principal repayments on Notes Payable to AIR		(534,127	)		(5,905	)
Purchase of interest rate options		(3,223	)		—
Proceeds from interest rate option		15,465			(7,773	)
Payments on finance leases		(25,797	)		—
Payments of prepayment premiums		(25,740	)		—
Common stock repurchased		(4,419	)		—
Dividend paid on common stock		(3,043	)		—
Distributions to noncontrolling interests		(1,052	)		—
Distributions to redeemable noncontrolling interests		(917	)		—
Contributions from noncontrolling interests		10,616			—
Contributions from redeemable noncontrolling interests		122,413
Redemption of common and preferred OP units		(209	)
Redemption of noncontrolling interests		(7,088	)
Redemption of redeemable noncontrolling interests		(5,094	)		—
Other financing activities		(13	)		(859	)
Net cash provided by (used in) financing activities		(164,432	)		158,584
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(19,141	)		(35,974	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD		244,582			298,735
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	225,441		$	262,761

(1) Accrued capital expenditures were $31.4 million and $19.4 million as of September 30, 2022 and 2021, respectively.

~~(1)~~

~~Capital expenditures net of accrued capital costs of $17.7 million and $0.6 million for the nine months ended September 30, 2021 and 2020, respectively.~~

~~(2)~~

~~Includes the acquisition of additional IQHQ shares.~~

See notes to condensed consolidated financial statements.

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APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AIMCO OP L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022

(Unaudited)

Note 1 — Organization

Apartment Investment and Management Company (“Aimco”), a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”). Aimco, through a ~~wholly-owned~~wholly owned subsidiary, is the general and special limited partner of Aimco OP L.P. (“Aimco Operating Partnership”).

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

~~The Separation~~

On December 15, 2020, Aimco completed the separation of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp. (“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”).

P~~rior to the Separation, the condensed consolidated financial statements~~ Events noted in this filing as occurring before December 15, 2020, were prepared on a carve-out basis and reflect significant assumptions and allocations. The condensed consolidated financial statements reflect our historical consolidated financial position, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States (“GAAP”). The historical financial statements ofthose entered into by Aimco ~~do not represent the financial position and results of operations of one legal entity, but r~~ather a combination of entities under common control that have been “carved out” from Aimco Predecessor’s financial statements. All significant intercompany balances have been eliminated in consolidation.Predecessor.

All separation related transactions between Aimco and Aimco Predecessor are considered effectively settled through partners’ capital in our condensed consolidated financial statements, other than the notes payable to AIR as discussed in Note 3. The settlement of these transactions is reflected as contributions from Aimco Predecessor, net in our condensed consolidated statements of equity and partners’ capital and as a net change in Aimco Predecessor investment in financing activity in our condensed consolidated statements of cash flows.Business

~~Business~~

As of September 30, ~~2021,~~2022, Aimco owned ~~93.1%~~92.7% of the legal interest in the common partnership units of Aimco Operating Partnership and ~~95.0%~~95.0% of the economic interest in Aimco Operating Partnership. The remaining ~~6.9%~~7.3% legal interest is owned by limited partners. As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.

We own or lease a portfolio of real estate investments focused primarily on the U.S. multifamily sector. These real estate investments ~~include~~include: a portfolio of 2426 operating apartment communities (22 consolidated properties with ~~6,067~~5,640 apartment homes and four unconsolidated operating properties), diversified by both geography and price ~~point, in 12 states; 1~~point; one commercial office building ~~owned as~~that is part of a land assemblage; ~~a recently acquired operating community with 58 townhomes; 3~~two residential apartment communities, with ~~1,331~~965 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and 1one hotel, with 106 planned rooms, ~~that~~ we are actively developing or redeveloping; land parcels held for ~~development;~~development. Our real estate portfolio also includes one land parcel held for sale and ~~three residential apartment communities, with 499 apartment homes,~~two unconsolidated investments in land held for ~~which we have completed the redevelopment and are in lease-up, but have not achieved stabilization.~~development. In addition, we ~~own an interest~~hold other opportunistic and alternative investments, including our Mezzanine Investment (see Note 2 for further information); our IQHQ investment (see Note 3 for further information); and our investment in ~~four unconsolidated operating apartment communities.~~real estate technology funds.

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~~generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a

~~Table of Contents~~

fair presentation have been included. Operating results for the three and nine months ended September 30, ~~2021,~~2022, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022.

The ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets of Aimco and Aimco Operating Partnership as of December 31, ~~2020,~~2021 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 Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Except where indicated, the footnotes refer to both Aimco and Aimco Operating Partnership.

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Principles of Consolidation

~~Aimco’s~~The accompanying condensed consolidated financial statements include the accounts of Aimco, Aimco Operating Partnership, and their consolidated subsidiaries. Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of Aimco Operating Partnership and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

We consolidate a variable interest entity (“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 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.

Certain reclassifications have been made to prior period amounts to conform to the current period condensed consolidated financial statement presentation with no effect on the Company’s previously reported results of operations, financial position, or cash flows.

~~Allocations~~

The 2020 condensed consolidated statements of operations include allocations of general and administrative expenses from Aimco Predecessor. We consider the basis on which expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented. However, the allocations may not include all of the actual expenses that we would have incurred and may not reflect our consolidated results of operations, financial position, and cash flows had it been a stand-alone company during the periods presented. Actual costs that might have been incurred had we been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions we might have performed ourselves or outsourced, and strategic decisions we might have made in areas such as information technology and infrastructure. Following the Separation, AIR, through its subsidiaries, provides Aimco with certain property management and other services, and we perform certain functions using our own resources or purchase services from third parties.

Common Noncontrolling Interests in Aimco Operating Partnership

Common noncontrolling interests in Aimco Operating Partnership consist of common Aimco Operating Partnership Units (“OP Units”), and are reflected in Aimco’s accompanying ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets as ~~common noncontrolling interests~~Common Noncontrolling Interests in Aimco Operating ~~Partnership.~~Partnership. Aimco Operating Partnership’s income or loss is allocated to the holders of common OP Units, other than Aimco, based on the weighted-average number of common OP Units (including Aimco) outstanding during the period. For all periods presented, the holders of common OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of approximately ~~5.0%~~5.0%. Substantially all of the assets and liabilities of Aimco are held by Aimco Operating Partnership.

Redeemable Noncontrolling ~~Interest~~Interests in Consolidated Real Estate ~~Partnership~~Partnerships

Redeemable noncontrolling ~~interest consists~~interests consist of equity interests held by a limited partner in a consolidated real estate partnership that has a finite life. We generally attribute to noncontrolling interests their share of income or loss of consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity accounts.

If a consolidated real estate partnership includes redemption rights that are not within our control, the noncontrolling interest is included as temporary equity. If the redemption right is not currently redeemable but probable of being redeemable in the future, changes in redemption value are recognized each quarter with the change in value being reflected in additional paid-in-capital.

~~Table of Contents~~

The assets of ~~our~~these consolidated real estate partnerships must first be used to settle the liabilities of the consolidated real estate partnerships. The consolidated real estate ~~partnerships’~~partnerships' creditors do not have recourse to the general credit of Aimco Operating Partnership.

~~The following table presents~~In July 2022, we closed a ~~reconciliation~~$102.0 million preferred equity financing with an institutional investor, providing for a fixed 8% annual rate of ~~our~~return payable monthly.

In February 2022, we acquired all of the outstanding redeemable noncontrolling ~~interest~~interests in two consolidated properties for $5.1 million. At the time of redemption, the carrying amount of the redeemable non-controlling interests was $4.9 million.

Redeemable noncontrolling interests in consolidated real estate ~~partnership~~partnerships as of September 30, 2022 consists of the $102.0 million preferred equity noted above and our partner's equity interest in the Upton Joint Venture, which provides for an accruing 9.7% rate of return on their investment. These investment interests are presented as Redeemable noncontrolling interests in consolidated real estate partnerships in our Condensed Consolidated Balance Sheet as ofSeptember 30, 2022.

The following table shows changes in our redeemable noncontrolling interests in consolidated real estate partnerships from December 31, ~~2020,~~2021 to September 30, ~~2021~~2022 (in thousands):

Balance at December 31, 2020

$
4,263

Net income

41

Balance at September 30, 2021

$
4,304


Balance at December 31, 2021	$	33,794
Capital contributions		124,723
Distributions		(917	)
Redemptions		(4,911	)
Net income		5,446
Balance at September 30, 2022	$	158,135

~~Revenue from Leases~~15

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 and other services. For the three and nine months ended September 30, 2021 and 2020, our total lease income was comprised of the following amounts for all operating leases (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Fixed lease income

$
39,382

$
34,744

$
113,726

$
104,737

Variable lease income

3,046

2,572

8,760

7,803

Total lease income

$
42,428

$
37,316

$
122,486

$
112,540

~~Lessee Arrangements~~

We, as lessee, and AIR, as lessor, have entered into finance leases on 5 properties currently under construction or in lease-up. Four leases commenced January 1, 2021, two of which have rent escalations that start at the point the property reaches stabilization. Three of the leases have a term of 25 years and one has a term of 10 years. During the nine months ended September 30, 2021, we, as lessee, and AIR, as lessor, entered into a finance lease for a 15-acre plot of land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and 8 accessory dwelling units in June 2021. The lease commenced on June 1, 2021 and has a term of 25 years.

We have provided AIR with residual value guarantees aggregating to $250.8 million, which provide that if the residual value of the leased assets are less than the specified residual value guarantees at the earlier of lease expiration or termination, we are required to pay the difference. See Note 3 for further details.

As of September 30, 2021, operating and financing right-of-use lease assets of $5.2 million and $434.0 million, respectively, are included in the condensed consolidated balance sheets. For the three months and nine months ended September 30, 2021, amortization related to our finance leases was $2.1 million and $5.5 million, respectively, net of amounts capitalized. For the three months and nine months ended September 30, 2021, interest expense related to our finance leases was $2.2 million and $6.1 million, respectively, net of amounts capitalized.

As of September 30, 2021, Aimco’s operating leases and finance leases have weighted-average remaining terms of 7.6 years, and 38.6 years, respectively, and weighted-average discount rates of 3.1% and 5.4%, respectively.

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~~Combined minimum annual lease payments, under operating and financing leases, reconciled to the lease liabilities in our condensed consolidated balance sheets, are as follows (in thousands):~~

Sublease Income

Operating Lease Future Minimum Rent

Financing Leases Future Minimum Payments

Remainder of 2021
$
347

$
420

$
6,699

2022

1,393

1,891

27,197

2023

1,403

1,922

27,597

2024

1,413

1,935

28,597

2025

1,423

1,930

29,208

Thereafter

4,959

6,575

1,644,138

Total
$
10,938

14,673

1,763,436

Less: Discount

(1,702
)

(1,327,521
)
Total lease liabilities

$
12,971

$
435,915

~~For the~~ ~~three and nine months ended September 30, 2021, we capitalized $5.8 million and $18.5 million of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets.~~ ~~NaN~~ ~~lease costs were capitalized on leased assets for the three and nine months ended September 30, 2020.~~

Mezzanine Investment

OnIn November ~~26,~~ 2019, Aimco Predecessor made a five-year, ~~$275.0~~$275.0 million mezzanine loan to ~~Maximus PM Mezzanine A LLC,~~ the partnership owning the “Parkmerced Apartments”, located in southwest San Francisco (the “Mezzanine Investment”). The loan bears interest at a ~~10%~~10% annual rate, accruing if not paid from property operations. Ownership of the subsidiaries that originated and hold the mezzanine loan was retained by AIR following the Separation.

The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, a related equity option to acquire a ~~30%~~30% interest in the partnership owning Parkmerced Apartments and the interest rate option, or swaption, that provides partial protection against future refinancing risk to Aimco through 2024 ~~to Aimco.~~once required third-party consents are received. At the time of the Separation and as of the date of this filing,, legal title of these subsidiaries had not yet transferred to Aimco. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments received on such loan to us, and we are obligated to indemnify AIR against any costs and expenses related thereto. We have the risks and rewards of ownership of the Mezzanine Investment and have recognized an asset related to our right to receive the Mezzanine Investment from AIR.

We recognize as income the net amounts recognized by AIR on its equity investment that are due to be paid to us when collected ~~which~~to the extent the income is supported by the change in AIR's claim to the net assets of the underlying borrower. The income recognized primarily ~~represent~~represents the interest accrued under the terms of the underlying mezzanine loan.

The loan isand the underlying real estate are subject to certain risks, including, but not limited to, those resulting from the ~~ongoing~~lingering disruption due to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portion of the loan not being repaid. In the event we ~~determine~~conclude that a portion of the Mezzanine Investment is not recoverable, we will recognize an impairment.

Income Tax Benefit (Expense)

Certain aspects of our operations, including our ~~Development~~development and ~~Redevelopment~~redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.

Our income tax benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in ~~income~~Income tax benefit (expense)in our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~Operations.

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT. For the three and nine months ended September 30, 2022, we had consolidated net loss and income subject to tax of $75.6 million and $91.0 million, respectively. For the three and nine months ended September 30, 2021,, we had consolidated net losses subject to tax of $$7.9 million and ~~$26.4~~$26.4 million, ~~respectively. For the~~ ~~three and nine months ended September 30, 2020, we had consolidated~~ ~~net losses~~ ~~subject to~~ ~~tax of $5.7 million and $14.5 million,~~ respectively.

For the three months ended September 30, ~~2021,~~2022, we recognized income tax benefit of ~~$2.0~~$17.6 million compared to ~~$2.7~~a $2.0 million benefit during the same period ~~ended 2020.~~in 2021. The change is primarily due ~~primarily~~ to ~~lower losses at our TRS entities.~~the GAAP income taxes associated with the lease modification depreciation expense recognized in the third quarter of 2022.

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For the nine months ended September 30, ~~2021,~~2022, we ~~recorded~~recognized income tax ~~benefit~~expense of ~~$9.9~~$24.3 million compared to ~~$6.7~~a $9.9 million benefit during the same period ~~ended 2020.~~in 2021. The change is primarily due ~~primarily~~ to the GAAP income ~~tax benefit~~taxes associated with ~~internal restructuring, changes to our effective state rate expected to apply to~~ the ~~reversal of our existing deferred items, and higher losses at our TRS entities.~~net lease modification income recognized in 2022.

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.

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Cash Equivalents

We classify highly liquid investments with an original maturity of three months or less as cash equivalents. We maintain cash equivalents in financial institutions in excess of insured limits. We have not experienced any losses in these accounts in the past and believe that we are not exposed to significant credit risk because our accounts are deposited with major financial institutions.

Restricted Cash

Restricted cash consists of tenant security deposits, capital replacement reserves, insurance reserves, and cash restricted as required by our debt agreements.

Other Assets, net

Other assets were comprised of the following amounts (in thousands):


	September 30, 2022		December 31, 2021
Other investments	$	63,594	$	45,386
Notes receivable		38,759		38,029
Unconsolidated real estate partnerships		28,958		13,025
Assets held for sale (1)		11,735		—
Deferred costs, deposits, and other		11,667		22,136
Prepaid expenses and real estate taxes		10,489		20,516
Corporate fixed assets		8,484		9,855
Accounts receivable, net of allowances of $1,406 and $1,285 as of September 30, 2022 and December 31, 2021, respectively		2,544		2,469
Deferred tax assets		1,999		6,388
Intangible assets, net		1,176		3,269
Due from affiliates		1,236		4,840
Total other assets, net	$	180,641	$	165,913

(1) In addition to the properties we sold during the period, from time to time we may market to sell certain properties that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such properties meet the criteria to be classified as held for sale. As of September 30, 2022, assets held for sale include one land parcel in Fort Lauderdale, Florida, which is expected to be sold during the fourth quarter of 2022.

Accounting Pronouncements Adopted in the Current Year

During the quarter ended March 31, 2022, we adopted ASU 2021-05 establishing Topic 842, Lessors - Certain Leases with Variable Lease Payments.ASU 2021-05requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct finance lease classification would trigger a day-one loss. The adoption of this standard on January 1, 2022, did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Pronouncements

September 30, 2021

December 31, 2020

Notes receivable
$
37,893

$
37,045

Deferred costs, deposits, and other

25,585

17,557

Interest rate options

29,778

13,315

Corporate fixed assets

10,536

12,860

Unconsolidated real estate partnerships

12,974

12,829

Investment in IQHQ

24,591

12,500

Prepaid expenses and other

17,974

10,493

Intangible lease assets, net

4,756

7,264

Due from affiliates

3,155

4,333

Accounts receivable, net of allowances of $1,378 and $1,467 respectively

4,075

2,660

Total other assets, net
$
171,317

$
130,856

In March 2020, the FASB issued Accounting Standards Update No. 2020-04,“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the LIBOR or by another reference rate expected to be discontinued because of reference rate reform. The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022. In January 2021, the FASB issued Accounting Standards Update 2021-01, “Reference Rate Reform (Topic 848): Scope” (“ASU 2021-01”), which clarified the scope and application of the original guidance. We plan to adopt ASU 2020-04 and ASU 2021-01 when LIBOR is discontinued. We are currently evaluating the potential impact of adopting this guidance, but do not expect it to have a material impact on our consolidated financial statements due to the fact that we hold one month LIBOR debt instruments, which are not expected to be discontinued in 2022.

Note 3 —Significant Transactions

~~Transactions with AIR~~Acquisitions and Investments

In conjunction with the Separation, we entered into various separation and transition services agreements with AIR that provide for a framework of our relationship with AIR after the Separation, including: (i) a separation agreement setting forth the mechanics of the Separation, the key provisions relating to the separation of our assets and liabilities from those of AIR, and certain organizational matters and conditions; (ii) an employee matters agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation, benefits plans and programs, and other related matters (the “Employee Matters Agreement”); (iii) agreements pursuant to which AIR will provide property management and related services to us (collectively, the “Property Management Agreements”); (iv) an agreement pursuant to which AIR will provide us with customary administrative and support services on an ongoing basis (the “Master Services Agreement”); and (v) a master leasing agreement where we may enter into leases with AIR with the option to develop, redevelop, or lease-up the subject leased properties, and under which we will have certain lease termination rights (the “Master Leasing Agreement”).17

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•

In February 2022, we entered into a short-term cancellable lease of and a purchase agreement to acquire, for $100.0 million, a nine-acre development site in the Flagler Village neighborhood of Fort Lauderdale, Florida. The site has the potential for the development of approximately three million square feet of mixed-use property, which could contain up to 1,500 residential units at full build-out. As of September 30, 2022, we had completed the $100.0 million purchase and recognized an additional $5.9 million of capitalized costs to Land in our Condensed Consolidated Balance Sheets.

•

In January 2022, our Fort Lauderdale consolidated joint venture closed on the acquisition of three undeveloped land parcels located in downtown Fort Lauderdale, Florida for $49.0 million ($25.0 million at Aimco's 51% share), funded primarily by a $40.0 million land loan ($20.4 million at Aimco's share). The cost was allocated among the parcels based on third-party appraisals.

At the time of acquisition, one land parcel was subject to a sales agreement with closing expected during the fourth quarter of 2022. Based on the facts and circumstances related to the sale, we determined the land parcel met the criteria for classification as assets held for sale as of September 30, 2022. These assets are reported at a carrying value of $11.7 million, and are included within Other assets, net in our Condensed Consolidated Balance Sheets. Liabilities related to these assets held for sale of $8.1 million are included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets.

•

In February 2022, we funded the remaining $14.2 million of a total $50.0 million commitment of a passive equity investment in IQHQ Inc. (IQHQ), a privately held life sciences real estate development company. Based on certain facts and circumstances related to the investment, IQHQ was initially reported at cost. In June 2022, 22% of our original investment with a cost basis of $10.8 million was redeemed for $16.5 million. Consequently, we recognized a $5.7 million gain from this redemption, and the redemption cash was received in July 2022. Further at that time, our remaining investment in IQHQ with a cost basis of $39.2 million was valued at an estimated fair market value of $59.7 million, and a $20.5 million unrealized gain was recognized.

Joint Venture Transactions

•

In May 2022, we formed two joint ventures for a ground up project on the development of a phased multifamily community totaling 574 units in Bethesda, Maryland. We hold a 50% share of the joint ventures (the “DC joint ventures”), with a maximum total initial capital commitment of $21.6 million, of which $13.4 million has been funded as of September 30, 2022. We serve as co-development manager for these ventures, which are expected to begin construction in late 2023.

•

In March 2022, we formed a joint venture for the construction of approximately one million square feet of mixed-use development in the Edgewater neighborhood of Miami, Florida. We hold a 20% share of the joint venture (the “Edgewater joint venture"), which includes our initial contribution of an eighth of an acre of land that we purchased for $1.7 million in January 2022 and cash of $0.3 million. Our total capital commitment for this venture is $8.0 million. We will serve as the development manager for this project, which is expected to begin construction in 2023.

Dispositions

•

In July, we sold Cedar Rim, a 104-unit apartment community located in Renton, Washington, for $53.0 million. Cedar Rim was previously reported as held for sale.

•

In August, we sold 2900 on First, a 135-unit apartment community with 14,000 square feet of retail located in Seattle, Washington for $69.0 million. 2900 on First was previously reported as held for sale.

•

In May 2022, we closed on the sale of our Pathfinder Village property located in Fremont, California, for a gross sales price of $127.0 million and recognized a gain of $94.6 million. Pathfinder Village was a stabilized property previously reported within our Operating segment.

Lease Arrangements

•

In September 2022, we as lessee, received final payment from AIR, pursuant to the lease termination agreement entered into in June 2022. The leases with respect to four properties were terminated, and we relinquished control of these properties. See Note 9 for further information.

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Note 4 — Commitments and Contingencies

Commitments

In connection with our development, redevelopment, and other capital additions activities, we have entered into various construction-related contracts, and have made commitments to complete development and redevelopment of certain real estate, pursuant to financing or other arrangements. As of September 30, 2022, our commitments related to these capital activities totaled approximately $152.1 million, most of which we expect to incur during the next 24 months.

As described in Note 3, we have joint venture commitments to fund a total of $29.6 million for our Edgewater joint venture and DC joint ventures formed during 2022. As of September 30, 2022, we had $14.2 million of remaining commitments. We expect to fund the remaining commitments over the next twelve months.

As of September 30, 2022, we have remaining commitments of $2.7 million related to four investments in privately held entities that develop technology related to the real estate industry. The timing of funding is uncertain.

We enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.

Legal Matters

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

Note 5 — Agreements and Transactions With AIR

In conjunction with the Separation in December 2020, we entered into the following agreements with AIR that have significant operational and financial impacts to us.

Master Services Agreement

~~We and AIR entered into a~~Under the Master Services Agreement ~~in which~~with AIR, ~~will provide~~AIR provides us with customary administrative and support services. We are obligated to pay AIR the fully burdened costs in performing ~~the~~those services. We may terminate any or all services on 60 days’ prior written notice, and AIR may terminate individual services at any time after December 31, 2023. During the three and nine months ended September 30, ~~2021,~~2022, we incurred administrative and support fees of ~~$0.7~~$0.6 million and ~~$1.8~~$1.5 million, respectively, ~~which are included in general~~compared to $0.7 million and ~~administrative expenses in our condensed consolidated statements of operations. We did 0t incur any fees for~~$1.8 million during the three and nine months ended September 30, ~~2020.~~2021, respectively. These administrative support fees are included in General and administrative expenses in our Condensed Consolidated Statements of Operations.

Property Management Agreements

~~We entered into several~~ Under the Property Management Agreements with AIR, ~~pursuant to which~~ AIR ~~will provide~~provides us with certain property management, property accounting and related services for the majority of our operating ~~properties, and we will~~properties. We pay AIR a property management fee equal to 3%3% of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services. The initial term of each Property Management Agreement is ~~one-year,~~one year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’ prior written notice to the other party before the end of the term. Neither party is obligated to pay ~~to the other party~~ a termination fee or other penalty upon such termination.

During the three and nine months ended September 30, ~~2021,~~2022, we ~~recorded~~incurred property management and property accounting fees of ~~$1.3~~$1.4 million and ~~$3.8~~$4.1 million, respectively, ~~which we included in property operating expenses in our condensed consolidated statements of operations. We did 0t incur any fees for the three~~compared to $1.3 million and ~~nine months ended September 30, 2020.~~

~~Notes Payable to AIR~~

~~On December 14, 2020, we entered into $534.1~~$3.8 million of notes payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets, however, the assets secure existing senior loans of $243.4 million as of September 30, 2021. The notes mature on January 31, 2024 and bear interest at 5.2%, with accrued interest payable quarterly on January 1, April 1, July 1 and October 1, commencing on April 1, 2021. Forduring the three and nine months ended September 30, 2021, ~~we recognized interest expense of $6.9 million and $20.8 million, respectively associated with the notes payable to AIR. We made interest payments of $6.9 million in the quarter which~~respectively. These fees are included in ~~interest payments on notes payable to AIR~~Property operating expenses in ~~operating activities in the condensed consolidated statement~~our Condensed Consolidated Statements of ~~cash flows for the nine months ended September 30, 2021~~ Operations.

Master Leasing Agreement

The Master Leasing Agreement, as amended on June 14, 2022, governs the current and any future leasing arrangements between us, as lessee, and AIR, as lessor. ~~The initial term of~~Under the amendments to the Master Leasing Agreement, ~~is 18 months (expiring on or about June 14, 2022),~~AIR's purchase option to acquire completed development and redevelopment properties was replaced with automatic annual extensions (subject to each party’s right to terminate upon notice prior to the end of any such extension term). The Master Leasing Agreement provides that each time the parties thereto wish to execute a lease for a particular property, such parties will cause their applicable affiliates to execute a stand-alone lease. The initial annual rent for any leased property is based on the then-current fair market value of the subject property and market NOI cap rates, subject to certain adjustments, and is further subject to periodic escalation as set forth in the applicable lease, and the other terms thereof, including the initial term and extensions. We have the right to terminate any such lease prior to the end of its term once the leased property is stabilized. In connection with such an early termination, AIR will generally have an option (and not an obligation) to pay us an amount equal to the difference between the property’s fair value at stabilization and the initial value of the leasehold interest, at a five percent discount thereto; if AIR does not exercise such option, we will have the right to cause such property to be sold to a third party, with AIR guaranteed to receive an amount equal to the difference between the property’s fair market value at stabilization and the initial value of the leasehold interest and we will retain any excess proceeds. In the event of such sale of the property, we may also elect to purchase the property at a purchase price equal to the fair market value as agreed upon at the time of lease inception (and may subsequently sell the property to a third party, subject to AIR’s right of first ~~refusal during the first year following our acquisition). If AIR elects not to pay the fee for the~~offer on development ~~or redevelopment-related improvements,~~ and we decline to purchase the property or cause its sale to a third party, we may elect to rescind our termination of the applicable lease and instead continue such lease in effect in accordance with its terms.

We, as lessee, and AIR, as lessor, have entered into leases of five properties currently under construction or in lease-up. Four of the property leases commenced on January 1, 2021: (i) North Tower at Flamingo Point in Miami Beach, Florida; (ii) The Fremont Residences on the Anschutz Medical Campus in Aurora, Colorado; (iii) Prism in Cambridge, Massachusetts; and (iv) 707 Leahy Apartments in Redwood City, California. According to the terms of the respective lease agreements, we had the option to complete the on-going development and redevelopment of such properties and their lease-ups, which we elected on January 1, 2021. The term of each lease is 25 years except for Prism, which has a lease term of 10 years. ~~During the nine months ended September 30, 2021, we, as lessee, and AIR, as lessor, entered into a 25 year finance lease for a 15-acre plot of~~

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~~land in~~redevelopment assets that have achieved stabilization and that we choose to bring to market within one year thereafter. Each time the ~~San Francisco Bay Area on which~~parties wish to execute a new lease for a particular property, they will execute a stand-alone lease.

In September 2022, we ~~began construction of 16 single family rental homes and 8 accessory dwelling units~~received final payment from AIR, pursuant to the lease termination agreement entered into in June ~~2021.~~2022. The leases with respect to four

~~The initial fair market values~~ properties were terminated, and we relinquished control of the ~~leased assets at~~associated properties. See Note 9 for further information.

Notes Payable to AIR

In July 2022, we completed the ~~time of lease inception was determined to be $475.1 million in the aggregate. In connection with the commencement~~prepayment of the ~~leases, we assumed $70.8~~$534.1 million of ~~estimated obligations pursuant~~Notes Payable to ~~certain construction contracts.~~AIR. As a result of the prepayment, we incurred $17.4 million of spread maintenance costs, which were fully accrued as of June 30, 2022. For the three and nine months ended September 30, 2022, we recognized interest expense on the Notes Payable to AIR of $0.4 million and $13.7 million, respectively, compared to $6.9 million and $20.8 million for the three and nine months ended September 30, 2021, respectively.

Other

In June 2022, for $7.2 million, we acquired from AIR the ~~estimated obligations pursuant~~common noncontrolling interest in the entity that indirectly holds a portfolio of assets that previously secured the Notes Payable to ~~the construction contracts assumed with these leases was $16.4 million.~~AIR.

Due to and from AIR

As of September 30, ~~2021,~~2022, we have amounts due to and from AIR of ~~$14.2~~$6.7 million and ~~$3.2~~$1.0 million, respectively. As of December 31, 2021 we had amounts due to and from AIR of $15.7 million and $4.8 million, respectively. The amounts due to AIR primarily consist of invoices paid on our behalf and ~~accrued interest on the notes payable~~other reimbursements owed to AIR. The amounts due from AIR primarily consist of net cash flows generated by our operating properties.

Terry Considine Service Agreement/AIR Reimbursement

~~In conjunction with~~As contemplated by the Separation ~~we entered into an arrangement with~~and by Aimco and AIR, ~~with respect to the services of~~ Terry Considine, an Aimco board member and our former Chief Executive Officer, ~~for services~~has specific responsibilities to ~~be rendered by Mr. Considine~~us as a non-executive employee during 2022 to support the establishment and growth of our business, reporting directly to our board of directors (the "Board"). These responsibilities, separate from ~~his~~Mr. Considine’s services as a board member, ~~including, but not limited to:~~include: (i) short and ~~long term~~long-term strategic direction and advice; (ii) transition and executive support to officers; and (iii) advice and consultation with respect to strategic growth and acquisition activities. The independent directors of the Board set Mr. Considine’s 2022 target total compensation (including base compensation, short-term incentive, and long-term incentive) for these responsibilities at $We2.1 million, to be paid in equity. Mr. Considine does not receive any additional compensation for serving on the Board.

Additionally, we are obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr. Considine for the calendar year ~~2021~~2022 under the terms of his employment agreement with AIR that are in excess of $1$1.0 million, collectively.

~~During the three months ended~~ As of September 30, 2021, the Independent Directors set Mr. Considine’s target total compensation for 2021 (including base compensation, short-term incentive, and long-term incentive) at $1.8 million, to be paid out in cash and equity. In addition,2022, we estimate the total ~~2021~~2022 reimbursement to AIR, pursuant to this arrangement, will be ~~$4.0~~$4.5 million.

We estimate compensation associated with these arrangements to total $6.6 million for ~~a combined total of $5.8 million.~~2022. For the three and nine months ended September 30, ~~2021,~~2022, we ~~recorded $1.2~~recognized $1.7 million and ~~$4.1~~$4.6 million of expense related to the arrangements, respectively, compared to $1.2 million and ~~included in general~~$4.1 million for the three and ~~administrative expense in our condensed consolidated statements of operations. As of September 30, 2021, $3.0 million is included in the amount due to AIR.~~

~~Guarantee Liability~~

Legal liabilities that relate to occurrences prior to the Separation, including environmental liabilities related to properties that were no longer owned by Aimco or AIR at the time of the Separation, pursuant to the terms of the Separation Agreement, are borne by Aimco Operating Partnership up to the first $17.5 million of such liabilities, in the aggregate, and borne by AIR Operating Partnership for any such liabilities in excess of $17.5 million.

On the date of Separation, we recognized a guarantee liability of $16.4 million based on an estimate of the expected future cash flows required to settle the legal liabilities, including, but not limited to, remediation, settlement and legal costs, discounted by an estimated market discount rate of 4.25%. The guarantee liability is systematically reduced as costs related to the legal liabilities are incurred, which we estimate will occur through 2023. For the nine months ended September 30, 2021, ~~the guarantee liability was reduced by $3.4 million. As of September 30, 2021, the guarantee liability of $13.0 million~~respectively. This expense is included in ~~accrued liabilities~~General and ~~other~~administrative expenses in our ~~condensed consolidated balance sheets.~~

~~Acquisitions from AIR~~

In February 2021, we acquired from AIR the Benson Hotel and Faculty Club. In August 2021, we acquired from AIR the Eldridge Townhomes. Refer to Note 5 for further details regarding these acquisitions.

~~Other Significant Transactions~~

~~Non-recourse Property Debt~~

~~On July 2, 2021, we entered into a $13.1 million ten-year non-recourse property note at a fixed interest rate~~Condensed Consolidated Statements of ~~4.20% with a maturity date of August 1, 2031 that is secured by one of our operating properties. We recorded deferred financing cost of $0.2 million, which will be amortized over the ten-year note.~~

On August 20, 2021, we entered into a $46.7 million ten-year non-recourse property note at a fixed interest rate of 2.78% with a maturity date of September 1, 2031 that is secured by one of our operating properties. We recorded deferred financing cost of $0.5 million, which will be amortized over the ten-year note.

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Operations~~Proceeds from the two non-recourse loans were used to fund the purchase of Eldridge Townhomes for $40.0 million and other investment opportunities.~~.

~~Construction Loans~~

On April 15, 2021, we entered into a $150 million variable-rate non-recourse construction loan collateralized by our leasehold interest and AIR’s fee ownership interest in Flamingo North Tower. The initial term of the loan is three years and bears interest at one month LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85%. As of September 30, 2021, we had $118.8 million of principal outstanding. Certain consolidated subsidiaries have indemnified AIR for any losses it incurs as a result of a default on the loan by Aimco. We recorded $3.8 million of deferred financing costs which will be amortized over the three year term of the loan.

On June 21, 2021, we entered into a $100.7 million variable-rate non-recourse construction loan collateralized by our fee ownership interest in Hamilton on the Bay. The initial term of the loan is three years and bears interest at one month LIBOR plus 320 basis points subject to a minimum all-in per annum interest rate of 3.45%. As of September 30, 2021, we had $25.0 million of principal outstanding. We recorded $2.3 million of deferred financing costs which will be amortized over the three year term of the loan.

If LIBOR ceases to exist during the term of these agreements, the documents associated with these agreements contain language to address a transition to another bench mark rate. It is anticipated LIBOR will be replaced with SOFR, however, if SOFR were to not be available the agreements contain alternate provisions.

~~Fort Lauderdale Consolidated Joint Venture~~

~~In July 2021, Aimco entered into a joint venture with Kushner Companies to purchase~~ 3 undeveloped land parcels located in downtown Fort Lauderdale, Florida. The total contract price for the land is $49 million ($25 million at Aimco’s 51% share). Current zoning allows for the development of approximately three million square feet of multifamily homes and commercial space. The land purchase is expected to close in ~~January 2022~~. ~~We have paid $2.4 million of the $25 million commitment, related to our share of the contract price.~~

~~Note 4 — Commitments and Contingencies~~

~~Commitments~~

In connection with our development, redevelopment, and other capital additions activities, we have entered into various construction-related contracts and we have made commitments to complete development and redevelopment of certain real estate, pursuant to financing or other arrangements. As of September 30, 2021, our commitments related to these capital activities totaled approximately $294.2 million, most of which we expect to incur during the next 24 months.

We have a commitment to fund an additional $25.4 million to IQHQ and currently expect to contribute this investment through the end of 2022. During the nine months ended September 30, 2021, we contributed a total of $12.1 million. We also have unfunded commitments related to three investments in privately held entities that develop technology related to the real estate industry (“RETV”). During the nine months ended September 30, 2021, we contributed a total of $0.1 million to RETV, leaving an additional funding commitment in the amount of $1.0 million, the timing of which is uncertain.

~~Legal Matters~~

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

~~Note 5 — Acquisitions~~

During the three months ended September 30, 2021, we acquired from AIR the Eldridge Townhomes for $40 million based on an independent opinion of its value. The Eldridge Townhomes are a 58-unit townhome community located on 3.6 acres of land contiguous to our Elm Creek community in Elmhurst, Illinois, a western suburb of Chicago. To fund the acquisition of Eldridge Townhomes, we used proceeds from debt placement on the unencumbered Evanston Place asset in Evanston, Illinois.

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Number of townhomes

58

Purchase price
$
40,000

Consideration allocated to land
$
3,483

Consideration allocated to building and improvements

35,630

Consideration allocated to intangible assets (1)

913

Consideration allocated to below-market lease liabilities (2)

(26
)
Total consideration
$
40,000

~~(1)~~

~~Intangible assets include in-place leases and leasing costs with a weighted-average term of six months.~~

~~(2)~~

~~Below-market leases have a weighted average term of six months.~~

During the nine months ended September 30, 2021, we acquired 8 land parcels adjacent to our Hamilton on the Bay apartment community, located in Miami’s Edgewater neighborhood, for $19.3 million and we began major redevelopment of the existing apartment building at Hamilton on the Bay. The scope of our investment will completely renew the waterfront high-rise, which benefits from spacious apartment homes (averaging 1,411 square feet) and an abundance of outdoor and amenity space that was previously underutilized.

In February 2021, we acquired The Benson Hotel and Faculty Club development property for $6.2 million, net of outstanding construction liabilities of $0.9 million. The development property consists of land and initial construction costs. The project is expected to be completed in the first quarter of 2023.

Note 6 — Earnings and Dividends per Share and per Unit

Aimco and Aimco Operating Partnership calculate basic earnings per share of common stock and basic earnings per common unit based on the weighted-average number of shares of common stock and common partnership units outstanding. We calculate diluted earnings per share of common stock and diluted earnings per common unit taking into consideration dilutive shares of common stock and common partnership unit equivalents and dilutive convertible securities outstanding during the period.

The shares of common stock and common partnership units outstanding at the Separation date are reflected as outstanding for all periods prior to the Separation for purposes of determining earnings per share and per unit. Each of our executives and AIR’s executives received one unvested share of ~~AIV~~Aimco stock and one unvested share of AIR stock at the Separation date for each unvested ~~shares.~~share they held at that date. We include AIR’s executives’ rights to receive ~~AIV~~Aimco shares upon vesting in our dilutive calculations.

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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 of common stock and Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares of common stock purchased under the options. These equivalents also include unvested ~~TSR~~performance-based 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 the shares that vest. Common partnership unit equivalents also include unvested long-term incentive partnership units. We include in the denominator securities with dilutive effect in calculating diluted earnings per share and per unit during these periods.

Our time-based restricted stock awards receive non-forfeitable dividends similar to shares of common stock and common partnership units prior to vesting, and our ~~TSR~~Performance-Based LTIP I units and ~~TSR~~Performance-Based LTIP II units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting and conversion. The unvested restricted shares and units related to these awards are participating securities. We include the effect of 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. ~~No such items were~~Participating securities are included in the computation of diluted ~~loss~~earnings per share for the three orand nine months ended September 30, 2022 and 2021, because ~~the effect of inclusion would be anti-dilutive.~~their effects are dilutive.

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Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, are as follows (in thousands, except per share and per unit data):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Earnings per share
Numerator:
Net income (loss) attributable to Aimco	$	29,472		$	(5,016	)	$	276,817		$	(4,492	)
Net income (loss) allocated to Aimco participating securities		(405	)		—			(3,806	)		—
Net income (loss) attributable to Aimco common stockholders		29,067			(5,016	)		273,011			(4,492	)

Denominator - shares:
Basic weighted-average common stock outstanding		149,611			149,762			149,706			149,517
Diluted share equivalents outstanding		1,586			—			1,370			—
Diluted weighted-average common stock outstanding		151,197			149,762			151,076			149,517

Earnings (loss) per share - basic	$	0.19		$	(0.03	)	$	1.82		$	(0.03	)
Earnings (loss) per share - diluted	$	0.19		$	(0.03	)	$	1.81		$	(0.03	)

Earnings per unit
Numerator:
Net income (loss) attributable to Aimco Operating Partnership	$	31,026		$	(5,269	)	$	291,465		$	(4,701	)
Net income (loss) allocated to Aimco Operating Partnership participating securities		(421	)		—			(3,964	)		—
Net income (loss) attributable to Aimco Operating Partnership's common unit holders		30,605			(5,269	)		287,501			(4,701	)

Denominator - units
Basic weighted-average common partnership units outstanding		157,530			157,806			157,627			157,873
Diluted partnership unit equivalents outstanding		1,606			-			1,390			-
Diluted weighted-average common partnership units outstanding		159,136			157,806			159,017			157,873

Earnings (loss) per unit - basic	$	0.19		$	(0.03	)	$	1.82		$	(0.03	)
Earnings (loss) per unit - diluted	$	0.19		$	(0.03	)	$	1.81		$	(0.03	)

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Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Earnings per share

Numerator:

Net (loss) income attributable to Aimco
$
(5,016
)

$
2,011

$
(4,492
)

$
9,502

   Net (loss) income attributable to participating securities

—

(1
)

—

(6
)
Net (loss) income attributable to Aimco common stockholders
$
(5,016
)

$
2,010

$
(4,492
)

$
9,496

Denominator – shares:

   Basic weighted-average common stock outstanding

149,762

148,549

149,517

148,549

   Diluted share equivalents outstanding

—

20

—

20

Diluted weighted-average common stock outstanding

149,762

148,569

149,517

148,569

Earnings per share – basic
$
(0.03
)

$
0.01

$
(0.03
)

$
0.06

Earnings per share – diluted
$
(0.03
)

$
0.01

$
(0.03
)

$
0.06

Earnings per unit

Numerator:

Net (loss) income attributable to Aimco Operating Partnership
$
(5,269
)

$
2,118

$
(4,701
)

$
10,009

   Net (loss) income attributable to participating securities

—

(4
)

—

(17
)
Net (loss) income attributable to Aimco Operating Partnership's Common unit holders
$
(5,269
)

$
2,114

$
(4,701
)

$
9,992

Denominator – units

   Basic weighted-average common partnership units outstanding

157,806

156,480

157,873

156,480

   Diluted partnership unit equivalents outstanding

—

20

—

20

Diluted weighted-average common partnership units outstanding

157,806

156,500

157,873

156,500

Earnings per unit – basic
$
(0.03
)

$
0.01

$
(0.03
)

$
0.06

Earnings per unit – diluted
$
(0.03
)

$
0.01

$
(0.03
)

$
0.06

Note 7 — Fair Value Measurements

Recurring Fair Value Measurements

In 2020, we paid an upfront premium of $12.1 million for the option to enter into a $1.5 billion notional amount interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against exposure to rising interest rates between now and October 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68% five year swap strike price. The amount of future cash settlement is capped 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, nor would we have any requirement to make a payment.

During the nine months ended September 30, 2021, we paid an upfront premium of $5.6 million (including transaction costs) for the option to enter into a $500 million notional amount interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our notes payable to AIR and is intended to mitigate interest rate increases between now and January 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 3% strike price on the five year swap rate. Alternatively, if interest rates were to decrease below the specified strike price we would not receive a cash settlement, nor would we have any requirement to make a payment.

From time to time we purchase interest rate swaps, caps, and other instruments to provide protection against increases in interest rates on our ~~floating~~variable rate debt. As of September 30, 2022, we held interest rate swaps and caps with $1.7 billion notional value that provide protection through the fourth quarter of 2024. These instruments were acquired for $15.7 million. The fair value of these instruments is noted in the table below.

During the nine months ended September 30, 2022, we monetized an interest rate ~~caps are included in the fair value table below.~~swap and a portion of an interest rate cap for $15.5 million and recognized gains of $9.8 million, net of transaction costs.

WeOn a recurring basis, we measure at fair value ~~on a recurring basis~~ our interest rate options, which are presented in ~~other~~Other assets, net in our ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. Our interest rate options are classified within Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market information, including contractual terms, market

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prices, and interest rate yield curves. The fair value adjustment is included in earnings in Unrealized gains on interest rate options in our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~Operations. Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, and ~~the~~any upfront premium is reflected in ~~purchase~~Purchase of interest rate ~~option~~options in our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~cash flows.~~Cash Flows.

WeAs of September 30, 2022, we have investments of ~~$4.5~~$3.9 million in ~~RETV~~property technology funds consisting of ~~three privately held~~ entities that develop technology ~~related to~~for the real estate industry. These investments are measured at net asset value (“NAV”) as a practical expedient. See Note 4 for further information.

The following table summarizes fair value for our interest rate options and our investments in real estate technology funds as of September 30, 2022, and December 31, 2021 (in thousands):


	As of September 30, 2022								As of December 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Interest rate options	$	61,329	$	—	$	61,329	$	—	$	25,449	$	—	$	25,449	$	—
Investment in real estate technology funds (1)	$	3,909		—		—		—	$	9,613		—		—		—

(1) Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy.

Nonrecurring Fair Value Measurements

As of September 30, 2022, assets measured at fair value on a nonrecurring basis shown in our Condensed Consolidated Balance Sheets consisted of our investment in ~~RETV (in thousands):~~IQHQ. IQHQ was initially reported at cost. In June 2022, 22% of our original investment with a cost basis of $10.8 million was redeemed for $16.5 million. As a result, our remaining shares in IQHQ after the partial redemption were re-valued on a stepped up basis to fair value at the same per share value as the cash redemption per share value. These observable inputs are classified as Level 1 within the GAAP fair value hierarchy. As of September 30, 2022, the fair value of our investment in IQHQ measured on a nonrecurring basis remained at $59.7 million.

As of September 30, 2021

As of December 31, 2020

Total

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Interest rate options

$
29,547

$
0

$
29,547

$
0

$
13,315

$
0

$
13,315

$
0

Investment in RETV (1)

4,497

0

0

0

2,293

0

—

0

~~(1)~~

~~Investments measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.~~

Fair Value Disclosures

We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and payables approximated their fair value as of September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, due to their relatively short-term nature and high probability of realization. We estimate the fair value of our ~~non-recourse property~~ debt ~~construction loans, and notes payable to AIR~~ 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, debt service coverage ratios, and loan to value ratios. We classify the fair value of our non-recourse property debt and construction loans ~~debt~~ within Level 2 of the GAAP fair value hierarchy based on the significance of certain of the unobservable inputs used to estimate ~~its~~their fair value. As of July 2022, we had prepaid the $534.1 million of Notes Payable to AIR.

~~The carrying amount~~22

Table of ~~the notes payable to AIR approximated their fair value at both September 30, 2021 and December 31, 2020.~~Contents

The following table summarizes the carrying value and fair value ~~for~~of our non-recourse property debt, ~~and~~ construction loans, ~~debt~~and Notes Payable to AIR as of September 30, 2022, and December 31, 2021, (in thousands):


	As of September 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Non-recourse property debt	$	868,237	$	796,311	$	484,883	$	498,960
Construction loans		86,693		86,693		168,376		168,376
Notes Payable to AIR		—		—		534,127		534,127
Total	$	954,930	$	883,004	$	1,187,386	$	1,201,463

As of September 30, 2021

As of December 31, 2020

Carrying Value

Fair Value

Carrying Value

Fair Value

Non-recourse property debt
$
488,576

$
505,215

$
449,510

$
467,010

Construction loans debt

143,742

143,742

0

0

Note 8 — Variable Interest Entities

~~Aimco consolidates~~We evaluate our investments in limited partnerships and similar entities in accordance with applicable consolidation guidance to determine whether each such entity is a VIE. The accounting standards for the consolidation of VIEs require qualitative assessments to determine whether we are the primary beneficiary. The primary beneficiary analysis is based on power and economics. We conclude that we are the primary beneficiary and consolidate the VIE if we have both: (i) the power to direct the activities of the VIE that most significantly influence the VIE's economic performance, and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. Significant judgments and assumptions related to these determinations include, but are not limited to, estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

We consolidate Aimco Operating Partnership, a VIE of which Aimco is the primary beneficiary. Aimco, through Aimco Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Substantially all of the assets and liabilities of Aimco are that of Aimco Operating Partnership.

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~~The VIEs that~~ Aimco Operating Partnership is the primary beneficiary, and therefore consolidates our four VIEs that own interests in real ~~estate or commitments to acquire real~~ estate. ~~We are the primary beneficiary of the VIEs because~~In addition, we have ~~the power to direct the activities that most significantly impact the entities’ economic performance and have a substantial economic interest. We have six~~nine unconsolidated VIEs for which we are not the primary beneficiary because we are not ~~the~~their primary decision maker. The ~~six~~nine unconsolidated ~~VIE’s~~VIEs include four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California, the Mezzanine Investment, our passive equity investment in IQHQ, our investment in the Edgewater joint venture, and ~~one other that is insignificant to~~ our ~~condensed consolidated balance sheets for both periods presented.~~investments in the DC joint ventures.

~~The details~~Details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of September 30, ~~2021~~2022, and December 31, ~~2020~~2021, (in thousands, except for VIE count):


	September 30, 2021				December 31, 2020				September 30, 2022				December 31, 2021
	Consolidated		Unconsolidated		Consolidated		Unconsolidated		Consolidated		Unconsolidated		Consolidated		Unconsolidated
Count of VIEs	9		6		2		6		4		9		9		6
Assets
Real estate, net	$	527,065	$	0	$	310,552	$	0	$	210,586	$	—	$	564,909	$	—
Mezzanine investment		0		330,016		0		307,362		—		362,788		—		337,797
Right-of-use lease assets		433,983		0		92,709		0		95,506		—		429,768		—
Unconsolidated real estate partnerships										—		28,958		—		13,005
Other assets, net		29,615		37,565		16,949		25,329		—		59,686		43,715		35,773
Liabilities
Deferred tax liabilities		126,851		0		133,842		0		—		—		124,747		—
Accrued liabilities and other		24,789		0		7,106		0		25,515		—		30,519		—
Non-recourse property debt, net										31,904		—		—		—
Construction loans, net		143,742		0		0		0		12,237		—		163,570		—
Lease liabilities		435,916		0		86,781		0		98,467		—		435,093		—

~~As of~~Consolidated Real Estate Partnerships

The changes in consolidated VIE assets and liabilities from December 31, 2021 to September 30, ~~2021, two~~2022 in the table above are primarily due to the impact of:

(i) In September 2022, we as lessee received final payment from AIR as lessor, pursuant to the lease termination agreement entered into in June 2022. The leases with respect to four properties were terminated, and we relinquished control of ~~our~~the associated leasehold improvements and underlying land of these four properties. Consequently, we derecognized $86.6 million real estate assets and a $138.4 million construction loan was paid off and derecognized as well. In addition, we derecognized right-of-use

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lease assets and lease liabilities of $326.1 million and $337.3 million, respectively, due to the lease modifications described in Note 9.

(ii) In February 2022, we acquired all of the outstanding redeemable non-controlling interests in an entity reported as a consolidated ~~VIEs closed construction loans. In conjunction with these loans, we made customary guarantees. In certain situations, the lenders may have recourse to our general credit. As~~VIE as of ~~September 30, 2021, we estimate the maximum exposure equals the $143.7 million outstanding loan balances. Other consolidated VIE’s creditors do not have recourse to our general credit.~~December 31, 2021.

Unconsolidated Real Estate Partnerships

We own an interest in 4four unconsolidated real estate partnerships that hold four apartment communities in San Diego, ~~California, of which we are not~~California. We also own investments in the ~~primary beneficiary.~~ Edgewater joint venture formed in March 2022 to develop a 2.8-acre site in Miami's Edgewater neighborhood, and the DC joint ventures formed in May 2022 to develop a ground-up phased multifamily community in Bethesda, Maryland. See Note 3 for further information.

Our investment ~~balance~~balances of ~~$13.0~~$29.0 million and $13.0 million as of September 30, 2022 and December 31, 2021, ~~represents~~respectively, represented our maximum exposure to loss in these ~~VIE’s.~~unconsolidated VIEs.

Mezzanine Investment

AIR owns an interest in a partnership that owns Parkmerced Apartments, of which it is not the primary beneficiary, and under the terms of the Separation Agreement, AIR is obligated to transfer ownership of the subsidiaries that hold this interest to us upon receipt of required third-party consents. Our investment ~~balance~~balances of ~~$330~~$362.8 million and $337.8 million as of September 30, 2022 and December 31, 2021, ~~reflected~~respectively, represent our indirect interest in ~~Mezzanine investment in~~notes receivable through our ~~consolidated balance sheets, represents~~agreement with AIR and our maximum exposure to loss in this VIE.

Note 9 — ~~Business Segments~~Lease Arrangements

Aimco as Lessor

For the three and nine months ended September 30, 2022 and 2021, our total lease income was comprised of the following amounts for all residential and commercial property leases (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Fixed lease income	$	44,239	$	39,382	$	137,519	$	113,726
Variable lease income		3,443		3,046		10,853		8,760
Total lease income	$	47,682	$	42,428	$	148,372	$	122,486

Aimco as Lessee

Lease Arrangements with AIR

We, as lessee, and AIR, as lessor, have entered into leases on properties currently under construction or in lease-up. These lease arrangements are governed by separate Master Lease Agreements and the Master Leasing Agreement.

In June 2022, we as lessee and AIR as lessor, entered into a lease termination agreement with respect to four leases entered into on January 1, 2021 that pertained to our North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism properties. This agreement terminated the four finance leases on September 1, 2022. Upon termination, both parties were released of any and all liabilities and obligations under each respective lease other than those liabilities and obligations, if any, that expressly survived termination. On September 1, 2022, we relinquished control of the leasehold improvements on these four properties as well as the underlying land. In exchange, AIR remitted a total of $200.0 million in consideration to us as termination payments.

Because the termination agreement modified the expiration date of each lease to September 1, 2022, we accelerated depreciation on the associated leasehold improvements using lease terms that ended September 1, 2022. We recorded $69.9 million and $85.7 million of total depreciation expense for thethree and nine months ended September 30, 2022, respectively. In addition, we recognized Lease modification income of $1.6 million and $207.0 million, which is included in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively.

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Ground Leases

We are lessee to two 99-year ground leases for the land underlying the development site at Upton Place, a mixed-use development project which will create 689 apartment homes and approximately 100,000 square feet of commercial space in upper-northwest Washington, D.C. These ground leases are classified as finance leases.

Other Finance Lease Arrangements

As described in Note 3, in February 2022, we, as lessee, entered into certain finance lease arrangements concurrent with a purchase agreement to acquire a development site in the Flagler Village neighborhood of Fort Lauderdale, Florida. As of September 30, 2022, we had completed the $100.0 million purchase and recognized an additional $5.9 million of capitalized costs to Land in our Condensed Consolidated Balance Sheets. See Note 3 for additional information.

As of September 30, 2022 and December 31, 2021, our finance leases had weighted-average remaining terms of 93.9 years and 38.5 years, respectively, and weighted-average discount rates of 6.0% and 5.4%, respectively.

As of September 30, 2022, finance lease right-of-use lease assets and liabilities totaled $95.5 million and $98.5 million, respectively. As of December 31, 2021, finance right-of-use lease assets and liabilities totaled $429.8 million and $435.1 million, respectively.

For the three and nine months ended September 30, 2022, amortization related to finance leases was $0.0 million and $6.7 million, respectively, net of amounts capitalized, compared to $2.1 million and $5.5 million for the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2022, we capitalized $1.7 million and $6.5 million, respectively, of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets, compared to $5.8 million and $18.5 million, respectively, for three and nine months ended September 30, 2021.

Operating Lease Arrangements

We have 3operating leases primarily for corporate office space. As of September 30, 2022 and December 31, 2021, our operating leases had weighted-average remaining terms of 6.6 years and 7.4 years, respectively. As of September 30, 2022 and December 31, 2021, the leases had weighted-average discount rates of 3.1%, and 3.1%, respectively.

We record operating lease expense on a straight-line basis over the lease term. Total operating lease expense for the three and nine months ended September 30, 2022 was $0.2 million and $0.5 million, respectively, compared to $0.2 million and $0.5 million for the three and nine months ended September 30, 2021, respectively. As of September 30, 2022 and December 31, 2021, operating lease right-of-use lease assets of $4.6 million and $5.1 million, respectively, are included in Other assets, net in our Condensed Consolidated Balance Sheets. As of September 30, 2022 and December 31, 2021, operating lease liabilities of $11.6 million and $12.7 million, respectively, are included in Accrued liabilities and other in our Condensed Consolidated Balance Sheets.

For finance and operating leases, when the rate implicit in the lease cannot be determined, we estimate the value of our lease liabilities using discount rates equivalent to the rates we would pay on a secured borrowing with terms similar to the leases. We determine if an arrangement is or contains a lease at inception. We have lease agreements with lease and non-lease components, and have elected to not separate these components for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded in our Condensed Consolidated Balance Sheets.

Office Space Sublease

We have a sublease arrangement to provide space within our corporate office for fixed rents, which commenced on January 1, 2021 and expires on May 31, 2029.

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Annual Future Minimum Lease Payments

Combined minimum annual lease payments under operating and finance leases, and sublease income that offsets our operating lease rent, are as follows (in thousands):


	Sublease Income and Lease Modification Income		Operating Lease Future Minimum Rent			Financing Leases Future Minimum Payments
Remainder of 2022	$	349	$	314		$	494
2023		1,403		1,922			2,335
2024		1,413		1,935			3,335
2025		1,423		1,930			3,835
2026		1,433		1,960			4,334
Thereafter		3,526		4,847			1,155,089
Total	$	9,547	$	12,908		$	1,169,422
Less: Discount				(1,308	)		(1,070,955	)
Total lease liabilities			$	11,600		$	98,467

Note 10 — Business Segments

We have three segments: (i) Development and Redevelopment; (ii) ~~Operating Portfolio;~~Operating; and (iii) Other.

Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land ~~assemblages that are being~~ held for ~~development adjacent to our Hamilton on the Bay community and other land purchases.~~development. Our Operating ~~Portfolio~~ segment includes ~~24 majority owned~~21 residential apartment communities that have achieved stabilized level of operations as of January 1, ~~2020~~2021 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating ~~Portfolio.~~segment. Our Other segment consists of properties that are not included in our ~~Developments~~Development and Redevelopment or Operating segments. During the nine months ended September 30, 2022 we disposed of two Seattle, Washington area properties that had previously been reported as held for sale assets and one stabilized property located in Fremont, CA that was previously reported within our Operating segment. ~~We realigned~~In addition, we terminated the leases for four residential apartment communities that were previously reported within our ~~segments during the fourth quarter 2020~~Development and ~~have restated historical periods to conform with~~Redevelopment segment. Prior period segment information has been recast based upon our current segment ~~presentation.~~

~~Our~~population and is consistent with how our chief operating decision maker ~~(“CODM”~~("CODM") evaluates the business. The recast conforms with our reportable segment composition as of September 30, 2022.

Our CODM uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating ~~Portfolio.~~segment. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding reimbursements, less direct property

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operating expenses, net of utility reimbursements, for consolidated communities. In our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations,~~Operations, utility reimbursements are included in ~~rental~~Rental and other property revenues, in accordance with GAAP.

As of September 30, ~~2021,~~2022, our Development and Redevelopment segment ~~includes 5 real estate investments: Upton Place, Hamilton on the Bay, The Benson Hotel,~~consists of 10 properties: two residential apartment communities with 965 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, we are actively developing or redeveloping; and, land parcels adjacent to our Hamilton on the Bay community and land purchased in Colorado Springs, Colorado. The Development and Redevelopment segment also includes our 5 leased properties of which, 2 are under construction and 3 are in lease-up but have not achieved stabilization.held for development. Our Operating ~~Portfolio~~ segment includes 2421 consolidated apartment communities with ~~6,067~~5,582 apartment homes. Our Other segment includes ~~our recent~~ Eldridge Townhomes ~~acquisition,~~apartment community, stabilized but not owned for the comparable reporting period, and 1001 Brickell Bay Drive, our only office building.

The following tables present the revenues, proportionate property net operating income, and income before income tax benefit of our segments on a proportionate basis, excluding amounts related to our proportionate share of four apartment communities with apartment homes that we neither manage nor consolidate, for the three and nine months ended September 30, 2021 and 2020 (in thousands):26

Development and Redevelopment

Operating Portfolio

Other

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments

Consolidated

Three months ended September 30, 2021:

Rental and other property revenues
$
3,196

$
34,591

$
3,360

$
1,746

$
—

$
42,893

Property operating expenses

2,026

11,257

1,047

1,723

2,102

18,155

Other operating expenses not allocated
   to segments (2)

—

—

—

—

30,577

30,577

Total operating expenses

2,026

11,257

1,047

1,723

32,679

48,732

Proportionate property net operating
   income (loss)

1,170

23,334

2,313

23

(32,679
)

(5,839
)
Other items included in income before
   income tax benefit (3)

—

—

—

—

(1,028
)

(1,028
)
Income (loss) before income tax benefit
$
1,170

$
23,334

$
2,313

$
23

$
(33,707
)

$
(6,867
)

Development and Redevelopment

Operating Portfolio

Other

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments

Consolidated

Three months ended September 30, 2020:

Rental and other property revenues
$
—

$
32,376

$
3,107

$
1,845

$
—

$
37,328

Property operating expenses

—

10,182

1,077

1,584

2,308

15,151

Other operating expenses not allocated
   to segments (2)

—

—

—

—

20,848

20,848

Total operating expenses

—

10,182

1,077

1,584

23,156

35,999

Proportionate property net operating
   income (loss)

—

22,194

2,030

261

(23,156
)

1,329

Other items included in income before
   income tax benefit (3)

—

—

—

—

(2,006
)

(2,006
)
Income (loss) before income tax benefit
$
—

$
22,194

$
2,030

$
261

$
(25,162
)

$
(677
)

Development and Redevelopment

Operating Portfolio

Other

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments

Consolidated

Nine months ended September 30, 2021:

Rental and other property revenues
$
7,889

$
100,609

$
9,489

$
5,128

$
—

$
123,115

Property operating expenses

5,956

33,386

3,108

4,930

4,120

51,500

Other operating expenses not allocated
   to segments (2)

—

—

—

—

85,627

85,627

Total operating expenses

5,956

33,386

3,108

4,930

89,747

137,127

Proportionate property net operating
   income (loss)

1,933

67,223

6,381

198

(89,747
)

(14,012
)
Other items included in income before
   income tax benefit (3)

—

—

—

—

333

333

   Income (loss) before income tax benefit
$
1,933

$
67,223

$
6,381

$
198

$
(89,414
)

$
(13,679
)

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The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended September 30, 2022 and 2021 (in thousands):


	Development and Redevelopment			Operating		Other		Proportionate and Other Adjustments(1)			Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three Months Ended September 30, 2022:
Rental and other property revenues	$	123		$	34,691	$	4,241	$	1,344		$	7,284		$	47,683
Property operating expenses		336			10,220		1,264		1,377			4,258			17,455
Other operating expenses not allocated to segments (3)		—			—		—		—			96,247			96,247
Total operating expenses		336			10,220		1,264		1,377			100,505			113,702
Proportionate property net operating income (loss)		(213	)		24,471		2,977		(33	)		(93,221	)		(66,019	)
Other items included in income before income tax (4)		—			—		—		—			82,629			82,629
Income (loss) before income tax	$	(213	)	$	24,471	$	2,977	$	(33	)	$	(10,592	)	$	16,610


	Development and Redevelopment			Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three Months Ended September 30, 2021:
Rental and other property revenues	$	256		$	31,126	$	3,459	$	1,300	$	6,752		$	42,893
Property operating expenses		472			10,301		1,124		1,293		4,965			18,155
Other operating expenses not allocated to segments (3)		—			—		—		—		30,577			30,577
Total operating expenses		472			10,301		1,124		1,293		35,542			48,732
Proportionate property net operating income (loss)		(216	)		20,825		2,335		7		(28,790	)		(5,839	)
Other items included in income before income tax (4)		—			—		—		—		(1,028	)		(1,028	)
Income (loss) before income tax	$	(216	)	$	20,825	$	2,335	$	7	$	(29,818	)	$	(6,867	)

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the nine months ended September 30, 2022 and 2021 (in thousands):


	Development and Redevelopment			Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Nine Months Ended September 30, 2022:
Rental and other property revenues	$	204		$	100,052	$	13,619	$	4,466	$	30,034		$	148,375
Property operating expenses		908			30,916		4,085		4,455		16,020			56,384
Other operating expenses not allocated to segments (3)		—			—		—		—		172,663			172,663
Total operating expenses		908			30,916		4,085		4,455		188,683			229,047
Proportionate property net operating income (loss)		(704	)		69,136		9,534		11		(158,649	)		(80,672	)
Other items included in income before income tax (4)		—			—		—		—		402,506			402,506
Income (loss) before income tax	$	(704	)	$	69,136	$	9,534	$	11	$	243,857		$	321,834

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	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Nine Months Ended September 30, 2021:
Rental and other property revenues	$	2,006	$	90,176	$	9,783	$	3,863	$	17,287		$	123,115
Property operating expenses		1,737		30,461		3,251		3,825		12,226			51,500
Other operating expenses not allocated to segments (3)		—		—		—		—		85,627			85,627
Total operating expenses		1,737		30,461		3,251		3,825		97,853			137,127
Proportionate property net operating income (loss)		269		59,715		6,532		38		(80,566	)		(14,012	)
Other items included in income before income tax (4)		—		—		—		—		333			333
Income (loss) before income tax	$	269	$	59,715	$	6,532	$	38	$	(80,233	)	$	(13,679	)

Development and Redevelopment

Operating Portfolio

Other

Proportionate
and Other
Adjustments (1)

Corporate and
Amounts Not
Allocated to
Segments

Consolidated

Nine months ended September 30, 2020:

Rental and other property revenues
$
—

$
98,336

$
9,458

$
5,008

$
—

$
112,802

Property operating expenses

—

31,088

3,022

4,505

7,207

45,822

Other operating expenses not allocated
   to segments (2)

—

—

—

—

62,612

62,612

Total operating expenses

—

31,088

3,022

4,505

69,819

108,434

Proportionate property net operating
   income (loss)

—

67,248

6,436

503

(69,819
)

4,368

Other items included in income before
   income tax benefit (3)

—

—

—

—

(1,432
)

(1,432
)
   Income (loss) before income tax benefit
$
—

$
67,248

$
6,436

$
503

$
(71,251
)

$
2,936

(1)

Represents adjustments for redeemable noncontrolling interests in consolidated real estate partnerships' share of the results of consolidated 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. Also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.

(3)

Other operating expenses not allocated to segments consist of depreciation and amortization, general and administrative expense, and miscellaneous other expenses.

(4)

Other items included in Income before income tax benefit consist primarily of interest expense, gain on our interest rate options, gain on sale of Real Estate, lease modification income and mezzanine investment income, net.

~~(1)~~

Represents adjustments for the redeemable noncontrolling interest in consolidated real estate partnership’s share of the results of consolidated 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)~~

~~Other operating expenses not allocated to segments consists of depreciation and amortization, general and administrative expense, and miscellaneous other expenses.~~

~~(3)~~

~~Other items included in income before income tax benefit consists primarily of interest expense, unrealized gain on our interest rate options and mezzanine investment income, net.~~

Net real estate and non-recourse property debt, net, of our segments as of September 30, 2022 and December 31, 2021, were as follows (in thousands):


	Development and Redevelopment			Operating			Other			Corporate(1)		Total
As of September 30, 2022:
Buildings and improvements	$	378,117		$	671,670		$	198,218		$	—	$	1,248,005
Land		226,738			259,033			153,501			—		639,272
Total real estate		604,855			930,703			351,719			—		1,887,277
Accumulated depreciation		(1,426	)		(459,722	)		(55,709	)		—		(516,857	)
Net real estate	$	603,429		$	470,981		$	296,010		$	—	$	1,370,420

Non-recourse property debt and construction loans, net	$	170,939		$	743,001		$	26,469		$	—	$	940,409


	Development and Redevelopment			Operating			Other			Corporate(1)			Total
As of December 31, 2021:
Buildings and improvements	$	202,367		$	675,269		$	196,853		$	182,725		$	1,257,214
Land		82,325			259,033			153,501			39,426			534,285
Total real estate		284,692			934,302			350,354			222,151			1,791,499
Accumulated depreciation		(1,426	)		(444,324	)		(41,841	)		(73,524	)		(561,115	)
Net real estate	$	283,266		$	489,978		$	308,513		$	148,627		$	1,230,384

Non-recourse property debt, net	$	36,218		$	428,308		$	—		$	182,181		$	646,707

Development and Redevelopment

Operating Portfolio

Other

Total

As of September 30, 2021:

Buildings and improvements
$
225,043

$
780,606

$
196,630

$
1,202,279

Land

82,132

298,459

153,501

534,092

Total real estate

307,175

1,079,065

350,131

1,736,371

Accumulated depreciation

(2,185
)

(506,065
)

(37,249
)

(545,499
)
Net real estate
$
304,990

$
573,000

$
312,882

$
1,190,872

Non-recourse property debt and construction loans, net
$
138,439

$
485,116

$
—

$
623,555

(1)

During the nine months ended September 30, 2022, certain properties were sold or reclassified as Held for Sale, and therefore are not included in our segment balance sheets, as of September 30, 2022. We added a new Corporate segment to this table for presentation purposes to display these assets and the associated debt as of December 31, 2021.

Development and Redevelopment

Operating Portfolio

Other

Total

As of December 31, 2020:

Buildings and improvements
$
61,813

$
772,786

$
160,517

$
995,116

Land

56,676

298,459

150,018

505,153

Total real estate

118,489

1,071,245

310,535

1,500,269

Accumulated depreciation

(447
)

(469,873
)

(24,690
)

(495,010
)
Net real estate
$
118,042

$
601,372

$
285,845

$
1,005,259

Non-recourse property debt, net
$
—

$
447,967

$
—

$
447,967

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In addition to the amounts disclosed in the tables above, as of September 30, 2022 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $95.5 million and $98.5 million, respectively, and as of December 31, 2021, aggregated to $429.8 million and $435.1 million, respectively. As of September 30, ~~2021 aggregated to $434.0 million~~2022, right-of-use lease assets and ~~$435.9 million, respectively, related~~lease liabilities primarily relate to our investments in Upton Place and Oak Shore. As described in Note 9, we entered into termination agreements to cancel our leases on North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism on September 1, 2022. Consequently, during the period ended September 30, 2022, we wrote off $326.1 million and ~~Oak shore. As of December 31, 2020, the Development and Redevelopment segment~~$337.3 million right-of-use lease assets and lease ~~liabilities totaled $92.7~~liability, respectively.

Note 11 – Financing Activities

Our outstanding indebtedness as of September 30, 2022 includes the following borrowings that closed during the nine months ended September 30, 2022 (in thousands):


	Loan Amount		Balance at September 30, 2022		Contractual Interest Rate	Maturity Date
Variable-Rate:
Variable property loans	$	100,000	$	100,000	Multiple (1)	Multiple (1)

Construction loan	$	23,000	$	1	One-Month SOFR+ 4.41% (min 5.56%)	June 2025 (2)
Fixed-Rate:
Non-recourse property loans	$	574,700	$	574,700	4.63%	Multiple (3)

(1)

Includes two variable rate property loans for $60.0 million and ~~$86.8~~$40.0 million, ~~respectively, related~~respectively. The $60.0 million loan has an original maturity date of August 2024, with an option to ~~our investment~~extend the loan term one additional year to August 2025. Total debt issuance costs for this loan of approximately $1.5 million have been deferred, and this loan bears an interest rate based on the One-Month SOFR plus a 6.75% spread with an all in ~~Upton Place.~~

~~Table~~minimum interest rate of ~~Contents~~

8.00%. The $40.0 million loan has an original maturity date of January 2024, with two options to extend the loan term for six month periods to July 2024 and January 2025. This loan bears an interest rate based on One-Month SOFR plus a 6.45% spread with an all in minimum interest rate of 6.50%.

(2)

The Construction Loan includes an option to extend the maturity one additional year to August 2025. Total debt issuance costs of approximately $1.2 million have been deferred.

(3)

Includes 14 long term, fixed rate, non-recourse property loans with a weighted-average term of 9.4 years and a weighted average interest rate of 4.63%. Total debt issuance costs of approximately $5.4 million have been deferred.

Note 1012 – Subsequent Events

~~We have evaluated subsequent events through the date~~In October 2022, we entered into an $81.3 million non-recourse property loan with an initial term of ~~this filing. Based~~36 months, extendable for two additional one year periods, and with an interest rate based on the ~~evaluation, there were no subsequent events~~sum of the One-Month Term SOFR plus a spread of 4.5%, subject to ~~report.~~

~~Table~~a minimum all-in interest rate of ~~Contents~~6.0%. Concurrently, we paid a $1.5 million premium to enter an $81.3 million notional amount interest rate cap agreement, which caps the One-Month Term SOFR at 3.5%.

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

Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report on Form 10-Q contains or may contain information that is forward-looking within the meaning of the federal securities laws, including, without limitation, statements regarding: the ongoing relationship between Aimco and AIR (the “Separate Entities”) following the Separation; 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, developments, and redevelopments; including our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ~~ratios.~~ratios; and the outcome and consequences of the current proxy contest with Land & Buildings Capital Growth, L.P.("Land & Buildings").

These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and ~~uncertainties. Risks and~~ uncertainties that could cause actual results to differ materially from our expectations, ~~include,~~including, but ~~are~~ not limited to: the effects of the coronavirus pandemic on Aimco’s business and on the global and U.S. economies generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, geopolitical events which may adversely affect the markets in which our securities trade, and other macroeconomic conditions, including, among other things, supply chain challenges and rising interest rates, all of which heightens the impact of the other risks and factors

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described herein, and the impact on entities in which Aimco holds a partial interest, including its indirect interest in the partnership that owns Parkmerced Apartments, and the impact of coronavirus related governmental lockdowns on Aimco’s residents, commercial tenants, and operations; real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing and effects of acquisitions, dispositions, developments and redevelopments; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete; financing risks, including the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of real estate presently or previously owned by Aimco; the relationship between Aimco and Separate Entities after the Separation; the ability and willingness of the Separate Entities and their subsidiaries to meet and/or perform their obligations under the contractual arrangements that were entered into among the parties in connection with the Separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; and the ability to achieve some or all the benefits that we expect to achieve from the Separation; the outcome and consequences of activist stockholders on our business; and such other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (“SEC”).

In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and depends on our ability to meet the various requirements imposed by the Code through actual operating results, distribution levels and diversity of stock ownership.

Readers should carefully review our financial statements and the notes thereto, as well as Item 1A. Risk Factors in Part II of this report. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Readers should also carefully review the section entitled “Risk Factors” described in Item 1A of Apartment Investment and Management Company’s and Aimco OP L.P.’s combined Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and subsequent documents we file from time to time with the SEC.

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

Certain financial and operating measures found herein and used by management are not defined under accounting principles generally accepted in the United States ~~or GAAP.~~("GAAP"). These measures are defined and reconciled to the most comparable GAAP measures under the Non-GAAP Measures heading.

Executive Overview

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

Our value proposition includes ~~our national platform organized around four regional and two satellite offices,~~our:

•

Platform, consisting of a cohesive and talented leadership team with an average Aimco tenure of over 10 years and ~~tenured team~~nearly 20 years of diverse real estate industry experience combined with a disciplined and ~~our~~ proven investment process; ~~a diversified~~

•

Diversified portfolio, consisting of high-performing in-process value-add investments, a deep ~~and growing~~ pipeline that has nearly tripled since the Separation with a total potential of more than 15 million square feet, alternative investments, and a portfolio of stabilized ~~assets;~~real estate to provide risk management and ~~our capital~~

produce predictable cash flow; and

~~Table of Contents~~•

Capital redeployment plan of reallocating ~~Aimco~~our equity to higher returning investments and prudent recycling of capital.

Our primary goal is outsized risk adjusted returns and accelerating growth for ~~Aimco~~our shareholders.

��

•

~~Platform: Our talented leadership with an average Aimco tenure of 10 years and nearly 20 years of diverse real estate industry experience combined with a disciplined and proven investment process.~~

•

Portfolio: We benefit from a deep and growing investment pipeline with $1.0 billion of development and redevelopment projects currently underway, over $2 billion of future opportunities under Aimco-control and more being explored. We add to this alternative investment strategies and a diversified portfolio of stabilized real estate to provide risk management and produce predictable cash flow.

•

Growth Plan: We have over $500 million of equity targeted for redeployment into high returning activities over the next 4-5 years offering investors a high performing, high return, vehicle with expected annualized returns on equity between 12-16% once optimal capital allocation is achieved.

We are focused on providing superior total-return performance to shareholders, primarily through capital appreciation driven by accretive investment and active portfolio management over multi-year periods. We plan to reinvest earnings to facilitate growth and, therefore, do not presently intend to pay a regular quarterly cash dividend.

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

Our capital allocation strategy has been designed to leverage ~~the Aimco~~our investment platform and optimize ~~risk adjusted~~risk-adjusted returns for ~~Aimco~~our shareholders.

Overall, we target a growth-oriented capital allocation, primarily weighted toward direct investment in ~~‘Value Add’~~“Value Add” and ~~‘Opportunistic’~~“Opportunistic” multifamily real estate.

From time to time, we ~~will~~expect to allocate a ~~defined~~limited/small portion of our capital ~~into alternative investments including~~to passive debt and equity investments, ~~(both direct~~both directly and ~~indirect). Aimco~~indirectly. We may also ~~plans to~~ utilize ~~its~~our established platform and existing relationships to generate fees through service offerings.

We have policies in place that support our strategy, guide our investment allocations, and manage risk, including to hold at all times a sizeable portion of ~~its~~our net equity in a diversified portfolio of ~~‘Core’~~“Core” and ~~‘Core-Plus’~~“Core-Plus” assets and before starting a project, require cash or committed credit necessary for completion.

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

•

Benefiting from a platform that leverages local and regional expertise

•

~~Benefiting from a national platform while leveraging local and regional expertise~~

We have corporate headquarters in Denver, Colorado and Bethesda, Maryland. Our investment platform is managed by experienced professionals based in four regions: West Coast, Central and Mountain West, Mid-Atlantic and Northeast, and Southeast. By regionalizing this platform, we are able to leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities.

•

Managing and investing in value-add and opportunistic real estate

•

~~Managing and investing in value-add and opportunistic real estate~~

Our dedicated team will source and execute development and redevelopment projects, and various other direct investment ~~strategies, across our national platform.~~strategies. The Aimco ~~Development~~development and ~~Redevelopment~~redevelopment portfolio currently includes ~~$1.0~~$0.6 billion of projects in construction and ~~lease-up, located across five major US markets.~~lease-up. In addition, ~~we currently have $2 billion worth~~since the Separation, our team has secured significant, high-quality, future development opportunities, more than tripling Aimco’s controlled pipeline to a total potential of ~~pipeline opportunities under Aimco control and have the opportunity to add to our investment pipeline based on strategic relationships and through sourcing by regional investment teams.~~more than 15 million square feet, located in high-growth markets. Generally, we seek direct investment opportunities in locations where barriers to entry are high, target customers can be clearly defined and where we have a comparative advantage over others in the market.

•

~~Managing and investing in other alternative investments~~

~~Our current allocation to alternative investments includes: our indirect interest mezzanine loan to the Parkmerced partnership which owns 3,165 apartment homes~~•

Owning a portfolio of stabilized core and ~~future development rights in San Francisco, California; our passive equity investments in IQHQ, Inc. (“IQHQ”), a privately-held life sciences~~core plus real estate ~~development company;~~

~~Table~~Our entire portfolio of ~~Contents~~

and RET Ventures, an early-stage real estate technology fund. We expect to allocate a portion of our capital to passive debt and equity investments, both directly and at the entity level. These prove attractive when warranted by risk adjusted returns, when we have special knowledge or expertise relevant to the particular investment or when the opportunity exists for positive asymmetric outcomes whether through strategic partnerships or otherwise. In addition, from time to time, we will use our established platform and existing relationships to generate fees through service offerings to third party real estate investors, owners, and capital allocators.

•

~~Owning a portfolio of stabilized core and core plus real estate~~

~~Our current~~ operating ~~portfolio~~properties includes 2926 apartment communities ~~(25~~(22 consolidated properties and 4four unconsolidated properties) ~~located in ten major US markets and~~ with average rents in line with local market averages (generally defined as B class). We also own one commercial office building that is part of an assemblage with an adjacent apartment building. The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across a ~~nationally~~geographically diversified portfolio and with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment ~~fundamental~~fundamentals and state and regional governance. ~~Core Plus~~Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values.

•

Managing and investing in other alternative investments

We expect to allocate a limited portion of our capital to passive debt and equity investments, both directly and at the entity level when warranted by risk adjusted returns. Our current allocation to alternative investments includes: our indirect interest mezzanine loan to the Parkmerced partnership which owns 3,165 apartment homes and future development rights in San Francisco, California, and our passive equity investments in IQHQ, Inc. (“IQHQ”), a privately held life sciences real estate development company, and in property technology funds consisting of entities that develop technology related to the real estate industry.

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•

Maintaining sufficient liquidity and utilizing safe financial leverage

•

~~Maintaining sufficient liquidity and utilizing safe financial leverage~~

At all times, we will guard our liquidity by maintaining sufficient cash and committed credit.

From time-to-time, we will allocate capital to financial assets designed to mitigate risks elsewhere in the Aimco enterprise. Existing examples include our option to acquire an interest rate swap designed to protect against repricing risk on our maturing ~~Aimco liabilities.~~ liabilities and the use of interest rate caps to provide protection against increases in interest rates on in-place loans.

We expect to capitalize our activities through a combination of non-recourse property debt, construction loans, third-party equity, and the recycling of Aimco equity, including retained earnings. We plan to limit the use of recourse leverage, with a strong preference towards non-recourse property-level debt in order to limit risk to the Aimco enterprise. When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage Aimco equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.

~~Results for the Three Months and Nine Months Ended September 30, 2021~~

The results from the execution of our business plan during the three and nine months ended September 30, ~~2021,~~2022 are further described below.

Financial Results and Recent Highlights

•

Net income per share attributable to Aimco, on a fully dilutive basis, was $0.19 for the three months ended September 30, 2022, compared to a loss of ($0.03) for the three months ended September 30, 2021, due primarily to gains related to dispositions of real estate. Net income per share attributable to Aimco, on a fully dilutive basis was $1.81 for the nine months ended September 30, 2022, compared to a loss of ($0.03) for the nine months ended September 30, 2021, due primarily to lease modification income and gains related to the dispositions of real estate.

•

For the three months ended September 30, 2022, revenue and net operating income from our Operating Properties were up 11.5% and 17.5%, respectively, year over year, with average monthly revenue per apartment home of $2,173, up $261 year over year, and average daily occupancy of 96.0%, down 190 basis points year over year.

•

In September 2022, we as lessee and AIR as lessor, closed the previously announced $669 million lease termination transaction with respect to four leases entered into on January 1, 2021 that pertained to our North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism properties. This transaction terminated the four leases on September 1, 2022 eliminating $469 million of obligations related to the four leased properties. In exchange we received a payment of $200 million. Our execution in the development and lease-up of these assets resulted in more than $100 million of realized value creation (net of costs) for Aimco shareholders.

•

In July 2022, we paid $147.0 million to complete the prepayment of the $534.1 million of Notes Payable to AIR.

•

In July and August 2022, we closed on the sales of two apartment communities, exiting the greater Seattle market for $122.0 million.

•

Net income (loss) attributable to Aimco common stockholders per share was $(0.03) for the three months ended September 30, 2021, compared to net income per share of $0.01 for the three months ended September 30, 2020, and $(0.03) per share for the nine months ended September 30, 2021, compared to net income per share of $0.06 for the nine months ended September 30, 2020.

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Strong demand for our Development and Redevelopment projects resulted in the execution of about 150 net new leases during the period, increasing NOI for that portfolio of properties by $0.8 million for the quarter.

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~~We acquired, for $40 million, a collection of 58 luxury townhomes in Elmhurst, Illinois and benefit from the community’s adjacency to an existing Aimco asset.~~

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~~We closed on $60 million of property financing and ended the third quarter with $413 million of liquidity, including cash and capacity on our revolving credit facility.~~

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~~Revenue from our operating properties was up 6.8% year-over-year, with occupancy of 97.8%, up 280 basis points.~~

Our business is organized around defined areas of strategic focus: value add and opportunistic real estate; alternative investments; investment activity; operating properties; balance sheet; and team and culture.

Value Add, Opportunistic ~~and~~& Alternative Investments

Development and Redevelopment

We generally seek development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and where we have a comparative advantage over others in the market. Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.

We currently have four active development and redevelopment projects, located across four U.S. markets, in varying phases of construction and lease-up. These projects remain on track, as measured by budget, lease-up metrics, and current market valuations. During the three and nine months ended September 30, ~~2021,~~2022, we ~~made total capitalized investments of $54~~invested $60.6 million and ~~$162~~$188.9 million respectively, in ~~our~~ development and redevelopment ~~projects.~~activities. Updates include:

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As of September 30, 2022, at The Hamilton in Miami, Florida, leasing of units ahead of initial occupancy progressed with 83 units pre-leased.

•

Construction remains on schedule and on budget at Upton Place in Northwest Washington, D.C., the Benson Hotel and Faculty Club on the Anschutz Medical Campus in Aurora, Colorado and at our single-family home development project, Oak Shore, in Corte Madera, California.

~~Construction Activity~~

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As previously announced, following the successful development and lease-up of 707 Leahy in Redwood City, California, Prism in Cambridge, Massachusetts, North Tower of Flamingo Point in Miami Beach, Florida, and The Fremont on the Anschutz Medical Campus in Aurora, Colorado, Aimco and AIR entered an agreement that cancelled our leasehold interest in each property on September 1, 2022. The transaction was completed on schedule at a combined asset value of $669 million. We received $200 million, resulting in value creation, net of costs, of approximately $100 million, which was realized about 18 months sooner than originally anticipated.

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At the North Tower of Flamingo Point in Miami Beach, Florida, the major redevelopment continues on plan. Initial delivery of apartment homes began in the third quarter with construction completion scheduled for 2022 and NOI stabilization targeted for 2024.

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~~Upton Place in Upper-Northwest Washington, D.C., is progressing on schedule and on-budget. The project is scheduled for completion in 2024 and NOI stabilization is targeted for 2026.~~

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~~The Benson Hotel and Faculty Club on the Anschutz Medical and Life Sciences Campus in Aurora, Colorado, is on budget and on schedule for completion in early 2023 and NOI stabilization in late 2026.~~

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In Corte Madera, California, development activity on Oak Shore, a community with 16 luxury single family rental homes, each averaging approximately 3,200 sf, plus eight accessory dwelling units, is underway and on plan with deliveries beginning in 2023 and NOI stabilization occurring in 2025.

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~~In the Edgewater neighborhood of Miami, Florida, Aimco is completely renovating Hamilton on the Bay and expects apartment homes coming back online in 2022 and NOI stabilization targeted for 2024.~~

~~Lease-up Progress~~

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~~At 707 Leahy, in Redwood City, California, all apartment homes had been delivered and construction was complete as of 4Q 2020. As of September 30, 2021, the 110-unit property was 97% leased.~~

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At The Fremont on the Anschutz Medical Campus in Aurora, Colorado, all apartment homes had been delivered and construction was complete as of 4Q 2020. As of September 30, 2021, the 253-unit property was 75% leased.

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~~At Prism, located in Cambridge, Massachusetts, all apartment homes had been delivered and construction was complete as of 1Q 2021. As of September 30, 2021, the 136-unit property was 88% leased.~~

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~~At Flamingo Point North Tower in Miami Beach, Florida, the initial units were delivered in third quarter with 193 of the 366 total units leased as of September 30, 2021.~~

Alternative Investments

Aimco makes alternative investments where it has special knowledge or expertise relevant to the venture and opportunity exists for positive asymmetric outcomes. Aimco's current alternative investments include a mezzanine loan secured by a stabilized multifamily property with an option to participate in future multi-family development as well as three passive equity investments. Updates include:

•

The borrower on our $362.8 million mezzanine loan, which is secured by the Parkmerced stabilized multifamily property plus phases two through nine of the site's future development opportunity, remains current on its first mortgage obligations. Due to the relative size of our investment and alternative accretive uses of capital, we initiated a marketing effort in July 2022 to explore opportunities to monetize all or a portion of our investment. Increased uncertainty within financial markets has led us to extend the timeline for this process and its execution.

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~~Parkmerced Mezzanine Investment~~: On November 26, 2019, we made a five-year, $275.0 million mezzanine loan to a partnership owning Parkmerced Apartments, located in southwest San Francisco (the “Mezzanine Investment”). The loan bears interest at a 10% annual rate, accruing if not paid from property operations. The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, a related equity option to acquire a 30% interest in the partnership owning Parkmerced Apartments and the interest rate option, or swaption, that provides partial protection against future refinancing risk through 2024 to Aimco. At the time of the Separation and as of the date of this report, legal title of these subsidiaries had not yet transferred to Aimco. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on such loan to us, and we are obligated to indemnify AIR against any costs and expenses related thereto. We have the risks and rewards of ownership of the Mezzanine Investment and have recognized an asset related to our right to receive the Mezzanine Investment from AIR.

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~~Life Science Developer Investment~~: In the third quarter of 2020, we made a $50 million commitment to purchase common stock of IQHQ, a privately-held life sciences real estate development company. In the third quarter we funded a capital call of $12.1 million bringing our total investment to $24.6 million of the total commitment.

Investment Activity

~~Leasehold Agreements~~Aimco is focused on development and redevelopment, funded through our joint ventures. Aimco will also consider opportunistic investments in related activities. Updates include:

•

As previously announced, in July and August 2022, Aimco closed on the purchase of two development parcels, completing the assemblage it contracted to acquire, for $100 million, in February 2022. The nine-acre assemblage is located in the rapidly growing Flagler Village neighborhood of Fort Lauderdale, Florida, and allows for approximately three million square feet of phased, mixed-use development, which could contain up to 1,500 residential units, more than 300 hotel keys, and more than 100,000 square feet of retail space at full build-out.

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On January 1, 2021, terms commenced on the leasehold agreements with AIR for 707 Leahy, The Fremont, Prism, and Flamingo Point North Tower. On June 1, 2021, terms commenced on the leasehold agreement with AIR for Oak Shore Land, a 15-acre plot of land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and eight accessory dwelling units in June 2021.

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The combined initial value of leasehold interest, as indicative of the initial fair market values of the leased assets at the time of lease inception, was $475.1 million. The combined annual leasehold payment for these five assets is $25.6 million.

•

The lease agreements provide Aimco the right, but not the obligation, to terminate each lease once the leased property is stabilized with AIR then having the option to retain ownership of the land and purchase the improvements from Aimco. Should AIR exercise its option, Aimco would be due the difference between the property’s fair-market value at stabilization and the initial value of the leasehold interest, less a 5% discount.

~~Acquisitions~~

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During the three months ended September 30, 2021, we acquired, for $40.0 million, Eldridge Townhomes, a 58-unit townhome community located in Elmhurst, Illinois that Aimco developed between 2018 and 2020. The

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Eldridge Townhomes are located adjacent to an existing 400-unit Aimco community and the acquisition provides for continued operational efficiencies and improved NOI margins. We plan to hold the Eldridge Townhomes within our portfolio of stabilized operating properties.

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During the three months ended September 30, 2021, we acquired for $7.3 million an additional two parcels adjacent to our Hamilton on the Bay apartment community in Miami’s Edgewater neighborhood. Combined with the six adjacent properties acquired in the second quarter of 2021, and land purchased as part of the initial acquisition of Hamilton on the Bay, we can now, in total, construct more than 1.1 million square feet of new development in this rapidly growing submarket.

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During the three months ended September 30, 2021, we purchased seven acres of developable land in Colorado Springs, Colorado for $4.1 million that allows for the construction of 119 apartment and townhomes.

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During the nine months ended September 30, 2021, we also acquired The Benson Hotel and Faculty Club (“Benson Hotel”) development property for $6.2 million, net of outstanding construction liabilities of $0.9 million. The development property consists of land and initial construction costs. The project is expected to be completed in the first quarter of 2023.

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In July 2021, Aimco entered into a joint venture with Kushner Companies to purchase three undeveloped land parcels located in downtown Fort Lauderdale, Florida. The total contract price for the land is $49.0 million ($25.0 million at Aimco’s 51% share). Current zoning allows for the development of approximately three million square feet of multifamily homes and commercial space. The land purchase is expected to close in January 2022. We have paid $2.4 million of the $25 million commitment, related to our share of the contract price.

Operating Property Results

~~We own~~Aimco owns a ~~geographically~~ diversified portfolio of ~~operating properties~~stabilized apartment communities located in eight major U.S. markets with average rents in line with local market averages. We also own a commercial office building that ~~produces stable cash flow and serves to balance the risk and highly variable cash flows associated~~is part of an assemblage with ~~its portfolio of development and redevelopments and value-add investments. Our operating portfolio produced solid results for the three and nine months ended September 30, 2021.~~an adjacent apartment building.

Highlights for the three months ended September 30, ~~2021~~2022 include:

•

~~Average daily occupancy at our operating portfolio of 97.8%, a 280-basis point improvement from the three months ended September 30, 2020.~~

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Revenue in the third quarter of 2022 was $34.7 million, up 11.5% year over year, resulting from a $261 increase in average monthly revenue per apartment home to $2,173, offset with a 190-basis point decrease in Average Daily Occupancy to 96.0%.

•

~~Revenue, before utility reimbursements, of $34.6 million, up 6.8% year over year.~~

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Expenses in the third quarter of 2022 were $10.2 million, down 0.8% year over year.

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~~Expenses, net of utility reimbursements of $11.2 million, up 10.6% year over year, due primarily to higher real estate taxes and insurance.~~

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Net operating income in the third quarter of 2022 was $24.5 million, up 17.5% year-over-year.

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~~Net operating income of our operating portfolio increased by 5.1% year over year.~~

We measure residential rent collection as the amount of payments received as a percentage of all residential amounts owed. During the three months ended September 30, 2021, we collected 98.2% of all amounts owed by Aimco residents and recognized 99.2% of revenue, reserving 80 basis points as bad debt.

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1001 Brickell Bay Drive, a waterfront office building in Miami, Florida, is owned as part of a larger assemblage ~~was 73% occupied on~~with substantial development potential. In the nine months ended September 30, 2022, we executed leases on over 76,000 square feet of office space, at rates per square foot 15% higher than leases executed in the nine months ended September 30, 2021.

As of September 30, 2022, the building was 84% occupied, up from 73% at the same time last year.

Balance Sheet and Financing Activity

Aimco capitalizes its activities through a combination of non-recourse property debt, construction loans, third-party equity, and the recycling of Aimco equity, including retained earnings. We plan to limit the use of recourse leverage, with a strong preference towards non-recourse property-level debt in order to limit risk to the Aimco enterprise. When warranted, we plan to seek equity capital from joint venture partners to improve its cost of capital, further leverage Aimco equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.

We are highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of September 30, ~~2021,~~2022, we had access to ~~$413~~$375.4 million in liquidity, including ~~$253~~$206.3 million of cash on hand, ~~$10~~$19.1 million of restricted cash, and the capacity to borrow up to ~~$150~~$150.0 million on our revolving credit facility. ~~Please refer~~Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.

In evaluating our financial condition and operating performance we use non-GAAP measures, including Adjusted EBITDAre, which we believe is useful to investors and creditors as a supplemental measure of our ability to incur and service debt. Our Adjusted EBITDAre for the three and nine months ended September 30, 2021 was $17.6 million and $53.8 million, respectively. Please refer to the Non-GAAP Measures section for further information about the calculation of Adjusted EBITDAre and our leverage ratios. Please refer to the Liquidity and Capital Resources section for additional information regarding our leverage.33

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~~Financing Activity~~

On April 15, 2021, the Company entered into a $150 million variable-rate non-recourse construction loan collateralized by our leasehold interest and AIR’s fee ownership interest in Flamingo North Tower. The initial term of the loan is three years and bears interest at one month LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85%. As of September 30, 2021, we had $118.8 million of principal outstanding. Certain consolidated subsidiaries have indemnified AIR for any losses it incurs as a result of a default on the loan by Aimco.

During the three months ended September 30, 2021, we closed on two non-recourse loans for $60 million. The loans have 10-year terms and a weighted average fixed interest rate of 3.09%. Proceeds from the loans were used to fund the acquisition of Eldridge Townhomes and other investment activities.

Financial Results of Operations

We have three segments: (i) Development and ~~Redevelopment;~~Redevelopment, (ii) Operating, ~~Portfolio;~~ and (iii) Other.

Our Development and Redevelopment segment ~~includes~~consists of properties that are under construction ~~in pre-construction,~~ or have not achieved stabilization, as well as land assemblages that are being held for development adjacent to ~~our~~The Hamilton ~~on the Bay~~ community and other land purchases. ~~The Development and Redevelopment segment also includes our five leased~~ ~~properties; two are under construction and three~~ ~~are operational but have not achieved stabilization.~~ Our Operating ~~Portfolio~~ segment includes ~~majority owned~~21 residential apartment communities that have achieved stabilized ~~levels~~level of operations as of January 1, ~~2020~~2021 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment. Our Other segment ~~includes~~consists of properties that are not included in our ~~recent Eldridge Townhomes acquisition, stabilized but not owned for a comparable reporting period,~~Development and ~~1001 Brickell Bay Drive, our only office building.~~Redevelopment or Operating segments.

The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.

Three and Nine Months Ended September 30, 2022 compared with the Three and Nine Months Ended September 30, 2021

Net income ~~decreased~~increased by ~~$6.8~~$34.5 million and ~~$13.5~~by $281.3 million during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the same periods in ~~2020,~~2021, as described more fully below.

~~Detailed Results of Operations for the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020.~~

Property Results

As of September 30, ~~2021,~~2022, our Development and Redevelopment segment included ~~five~~four properties that were under ~~construction and three properties in lease-up.~~construction. Our Operating ~~Portfolio~~ segment included 2421 communities with ~~6,067~~5,582 apartment homes, and our Other segment ~~includes~~included our recent Eldridge Townhomes acquisition, and one office building.

We use proportionate property net operating income to assess the operating performance of our segments. Proportionate property net operating income is defined as our share of rental and other property revenues, ~~excluding utility reimbursements,~~ less direct property operating expenses, ~~net of~~but

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excluding utility reimbursements, for the consolidated communities. In our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations,~~Operations, utility reimbursements are included in rental and other property revenues, in accordance with ~~GAAP. Accordingly, the results of operations of our segments discussed below are presented on a proportionate basis and exclude~~GAAP;

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excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, notes receivable, our investment in IQHQ and the Mezzanine ~~Investment.~~

~~We do not include~~Investment; and

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excluding property management costs and casualty gains or losses, 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 910 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 expenses.

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Proportionate Property Net Operating Income

The results of our segments for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, as presented below, are based on segment classifications as of September 30, ~~2021.~~2022:


	Three Months Ended September 30,				Historical Change						Three Months Ended September 30,
(in thousands)	2021		2020		$			%			2022			2021			$ Change			% Change
Rental and other property revenues, before utility reimbursements:
Development and Redevelopment	$	3,196	$	—	$	3,196			100	%	$	123		$	256		$	(133	)		(52.0	%)
Operating Portfolio		34,591		32,376		2,215			6.8	%
Operating												34,691			31,126			3,565			11.5	%
Other		3,360		3,107		253			8.1	%		4,241			3,459			782			22.6	%
Total		41,147		35,483		5,664			16.0	%		39,055			34,841			4,214			12.1	%
Property operating expenses, net of utility reimbursements:
Development and Redevelopment		2,026		—		2,026			100	%		336			472			(136	)		(28.8	%)
Operating Portfolio		11,257		10,182		1,075			10.6	%
Operating												10,220			10,301			(81	)		(0.8	%)
Other		1,047		1,077		(30	)		(2.8	%)		1,264			1,124			140			12.5	%
Total		14,330		11,259		3,071			27.3	%		11,820			11,897			(77	)		(0.6	%)
Proportionate property net operating income:
Development and Redevelopment		1,170		—		1,170			100	%		(213	)		(216	)		3			(1.4	%)
Operating Portfolio		23,334		22,194		1,140			5.1	%
Operating												24,471			20,825			3,646			17.5	%
Other		2,313		2,030		283			13.9	%		2,977			2,335			642			27.5	%
Total	$	26,817	$	24,224	$	2,593			10.7	%	$	27,235		$	22,944		$	4,291			18.7	%

For the three months ended September 30, ~~2021,~~2022, compared to ~~2020,~~ the same period in 2021:

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Development and Redevelopment proportionate property net operating income decreased from the amounts presented in our Form 10-Q dated June 30, 2022, due to the termination of the four initial leases.

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Operating ~~Portfolio~~ proportionate property net operating income increased by ~~$1.1~~$3.6 million, or ~~5.1%~~17.5%. The increase was attributable primarily to a ~~$2.2~~$3.6 million, or ~~6.8%~~11.5% increase in rental and other property revenues due to higher average revenues of ~~$72~~$261 per apartment home, ~~and~~offset with a ~~280-basis~~190-basis point ~~increase~~decrease in ~~occupancy, offset partially by a $1.1 million, or 10.6%, increase in property operating expenses due primarily to higher real estate taxes and insurance.~~occupancy.

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~~For the three months ended September 30, 2021, compared to 2020, total~~

Other proportionate property net operating income increased by ~~$2.6~~$0.6 million, or ~~10.7%~~27.5%.

The results of our segments for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, as presented below, are based on segment classifications as of September 30, ~~2021.~~2022:


	Nine Months Ended September 30,				Historical Change						Nine Months Ended September 30,					Historical Change
(in thousands)	2021		2020		$			%			2022			2021		$			%
Rental and other property revenues, before utility reimbursements:
Development and Redevelopment	$	7,889	$	—	$	7,889			100.0	%	$	204		$	2,006		(1,802	)		(89.8	%)
Operating Portfolio		100,609		98,336		2,273			2.3	%
Operating												100,052			90,176		9,876			11.0	%
Other		9,489		9,458		31			0.3	%		13,619			9,783		3,836			39.2	%
Total		117,987		107,794		10,193			9.5	%		113,875			101,965		11,910			11.7	%
Property operating expenses, net of utility reimbursements:
Development and Redevelopment		5,956		—		5,956			100.0	%		908			1,737		(829	)		(47.7	%)
Operating Portfolio		33,386		31,088		2,298			7.4	%
Operating												30,916			30,461		455			1.5	%
Other		3,108		3,022		86			2.8	%		4,085			3,251		834			25.7	%
Total		42,450		34,110		8,340			24.5	%		35,909			35,449		460			1.3	%
Proportionate property net operating income:
Development and Redevelopment		1,933		—		1,933			100.0	%		(704	)		269		(973	)		(100.0	%)
Operating Portfolio		67,223		67,248		(25	)		(—	%)
Operating												69,136			59,715		9,421			15.8	%
Other		6,381		6,436		(55	)		(0.9	%)		9,534			6,532		3,002			46.0	%
Total	$	75,537	$	73,684	$	1,853			2.5	%	$	77,966		$	66,516	$	11,450			17.2	%

For the nine months ended September 30, ~~2021,~~2022, compared to ~~2020,~~ the same period in 2021:

~~our Operating Portfolio~~•

Development and redevelopment proportionate property net operating income ~~was flat year over year. This was~~decreased by $1.0 million, due primarily to the ~~result~~major redevelopment of ~~a $2.3~~The Hamilton. Development and redevelopment proportionate property net operating income decreased in the third quarter due to the termination of the four leases.

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Operating proportionate property net operating income increased by $9.4 million, or ~~2.3%,~~15.8%. The increase was attributable primarily to a $9.9 million, or 11.0% increase in rental and other property revenues due to higher average revenues of ~~$17~~$210 per apartment home, ~~and~~offset with a ~~140-basis~~30-basis point ~~increase~~decrease in ~~occupancy, offset by increases in property operating expenses due primarily to higher real estate taxes and insurance.~~occupancy.

~~For the nine months ended September 30, 2021, compared to 2020, total~~

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Other proportionate property net operating income increased by ~~$1.9~~$3.0 million, or ~~2.5%~~46.0%.

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Non-Segment Real Estate Operations

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

Depreciation and Amortization

For the three and nine months ended September 30, ~~2021~~2022, depreciation and amortization expense ~~was higher~~increased by ~~$2.4~~$63.7 million, or 100%, and ~~$5.4~~$80.4 million, or 100%, respectively, when compared to the same periods in ~~2020,~~2021, primarily due to ~~additional assets being placed into service.~~accelerated depreciation recognized relating to the lease termination transaction in the amount of $69.9 million and $85.7 million for the three and nine months ended September 30, 2022, respectively.

General and Administrative Expenses

For the three months ended September 30, 2022, general and administrative expenses increased by $1.9 million, or 21.9% compared to the three months ended September 30, 2021. For the nine months ended September 30, 2022, general and administrative expenses increased by $6.7 million, or 29.6% compared to the nine months ended September 30, 2021. General and administrative expenses incurred for the three and nine months ended September 30, 2021 were prior to the full build out of our platform and are not representative of what we believe our anticipated expenses will be going forward. Additionally, for three and nine months ended September 30, 2022 and 2021, general and administrative expenses included $1.7 million and $4.6 million of expenses, respectively, to be reimbursed to AIR, per agreement upon separation, for consulting services with respect to strategic growth, direction, and advice. This agreement will conclude at year end.

Interest Expense

For the three and nine months ended September 30, ~~2021,~~2022, compared to the same periods in ~~2020, general~~2021, interest expense decreased by $3.0 million, or 23.4%, and ~~administrative expenses~~ increased by ~~$7.3~~$27.9 million, ~~and $17.6~~or 73.4%, respectively. The quarterly decrease of $3.0 million ~~respectively,~~was due primarily to repayment and refinancing activity. The year to date increase of $27.9 million was due primarily to spread maintenance costs related to prepayment of the ~~difference~~Notes Payable to AIR and other debt, the refinancing of ~~allocating costs in 2020~~certain property debt, and the ~~actual costs experienced running the separate business in 2021.~~payoff of a construction loan.

~~Interest Expense~~

~~For the three and nine months ended September 30, 2021, compared to the same periods in 2020, interest expense increasedby $5.6 million, or 78.5%, and $19.4 million, or 104.7%, respectively, mainly due to interest associated with the notes payable to AIR entered into in conjunction with the Separation.~~

Mezzanine Investment Income, Net

On November 26, 2019, weAimco Predecessor made a five-year, $275.0 million mezzanine loan to athe partnership owning ~~Parkmerced Apartments,~~the “Parkmerced Apartments” located in southwest San ~~Francisco.~~Francisco (the “Mezzanine Investment”). The loan ~~is junior to a $1.5 billion first mortgage position and~~ bears interest at a 10% annual rate, accruing if not paid from property operations. Ownership of the subsidiaries that originated and hold the mezzanine loan was retained by AIR following the Separation. The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, once required third-party consents to transfer are received. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on the mezzanine loan to us.

As of September 30, 2022 and December 31, 2021, the total receivable, including accrued and unpaid interest, was ~~$330.0 million.~~$362.8 million and $337.8 million, respectively. During the three and nine months ended September 30, ~~2021,~~2022, we recognized ~~$7.6~~$8.4 million and ~~$22.7~~$25.0 million, respectively, of income in connection with the mezzanine loan, compared to ~~$6.9~~$7.6 million and ~~$20.6~~$22.7 million during the three and nine months ended September 30, ~~2020,~~2021, respectively.

The loan is subject to certain risks, including, but not limited to, those resulting from the lingering disruption due to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portion of the loan not being repaid. In the event we determine that a portion of the related Mezzanine Investment is not recoverable, we will recognize an impairment.

Realized and Unrealized Gains (Losses) on Interest Rate Options

We ~~are required~~recorded unrealized gains of $7.5 million and $38.3 million, respectively, during the three and nine months ended September 30, 2022, compared to ~~adjust our interest rate options to fair value on a quarterly basis. As a result of the mark to market adjustment we recorded an~~ unrealized ~~gain in the amount~~gains of $2.2 million and ~~an unrealized gain in the amount of~~ $10.6 million during the three and nine months ended September 30, 2021, ~~respectively,~~respectively. In addition, we recorded realized gains of $1.7 million and $9.7 million during the three and nine months ended September 30, 2022.

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Realized and Unrealized Gains (Losses) on Equity Investments

In June 2022, 22% of our original investment in IQHQ was redeemed for $16.5 million and we recognized a realized gain of $5.7 million. Our remaining investment in IQHQ with a cost basis of $39.2 million was valued at an estimated fair market value of $59.7 million, and a $20.5 million unrealized gain was recognized.at the same per share value as the cash redemption.

We measure our investments in property technology funds at NAV as a practical expedient. As a result of changes in NAV, we recorded an unrealized ~~loss in~~losses of $2.2 million and $6.0 million, respectively, during the ~~amount~~three and nine months ended September 30, 2022, compared to unrealized gains of ~~$1.0~~$1.2 million and $2.1 million during the three and nine months ended September 30, ~~2020.~~2021.

Gains on Dispositions of Real Estate

In July and August 2022, we sold our Cedar Rim and 2900 on First properties located in Seattle, Washington, for a total gross sales price of $122.0 million and recognized gains from the sales of $75.5 million.

In May 2022, we sold our Pathfinder Village property located in Fremont, California, for a gross sales price of $127.0 million and recognized a gain from the sale of $94.6 million.

Lease Modification Income

In June 2022, we as lessee and AIR as lessor, entered into a lease termination agreement pursuant to which AIR paid us a termination payment on September 1, 2022. Upon receipt of this payment, the leases with respect to four properties were terminated, and we relinquished control of the associated leasehold improvements and underlying land of these four properties. The total lease modification income recognized for the nine months ended September 30, 2022 was $207.0 million.

Other Income (Expense), Net

Other income (expense), net, includes costs associated with our risk management activities, partnership administration expenses, valuation changes associated with equity investments, fee income, and certain non-recurring ~~items such as service revenue. For~~items. Other income (expense), net, for the three ~~and~~months ended September 30, 2022 decreased by $0.8 million, or 100.0%, compared to the three months ended September 30, 2021. Other income (expense), net, for the nine months ended September 30, ~~2021,~~2022, decreased by $4.7 million, or 100.0% compared to the same periods in 2020, other expenses, net decreased by $2.6 million and $6.4 million, respectively, due primarily to $1.0 million and $3.3 million of service fee revenue earned during the three and nine months ended September 30, 2021 with the remaining differences being RETV valuation changes.2021.

Income Tax Benefit (Expense)

Our income tax benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in income tax benefit (expense) in our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~Operations.

Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT. For the three and nine months ended September 30, 2022, we had consolidated net loss and income subject to tax of $75.6 million and $91.0 million, respectively. For the three and nine months ended September 30, 2021,, we had consolidated net losses subject to tax of $7.9 million and $26.4 million, respectively. ~~For the three and nine months ended September 30, 2020, we had consolidated net losses subject to tax of $5.7 million and $14.5 million, respectively.~~

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For the three months ended September 30, ~~2021,~~2022, we recognized income tax benefit of ~~$2.0~~$17.6 million compared to ~~$2.7~~a $2.0 million benefit during the same period in ~~2020.~~2021. The change is primarily due ~~primarily~~ to ~~lower losses at our TRS entities.~~ the GAAP income taxes associated with the lease modification depreciation expense recognized in the third quarter of 2022.

For the nine months ended September 30, ~~2021,~~2022, we recognized income tax ~~benefit~~expense of ~~$9.9~~$24.3 million compared to ~~$6.7~~a $9.9 million benefit during the same period ~~ended 2020.~~in 2021. The change is primarily due ~~primarily~~ to the GAAP income ~~tax benefit~~taxes associated with ~~internal restructuring, changes to our effective state rate expected to apply to~~ the ~~reversal~~net lease modification income recognized in 2022.

Table of ~~our existing deferred items, and higher losses at our TRS entities.~~Contents

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 Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There have been no significant changes in our critical accounting policies from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.

Non-GAAP Measures

We use EBITDAre and Adjusted EBITDAre in managing our business and in evaluating our financial condition and operating performance. These key financial indicators are non-GAAP measures and are defined and described below. We provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP.

Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ~~(EBITDAre)~~("EBITDAre")

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

•

gains and losses on the dispositions of depreciated property;

•

impairment write-downs of depreciated property;

•

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

•

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

•

~~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 Aimco’s share of EBITDAre of investments in unconsolidated entities.~~

EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for greater comparability between real estate investment trusts. We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of net income attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and unrealized gain on interest rate options, which we believe allow investors to compare a measure of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate industry. Additionally, we exclude interest income recognized on our Mezzanine Investment that was accrued but not ~~paid during the three and nine months ended September 30, 2021 and 2020.~~paid.

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The reconciliation of net ~~(loss)~~ income to EBITDAre and Adjusted EBITDAre for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020				Three Months Ended September 30,						Nine Months Ended September 30,
Net (loss) income	$	(4,846	)	$	1,996		$	(3,798	)	$	9,664
														2022			2021			2022			2021
Net income (loss)														$	34,173		$	(4,846	)	$	297,496		$	(3,798	)
Adjustments:
Interest expense		12,680			7,103			37,995			18,563				9,719			12,680			65,865			37,995
Income tax benefit		(2,021	)		(2,673	)		(9,881	)		(6,728	)
Income tax (benefit) expense															(17,563	)		(2,021	)		24,338			(9,881	)
Gains on dispositions of real estate															(75,539	)		—			(170,004	)		—
Lease modification income															(1,577	)		—			(206,963	)		—
Depreciation and amortization		21,709			19,296			63,065			57,673				85,438			21,709			143,420			63,065
Adjustment related to EBITDAre of unconsolidated partnerships		225			212			655			635				253			225			768			655
EBITDAre	$	27,747		$	25,934		$	88,036		$	79,807			$	34,904		$	27,747		$	154,920		$	88,036
Net loss (income) attributable to redeemable noncontrolling interest consolidated real estate partnership		(127	)		121			(41	)		349
Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships															(2,907	)		(127	)		(5,446	)		(41	)
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships		(296	)		1			(862	)		(4	)			(240	)		(296	)		(585	)		(862	)
EBITDAre adjustments attributable to noncontrolling interests		177			(326	)		(54	)		(678	)			(93	)		177			(325	)		(54	)
Mezzanine investment income, net accrued		(7,636	)		(6,870	)		(22,654	)		(20,553	)
Unrealized (gains) losses on interest rate options		(2,231	)		998			(10,608	)		2,078
Mezzanine investment income, net (1)															(8,423	)		(7,636	)		(24,990	)		(22,654	)
Realized and unrealized (gains) losses on interest rate options															(9,209	)		(2,231	)		(48,005	)		(10,608	)
Unrealized (gains) losses on IQHQ investment															—			—			(20,501	)		—
Adjusted EBITDAre	$	17,635		$	19,858		$	53,817		$	60,999			$	14,032		$	17,634		$	55,068		$	53,817

(1) Includes the portion of accrued and unpaid income recognized during the year													(1) Includes the portion of accrued and unpaid income recognized during the year

Liquidity and Capital Resources

Liquidity

Liquidity is the ability to meet present and future financial obligations. Our primary sources of liquidity are cash flows from operations and borrowing capacity under our loan agreements.

As of September 30, ~~2021,~~2022, our available liquidity was ~~$413~~$375.4 million, which consisted of:

•

$206.3 million in cash and cash equivalents; and

•

$19.1 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance; and

•

$150.0 million of available capacity to borrow under our revolving secured credit facility.

•

~~$253 million in cash and cash equivalents;~~

•

~~$10 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for capital additions, property taxes, and insurance; and~~

•

~~$150 million of available capacity to borrow under our revolving secured credit facility.~~

We have commitments for, and expect to spend, approximately ~~$294.2~~$152.1 million on development and redevelopment projects underway, with ~~$281.2~~$211.2 million undrawn on our construction loans as of September 30, ~~2021.~~

2022. The initial allocation to our Edgewater joint venture and DC joint ventures have remaining unfunded commitments of $14.2 million. We also have unfunded commitments in the amount of $2.7 million related to four investments in entities that develop technology for the real estate industry. Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, and future investments. Additionally, our third-party property managers may enter into commitments on our behalf to purchase goods and services in connection with the operation of our apartment communities and our office building. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to historical levels.

We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next twelve months.

In the event that our cash and cash equivalents, revolving secured credit facility, and cash provided by operating activities are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional property financing activity and proceeds from apartment community sales. We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property

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financing activity, cash generated from operations, and the recycling of ~~Aimco~~our equity. Our revolving secured credit facility matures in December 2023, prior to consideration of its two one-year extension options.

Leverage and Capital Resources

The availability and cost of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing. ~~Currently, interest rates are low compared to historical levels, and financing is readily available.~~ Any adverse changes in the lending environment could negatively affect our

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liquidity. We have taken steps to mitigate a portion of our repricing risk. However, if property or development financing options become unavailable, we may consider alternative sources of liquidity, such as reductions in capital spending or apartment community dispositions.

As of September 30, ~~2021, approximately 42%~~2022, 81% of our ~~leverage consisted of property-level,~~outstanding debt had a fixed interest rate and 19% had a variable interest rate. The weighted-average interest rate on our non-recourse ~~amortizing debt. Approximately 89% of our property-level~~ debt ~~is fixed-rate, which provides a hedge against increases in interest rates, capitalization rates,~~was 4.86%, and ~~inflation. The weighted-average~~the average remaining term to maturity ~~of our non-recourse property-level debt~~ was ~~5.7 years at a weighted-average~~7.2 years. At quarter end, Aimco had interest rate cap protection in place for 100% of ~~3.09%.~~its variable interest rate debt. Aimco's use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on forecasted interest rates.

While our primary source of leverage is property-level debt, we also have a secured $150.0 million credit facility with a syndicate of financial institutions, and construction loans. As of September 30, ~~2021,~~2022, we had no outstanding borrowings under our revolving secured credit ~~facility,~~ ~~swingline loan sub-facility and letter of credit sub-facility~~ ~~and had capacity to borrow up to $150 million.~~

As of September 30, 2021, approximately 46% of our leverage consisted of notes payable to AIR, with a fixed interest rate of 5.2% and a term to maturity of 2.3 years, and approximately 12% consisted of our ~~variable-rate non-recourse construction loans.~~

facility. Under our revolving secured credit facility, we have agreed to maintain a fixed charge coverage ratio of ~~at least 1.25x,~~1.25X minimum tangible net worth of ~~$625~~$625.0 million, and maximum leverage of ~~60%~~60.0% as defined in the credit agreement. We are currently in compliance and expect to remain in compliance with these ~~covenants.~~covenants during the next twelve months.

Changes in Cash, Cash Equivalents, and Restricted Cash

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

Operating Activities

For the nine months ended September 30, ~~2021,~~2022, net cash provided by operating activities was ~~$22.1~~$228.3 million. Our operating cash flow is primarily affected by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment communities and general and administrative costs. Cash provided by operating activities for the nine months ended September 30, ~~2021, decreased~~2022, increased by ~~$19.2~~$206.2 million compared to the same period ended in ~~2020~~2021 due to ~~higher operating and general and administrative expenses.~~timing of balance sheet position changes.

Investing Activities

For the nine months ended September 30, ~~2021,~~2022, our net cash used in investing activities of ~~$216.6~~$83.0 million consisted primarily of capital expenditures of $184.0 and $130.1 million of cash used to acquire undeveloped land parcels in Fort Lauderdale, Florida, offset by $243.1 million of proceeds received from the ~~purchase~~disposition of ~~The Benson Hotel, the Eldridge Townhomes,~~our properties located in Fremont, California and ~~construction costs on our development properties.~~Seattle, Washington.

Total capital additions ~~totaled $134.9~~were $184.0 million and ~~$15.3~~$134.9 million during the nine months ended September 30, 2022 and 2021, respectively, and ~~2020, respectively.~~were primarily used for construction costs on our development and redevelopment properties. We have generally funded capital additions with available cash, ~~and~~ cash provided by operating ~~activities.~~activities, and construction loans.

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 communities with capital additions, and their related capital spending categories.

~~For further details regarding our development and redevelopment activities, including apartment communities constructed and delivered refer to the Executive Overview section above.~~

Financing Activities

For the nine months ended September 30, 2022, our net cash used in financing activities of $164.4 million consisted primarily of the $534.1 million payoff of the Notes Payable to AIR, $284.6 million to retire property debt and the $138.4 million paydown

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of construction loans, offset by $674.7 million in cash raised from the issuance of new property debt and a $102.0 million redeemable noncontrolling interest preferred equity contribution from an institutional partner.

Net cash ~~from~~provided by financing activities for the nine months ended September 30, 2021 ~~increased by $93.2~~was $158.6 million ~~compared~~primarily due to ~~the nine months ended September 30, 2020, due primarily to draws on~~ $142.3 million of proceeds received from construction loans ~~and proceeds from the $59.8 million non-recourse property loans~~ undertaken.~~entered into during the nine months ended September 30, 2021.~~

Future Capital Needs

We expect to fund any future acquisitions, development and redevelopment, ~~development,~~ and other capital spending principally with operating cash flows, short-term borrowings, and debt and equity financing. Our near-term business plan does not contemplate

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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 ~~2021 and beyond.~~the next twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our chief market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing property debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We use long-dated, fixed-rate, non-recourse property debt in order to avoid the refunding and repricing risks of short-term borrowings. We use working capital primarily to fund short-term uses. We make limited use of derivative financial instruments primarily to mitigate repricing risk, and we do not use them for trading or other speculative purposes.

As of September 30, ~~2021,~~2022, on a consolidated basis, we had approximately ~~$55.0~~$91.9 million of variable-rate property-level debt outstanding in addition to ~~two~~three variable rate construction loans that totaled ~~$143.7~~$86.7 million. We estimate that a change in ~~30-day LIBOR~~variable rates of 100 basis points with constant credit risk spreads would reduce or increase interest expense by approximately ~~$2.0~~$1.8 million.

~~In 2020, we paid an upfront premium~~ This risk is mitigated by Aimco's use of $12.1 million for the option to enter into a $1.5 billion notional amount interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against exposure to rising interest rates between now and October 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68% strike price on the five-year swap. The amount of a future cash settlement is capped 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 nor would we have any liability to make a payment.

During the first quarter of 2021, we paid an upfront premium of $5.6 million (including transaction costs) for the option to enter into a $500 million notional amount interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our notes payable to AIR, and is intended to mitigate interest rate increases between now and January 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 3% strike price on the five year swap. Alternatively, if interest rates were to decrease below the specified strike price, we would not receive a cash settlement nor would we have any liability to make a payment.

~~During the nine months ended September 30, 2021, we paid an upfront premium of $0.3 million for~~ interest rate caps, which as of September 30, 2022, provided protection for ~~the entire amounts on our Flamingo and Hamilton construction loans. These~~100% of its variable interest rate debt. Aimco's use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and Aimco's view on forecasted interest rates.

As of September 30, 2022, we held interest rate swaps and caps with $1.7 billion notional value that provide protection ~~if one month LIBOR exceeds 3% during the initial term of the loans.~~through June 2025. These instruments were acquired for $15.7 million and are currently valued at $61.3 million.

ITEM 4. CONTROLS AND PROCEDURES

Aimco

Disclosure Controls and Procedures

Aimco’s management, with the participation of Aimco’s ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~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~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer have concluded that, as of the end of such period, Aimco’s disclosure controls and procedures were 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~~ quarter ~~of 2021~~ended September 30, 2022, that has materially affected, or is reasonably likely to materially affect, Aimco’s internal control over financial reporting.

Aimco Operating Partnership

Disclosure Controls and Procedures

Aimco Operating Partnership’s management, with the participation of the ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer of both Aimco and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, has evaluated the effectiveness of 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~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer of Aimco OP GP, LLC have concluded that, as of the end of such period, Aimco Operating Partnership’s disclosure controls and procedures are effective.

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Changes in Internal Control Over Financial Reporting

There has been no change in 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~~ quarter ~~of 2021~~ended September 30, 2022, that has materially affected, or is reasonably likely to materially affect, Aimco Operating Partnership’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes from the risk factors in Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, except as discussed below. We may disclose changes to such factors or disclose additional factors from time to time in our filings with the SEC.

Activist Shareholders

On September 8, 2022, Land & Buildings Capital Growth Fund, LP, nominated three individuals to stand for election as directors at the Company’s 2022 annual meeting of stockholders in opposition to the three nominees recommended by the Board. On September 30, 2022, Land & Buildings withdrew one of its nominees.

While we strive to maintain constructive, ongoing communications with all of our stockholders, and welcome their views and opinions with the goal of enhancing value for all stockholders, activist stockholders may, from time to time, engage in proxy solicitations or advance stockholder proposals, or otherwise attempt to effect changes and assert influence on the Board and management. Responding to proposals by activist stockholders may and responding to a proxy contest instituted by stockholders would, require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs and require significant time and attention by the Board and management, diverting their attention from the pursuit of our business strategy. Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of the Board or senior management team arising from proposals by activist stockholders or a proxy contest could lead to the perception of a change in the direction of our business or instability which may be exploited by our competitors, result in the loss of potential business opportunities, and make it more difficult to pursue our strategic initiatives or attract and retain qualified personnel and business partners, any of which could have an adverse effect, which may be material, on our business and operating results and could result in volatility in the trading prices of our common stock. We may choose to initiate, or may become subject to, litigation as a result of proposals by activist stockholders or proxy contests or matters relating thereto, which would serve as a further distraction to the Board and management and could require us to incur significant additional costs.

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

Aimco

Unregistered Sales of Equity Securities

From time to time, Aimco may issue shares of common stock in exchange for OP Units, defined under the Aimco Operating Partnership heading below. Such shares are issued based on an exchange ratio of one share for each common OP Unit. 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 30, ~~2021,~~2022, Aimco issued approximately ~~140,000~~26,000 shares of common stock in exchange for OP Units in these transactions. Such shares were issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.

Repurchases of Equity Securities

~~There were no repurchases by Aimco of its common equity securities during the three months ended September 30, 2021.~~ Aimco’s ~~board of directors~~Board has, from time to time, authorized Aimco to repurchase shares of its outstanding common stock. As of September 30, ~~2021,~~2022, Aimco was authorized to repurchase ~~approximately 10.4~~up to 14.9 million ~~shares. This authorization has no expiration date. These repurchases~~shares of Aimco's outstanding common stock, subject

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to certain customary limitations, which may be made from time to time in the open market or in privately negotiated transactions. This authorization has no expiration date.

During the three months ended September 30, 2022, we repurchased 73,444 shares of Aimco Class A common stock at a weighted-average price of $7.16 per share. During the nine months ended September 30, 2022, we repurchased 815,608 shares of our common stock at a weighted-average price of $6.06 per share.

Aimco Operating Partnership

Unregistered Sales of Equity Securities

Aimco Operating Partnership did not issue any unregistered OP Units during the three months ended September 30, ~~2021~~2022..

Repurchases of Equity Securities

Aimco Operating Partnership’s Partnership Agreement generally provides that after holding common OP Units for ~~one-year,~~one year, limited partners other than Aimco have the right to redeem their common OP Units for cash or, at our election, shares of Aimco Common Stock on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended September 30, ~~2021,~~2022, approximately ~~140,000 of~~26,000 common OP Units were redeemed in exchange for shares of Common Stock.

~~The following table summarizes Aimco Operating Partnership’s repurchases, or redemptions~~ During the same period, approximately 12,000 common OP Units were redeemed in exchange for cash at an average price per unit of ~~common OP Units for the three months ended September 30, 2021.~~$6.57.

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, 2021 ‒ July 31, 2021

—

$
—

N/A

N/A
August 1, 2021 ‒ August 31, 2021

—

—

N/A

N/A
September 1, 2021 ‒ September 30, 2021

985

6.98

N/A

N/A
Total

985

$
6.98

~~(1)~~

The terms of 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, Aimco Operating Partnership has no publicly announced plans or programs of repurchase. However, for Aimco to repurchase shares of its Common Stock, 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.

Dividend and Distribution Payments

As a REIT, Aimco is required to distribute annually to holders of shares of its Common Stock at least ~~90%~~90.0% of its “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income. Aimco’s ~~board of directors~~Board determines and declares its dividends. In making a dividend determination, Aimco’s ~~board of directors~~Board considers a variety of factors, including REIT distribution requirements; current market conditions; liquidity needs; and other uses of cash, such as deleveraging and accretive investment activities. On September 30, 2022, we paid a special cash dividend of $0.02 per share to shareholders of record on September 14, 2022.

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~~activities. Aimco plans to reinvest earnings to facilitate growth and, therefore, does not presently intend to pay a regular quarterly cash dividend.~~

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ITEM 6. EXHIBITS

The following exhibits are filed with this report:


EXHIBIT NO.		DESCRIPTION

3.1		Charter – Articles of Restatement (Exhibit 3.1 to Aimco’s Annual Report on Form 10-K dated February 24, 2020, is incorporated herein by this reference)

3.2		Amended and Restated Bylaws (Exhibit 3.2 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

3.3		Articles Supplementary of Apartment Investment Management Company (Exhibit 3.1 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

10.1		Amended and Restated Agreement of Limited Partnership of Aimco OP L.P., effective as of December 14, 2020 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)

10.2		Amendment to Master Leasing Agreement by and between Apartment Income REIT L.P. and Aimco Development Company, LLC, dated as of May 19, 2022 (Exhibit 1.1 to Aimco's Current Report on Form 8-K, dated as of May 25, 2022, is incorporated herein by this reference)

10.3		Termination of Master Lease Agreements, dated as of June 17, 2022, by and among (i) MCZ/Centrum Flamingo II, L.L.C., AIMCO 50 Rogers Street, L.L.C., AIMCO Leahy Square Apartments, LLC, and Aimco Fitzsimons 3A Lessor, LLC; (ii) Flamingo North Lessee, LLC, Prism Lessee, LLC, 707 Leahy Lessee, LLC, and Fremont Lessee LLC; (iii) Aimco OP L.P.; and (iv) Apartment Income REIT, L.P. (Exhibit 1.1 to Aimco's Current Report on Form 8-K, dated June 14, 2022, is incorporated herein by this reference)

10.4		Amendment to Mezzanine Note Agreement and Notes, dated as of June 17, 2022, by and among Aimco JO Intermediate Holdings, LLC, Apartment Income REIT, L.P. (f/k/a AIMCO Properties, L.P.) and AIR/Bethesda Holdings, Inc. (f/k/a AIMCO/Bethesda Holdings, Inc.) (Exhibit 1.2 to Aimco's Current Report on Form 8-K, dated June 14, 2022, is incorporated herein by this reference)

10.5		Amendment to Master Leasing Agreement by and between Apartment Income REIT, L.P. and Aimco Development Company, LLC, dated as of June 14, 2022, (Exhibit 1.3 to Aimco's Current Report on Form 8-K, dated June 14, 2022, is incorporated herein by this reference)

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

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

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

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EXHIBIT NO.		DESCRIPTION
~~101~~
101		The following materials from Aimco’s and Aimco Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended September 30, ~~2021,~~2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of equity and partners’ capital; (iv) condensed consolidated statements of cash flows; and (v) notes to condensed consolidated financial statements.

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

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SIGNATURES

~~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/ H. Lynn C. Stanfield
		H. Lynn C. Stanfield
		Executive Vice President and Chief Financial Officer


	AIMCO OP L.P.

	By:	Aimco OP GP, LLC, its General Partner

	By:	/s/ H. Lynn C. Stanfield
		H. Lynn C. Stanfield
		Executive Vice President and Chief Financial Officer

Date: November ~~9, 2021~~7, 2022

4547

	General Partner and Special Limited Partner			Limited Partners			Partners’ Capital Attributable to the Aimco Operating Partnership			Noncontrolling Interests in Consolidated Real Estate Partnerships			Aimco Predecessor Capital		Total Partners’ Capital
Balances at June 30, 2020	$	—		$	589		$	589		$	113		$	520,762	$	521,464
Net income attributable to Aimco Predecessor		—			107			107			—			2,011		2,118
Net loss attributable to noncontrolling interests in consolidated real estate partnerships		—			—			—			(1	)		—		(1	)
Contributions from Aimco Predecessor, net		—			—			—			—			123,150		123,150
Balances at September 30, 2020	$	—		$	696		$	696		$	112		$	645,923	$	646,731

Balances at June 30, 2021	$	502,721		$	26,654		$	529,375		$	31,847		$	—	$	561,222
Redemption of Aimco Operating Partnership units		355			(355	)		—			—			—		—
Cash paid on redemption of Aimco Operating Partnership units		—			(6	)		(6	)		—			—		(6	)
Share-based compensation expense		1,019			441			1,460			—			—		1,460
Distribution to noncontrolling interests in consolidated real estate partnerships		—			—			—			(287	)		—		(287	)
Contributions from noncontrolling interests in consolidated partnerships		—			—			—			3,158			—		3,158
Net income attributable to noncontrolling interests in consolidated real estate partnerships		—			—			—			296			—		296
Net loss attributable to the Aimco Operating Partnership		(5,016	)		(253	)		(5,269	)		—			—		(5,269	)
Other, net		(45	)		—			(45	)		—			—		(45	)
Balances at September 30, 2021	$	499,034		$	26,481		$	525,515		$	35,014		$	—	$	560,529

Balance at December 31, 2020	$	4,263
Net income		41
Balance at September 30, 2021	$	4,304

	Sublease Income		Operating Lease Future Minimum Rent			Financing Leases Future Minimum Payments
Remainder of 2021	$	347	$	420		$	6,699
2022		1,393		1,891			27,197
2023		1,403		1,922			27,597
2024		1,413		1,935			28,597
2025		1,423		1,930			29,208
Thereafter		4,959		6,575			1,644,138
Total	$	10,938		14,673			1,763,436
Less: Discount				(1,702	)		(1,327,521	)
Total lease liabilities			$	12,971		$	435,915

Number of townhomes		58
Purchase price	$	40,000
Consideration allocated to land	$	3,483
Consideration allocated to building and improvements		35,630
Consideration allocated to intangible assets (1)		913
Consideration allocated to below-market lease liabilities (2)		(26	)
Total consideration	$	40,000

	As of September 30, 2021								As of December 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Interest rate options	$	29,547	$	0	$	29,547	$	0	$	13,315	$	0	$	13,315	$	0
Investment in RETV (1)		4,497		0		0		0		2,293		0		—		0

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, 2021 ‒ July 31, 2021		—	$	—	N/A	N/A
August 1, 2021 ‒ August 31, 2021		—		—	N/A	N/A
September 1, 2021 ‒ September 30, 2021		985		6.98	N/A	N/A
Total		985	$	6.98