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What changed in APARTMENT INVESTMENT & MANAGEMENT CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of APARTMENT INVESTMENT & MANAGEMENT CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+270 added−272 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in APARTMENT INVESTMENT & MANAGEMENT CO's 2023 10-K

270 paragraphs added · 272 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

23 edited+2 added−5 removed13 unchanged
Biggest changeCompetition There are many developers, managers, and owners of apartment real estate and underdeveloped land, as well as REITs, private real estate companies, and investors, that compete with us in acquiring, developing, obtaining financing for, and disposing of apartment communities. This competition affects our ability to realize our real estate development and transactional objectives.
Biggest changeWhen warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage our equity, reduce exposure to a single investment and, in certain cases, for strategic benefits. 3 Competition There are many developers, managers, and owners of apartment real estate and underdeveloped land, as well as REITs, private real estate companies, and investors, that compete with us in acquiring, developing, obtaining financing for, and disposing of apartment communities.
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”) and the project-level Multiple on Invested Capital (“MOIC”). We measure broader performance based on Net Asset value (“NAV”) growth over time.
Our financial objectives are to create value and produce superior, asset level, risk-adjusted returns on equity as measured by the investment period Internal Rate of Return (“IRR”) and the project-level Multiple on Invested Capital (“MOIC”). We measure broader performance based on Net Asset value (“NAV”) growth over time.
Our investment platform is managed by experienced professionals based in three regions, where we will focus our new investment activity: Southeast Florida and the Washington D.C. Metro Area and Colorado's Front Range.
Our investment platform is managed by experienced professionals based in three regions, where we will focus our new investment activity: Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range.
(“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. • Maintaining sufficient liquidity and utilizing safe financial leverage At all times, we will guard our liquidity by maintaining sufficient cash and committed credit.
(“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. • Maintaining sufficient liquidity and utilizing safe financial leverage We will guard our liquidity at all times by maintaining sufficient cash and committed credit.
By regionalizing this platform, we are able to leverage 2 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 Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies.
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 Our dedicated team will source and execute development and redevelopment projects, and various other direct investment strategies.
The Code imposes various requirements related to organizational structure, distribution levels, diversity of stock ownership, and certain restrictions with regard to owned assets 3 and categories of income that must be met in order to continue to qualify as a REIT.
The Code imposes various requirements related to organizational structure, distribution levels, diversity of stock ownership, and certain restrictions with regard to owned assets and categories of income that must be met in order to continue to qualify as a REIT.
Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values. • Managing and, over time, reducing our allocation to alternative investments We currently hold select alternative investments the majority of which originated with Aimco Predecessor and, over time, plan to significantly reduce capital allocated to these investments.
Core-Plus opportunities offer the opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and improve asset values. • Managing and continuing to reduce our allocation to alternative investments, over time We currently hold select alternative investments, the majority of which originated with Aimco Predecessor and, over time, plan to significantly reduce capital allocated to these investments.
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.
Our current allocation to alternative investments includes: our 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.
ITEM 1. BUSINESS The Company Aimco, a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”). Aimco is, through a wholly-owned subsidiary, the general and special limited partner of Aimco Operating Partnership, a Delaware Limited Partnership. Aimco conducts all of its business and owns all of its assets through Aimco Operating Partnership.
ITEM 1. BUSINESS The 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 subsidiary, is the general partner and directly is the special limited partner of Aimco Operating Partnership, a Delaware Limited Partnership.
Our development and redevelopment portfolio currently includes $0.8 billion of projects in construction and lease-up. In addition, our team has secured significant, high-quality, future development opportunities, including total potential of approximately 14 million square feet, located in high-growth markets.
Our development and redevelopment portfolio currently includes projects in construction and lease-up. In addition, our team has secured significant, high-quality, future development opportunities, including total potential of 13 million square feet, located in high-growth markets.
Our value proposition includes our: • Platform, consisting of a cohesive, talented, and tenured team with diverse real estate industry experience combined with a disciplined and proven investment process; • Diversified portfolio, consisting of $0.8 billion of in-process value-added investments, a deep pipeline which includes approximately 14 million square feet of potential future development, a national portfolio of stabilized multifamily real estate and select indirect and passive investments; and • Capital redeployment plan of prudent recycling of capital, reallocating our equity to higher returning investments.
Our value proposition includes our: • Platform, consisting of a cohesive, talented, and tenured team with diverse real estate industry experience combined with a disciplined and proven investment process; • Diversified portfolio, consisting of $0.6 billion of in-process value-add investments, a pipeline of 13 million square feet of potential future development, a national portfolio of stabilized multifamily real estate and limited indirect and passive investments; and • Capital redeployment plan which includes the prudent recycling of capital, reallocating our equity to higher returning investments, and return of capital to stockholders when appropriate.
The target composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across a geographically diversified portfolio and with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment fundamentals and state and regional governance.
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 geographically diversified markets, with a bias toward long established residential neighborhoods that rank highly in regard to schools, employment fundamentals and state and regional governance.
We have policies in place that support our stated strategy, guide our investment allocations, and manage risk, including to hold at all times a sizeable portion of our net equity in stabilized cash-flowing assets and to require cash or committed credit necessary for completion of development and redevelopment projects prior to their commencement.
We have policies in place that support our stated strategy, guide our investment allocations, and manage risk, including to hold at all times a sizeable portion of our net equity in stabilized cash-flowing assets and to require cash or committed credit necessary for completion of development and redevelopment projects prior to their commencement. 2 Given our stated strategy, it is expected that at any point in time the value-creation process will be ongoing at various of our investments.
In addition, our apartment communities compete for residents with other housing alternatives, including other rental apartments and condominiums, and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale.
This competition affects our ability to realize our real estate development and transactional objectives. In addition, our apartment communities compete for residents with other housing alternatives, including other rental apartments and condominiums, and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale.
On December 15, 2020, we completed the Separation, creating two separate and distinct, publicly traded companies, Aimco and AIR. Additional information regarding the Separation is contained in the Explanatory Note. Please refer to Note 15 to the consolidated financial statements in Item 8 for discussion regarding our business segments.
Aimco conducts all of its business and owns all of its assets through Aimco Operating Partnership. On December 15, 2020, we completed the Separation, creating two separate and distinct, publicly traded companies, Aimco and AIR. Please refer to Note 14 to the consolidated financial statements in Item 8 for discussion regarding our business segments.
Our primary goal is outsized risk-adjusted returns and accelerating growth for our shareholders. 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.
Our primary goal is outsized risk-adjusted returns and accelerating growth for our stockholders. We are focused on providing superior total-return performance to stockholders, primarily through capital appreciation driven by accretive investment and active portfolio management over multi-year periods.
Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the release or presence of such materials.
These materials may include lead-based paint, asbestos, polychlorinated biphenyls, and petroleum-based fuels. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the release or presence of such materials.
In addition, we currently hold select alternative assets, consisting primarily of indirect, real estate related, debt and equity investments. We plan to significantly reduce our allocation to these investments over time.
Metro Area and Colorado’s Front Range, plus investment in a geographically diversified portfolio of “Core” and “Core-Plus” apartment communities. In addition, we currently hold select alternative assets, consisting primarily of indirect, real estate related debt and equity investments. We have reduced our allocation to these investments and plan to continue to significantly reduce our allocation over time.
We expect to capitalize our activities through a combination of non-recourse property debt, construction loans, third-party equity, and the recycling of our 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 our enterprise.
We plan to limit the use of recourse leverage, with a strong preference towards non-recourse property-level debt to limit risk to our enterprise.
In addition, existing rent control laws, as well as future enactment of rent control or rent stabilization laws, or other laws and ordinances regulating multifamily housing, may reduce rental revenue or increase operating costs in particular markets.
In addition, existing rent control laws, as well as future enactment of rent control or rent stabilization laws, or other laws and ordinances regulating multifamily housing, may reduce rental revenue or increase operating costs in particular markets. 4 Environmental Various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present.
From time-to-time, we will allocate capital to financial assets designed to mitigate risks elsewhere in our enterprise. Existing examples include our option to acquire an interest rate swap designed to protect against repricing risk on our maturing liabilities and the use of rate caps to provide protection against increases in interest rates on in-place loans.
From time-to-time, we will allocate capital to financial assets designed to mitigate risks. Existing examples include our 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 our equity, including retained earnings.
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. • Owning a portfolio of stabilized core and core plus real estate Our entire portfolio of operating properties includes 26 apartment communities (22 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class).
In any time period, the amount of our capital that is allocated to development activities may vary based on market conditions and other factors. • Owning a portfolio of stabilized core and core plus real estate Our entire portfolio of operating properties includes 26 apartment communities (22 consolidated properties and four unconsolidated properties) with average rents in line with local market averages (generally defined as B class).
Our capital allocation strategy was designed to leverage our investment platform and optimize risk-adjusted returns for our shareholders.
Our capital allocation strategy was designed to leverage our investment platform and optimize risk-adjusted returns for our stockholders. We target a balanced allocation, which includes investments in “Value Add” and “Opportunistic” multifamily real estate, primarily located in Southeast Florida, the Washington, D.C.
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Aimco targets a balanced allocation which includes investments in “Value Add” and “Opportunistic” multifamily real estate, primarily located in South Florida, the Washington DC Metro Area and Colorado’s Front Range, plus investment in a geographically diversified portfolio of “Core” and “Core-Plus” apartment communities.
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We do not presently intend to pay a regular quarterly cash dividend, but may periodically pay dividends for REIT tax purposes or to return a portion of profits to stockholders.
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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.
Added
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. From time to time, we may choose to monetize certain pipeline assets prior to vertical construction in an effort to maximize value and risk adjusted returns.
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We also own one commercial office building that is part of an assemblage with an adjacent apartment building.
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When warranted, we plan to seek equity capital from joint venture partners to improve our cost of capital, further leverage our equity, reduce exposure to a single investment and, in certain cases, for strategic benefits.
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Environmental Various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present. These materials may include lead-based paint, asbestos, polychlorinated biphenyls, and petroleum-based fuels.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+53 added−19 removed143 unchanged
Biggest changeThese conditions also may add uncertainty to operations and may cause supply chain disruptions. 5 The effects of the COVID-19 pandemic or another health crisis, adverse economic or geopolitical events or dislocation in the financial and credit markets have negatively impacted or would negatively impact our operations or those of entities in which we hold a partial interest, including: • our ability to collect rents and late fees on a timely basis or at all, without reductions or other concessions; • our ability to evict residents for non-payment or for other reasons; • our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption; • fluctuations in regional and local economies, local real estate conditions, and rental rates; • interruptions in real estate development and redevelopment activities due to supply chain disruptions; • our ability to control incremental costs associated with COVID-19, including increased costs resulting from higher inflation; • our ability to dispose of communities at all or on terms favorable to us; • our ability to complete developments and redevelopments and other construction projects as planned; and • potential litigation relating to the COVID-19 pandemic.
Biggest changeThe effects of a health crisis, adverse economic or geopolitical events or dislocation in the financial and credit markets have negatively impacted or would negatively impact our operations or those of entities in which we hold a partial interest, including: • our ability to collect rents and late fees on a timely basis or at all, without reductions or other concessions; • our ability to evict residents for non-payment or for other reasons; • our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption; • fluctuations in regional and local economies, local real estate conditions, and rental rates; • interruptions in real estate development and redevelopment activities due to supply chain disruptions; • our ability to dispose of communities at all or on terms favorable to us; and • our ability to complete developments and redevelopments and other construction projects as planned.
Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including: • the general economic climate; • an inflationary environment in which the costs to operate and maintain our communities increase at a rate greater than our ability to increase rents, which we can only do upon renewal of existing leases or at the inception of new leases; • competition from other apartment communities and other housing options; • local conditions, such as loss of jobs, unemployment rates, or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates; • changes in governmental regulations and the related cost of compliance; 7 • changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing; and • changes in interest rates and the availability of financing.
Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including: • the general economic climate; • an inflationary environment in which the costs to operate and maintain our communities increase at a rate greater than our ability to increase rents, which we can only do upon renewal of existing leases or at the inception of new leases; • competition from other apartment communities and other housing options; 7 • local conditions, such as loss of jobs, unemployment rates, or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates; • changes in governmental regulations and the related cost of compliance; • changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing; and • changes in interest rates and the availability of financing.
This could happen if a transaction results in fewer than 100 persons owning all of Aimco's shares of capital stock or results in five or fewer persons (applying certain attribution rules of the Code) owning 50% or more of the value of all of Aimco's shares of capital stock.
This could happen if a transaction results in fewer than 100 persons owning all of Aimco's shares of capital stock or results in five or fewer persons (applying certain attribution rules of the Code) owning more than 50% of the value of all of Aimco's shares of capital stock.
Such conflicts of interest might arise in the following situations, among others: • decisions of the general partner with respect to the amount and timing of cash expenditures, borrowings, issuances of additional interests and reserves in any quarter, will affect whether or the extent to which there is available cash to make distributions in a given quarter; 17 • whenever possible, the general partner seeks to limit Aimco Operating Partnership’s liability under contractual arrangements to all or particular assets of Aimco Operating Partnership, with the other party thereto having no recourse against the general partner or its assets; • any agreements between Aimco Operating Partnership and the general partner and its affiliates will not grant to the holders of OP Units, separate and distinct from Aimco Operating Partnership, the right to enforce the obligations of the general partner and such affiliates in favor of our operating partnership.
Such conflicts of interest might arise in the following situations, among others: • decisions of the general partner with respect to the amount and timing of cash expenditures, borrowings, issuances of additional interests and reserves in any quarter, will affect whether or the extent to which there is available cash to make distributions in a given quarter; • whenever possible, the general partner seeks to limit Aimco Operating Partnership’s liability under contractual arrangements to all or particular assets of Aimco Operating Partnership, with the other party thereto having no recourse against the general partner or its assets; • any agreements between Aimco Operating Partnership and the general partner and its affiliates will not grant to the holders of OP Units, separate and distinct from Aimco Operating Partnership, the right to enforce the obligations of the general partner and such affiliates in favor of our operating partnership.
If anyone acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs: • the transfer will be considered null and void; • we will not reflect the transaction on Aimco’s books; • we may institute legal action to enjoin the transaction; • we may demand repayment of any dividends received by the affected person on those shares; • we may redeem the shares; • the affected person will not have any voting rights for those shares; and • the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more charitable organizations designated by Aimco.
If anyone acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs: • the transfer will be considered null and void; • we will not reflect the transaction on Aimco’s books; 21 • we may institute legal action to enjoin the transaction; • we may demand repayment of any dividends received by the affected person on those shares; • we may redeem the shares; • the affected person will not have any voting rights for those shares; and • the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more charitable organizations designated by Aimco.
Additionally, perceived uncertainties as to our future direction as a result of stockholder activism or changes to the composition of our board of directors (the "Board") may lead to the perception of a change in the direction of the business, instability, or lack of continuity, which may be exploited by our competitors, cause concern to our current or potential lenders, partners, or others with whom we do business, and make it more difficult to attract and retain qualified personnel.
Additionally, perceived uncertainties as to our future direction as a result of stockholder activism or changes to the composition of our Board may lead to the perception of a change in the direction of the business, instability, or lack of continuity, which may be exploited by our competitors, cause concern to our current or potential lenders, partners, or others with whom we do business, and make it more difficult to attract and retain qualified personnel.
In addition, the Maryland General Corporation Law provides that a corporation that: • has at least three directors who are not officers or employees of the entity or related to an acquiring person; and • has a class of equity securities registered under the Securities Exchange Act of 1934, as amended, may elect in its charter or bylaws or by resolution of the board of directors to be subject to all or part of a special subtitle (which we refer to as the “Maryland Unsolicited Takeovers Act” or “MUTA”) that provides that: • the corporation will have a classified board of directors; • any director may be removed only for cause and by the vote of two-thirds of the votes entitled to be cast in the election of directors generally, even if a lesser proportion is provided in the charter or bylaws; • the number of directors may only be set by the board of directors, even if the procedure is contrary to the charter or bylaws; • vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or bylaws; and • the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting, even if the procedure is contrary to the charter or bylaws.
In addition, the Maryland General Corporation Law provides that a corporation that: • has at least three directors who are not officers or employees of the entity or related to an acquiring person; and • has a class of equity securities registered under the Securities Exchange Act of 1934, as amended, may elect in its charter or bylaws or by resolution of the board of directors to be subject to all or part of a special subtitle (which we refer to as the “Maryland Unsolicited Takeovers Act” or “MUTA”) that provides that: o the corporation will have a classified board of directors; o any director may be removed only for cause and by the vote of two-thirds of the votes entitled to be cast in the election of directors generally, even if a lesser proportion is provided in the charter or bylaws; 22 o the number of directors may only be set by the board of directors, even if the procedure is contrary to the charter or bylaws; o vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or bylaws; and o the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting, even if the procedure is contrary to the charter or bylaws.
However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell apartment communities or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code. Aimco may be subject to federal, state, and local income taxes in certain circumstances.
However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell apartment communities or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code. 17 Aimco may be subject to federal, state, and local income taxes in certain circumstances.
The reverse can occur as well, where a contractor we have paid files for bankruptcy protection or commits fraud with the funds before completing a project that we have funded in part or in full. 8 Additionally, we use partnerships and limited liability companies to develop some of our real estate investments.
The reverse can occur as well, where a contractor we have paid files for bankruptcy protection or commits fraud with the funds before completing a project that we have funded in part or in full. Additionally, we use partnerships and limited liability companies to develop some of our real estate investments.
We have only limited insurance coverage for property damage claims arising from the presence of mold and for personal injury claims related to mold exposure. Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our financial condition and results of operations.
We have only limited insurance coverage for property damage claims arising from the presence of mold and for personal injury claims related to mold exposure. 11 Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our financial condition and results of operations.
The effect of any such issuance may be to dilute the interests of holders of OP Units. 16 Cash distributions by Aimco Operating Partnership are not guaranteed and may fluctuate with partnership performance. Aimco Operating Partnership does not intend to make regular distributions to holders of OP Units (other than what is required for Aimco to maintain its REIT status).
The effect of any such issuance may be to dilute the interests of holders of OP Units. Cash distributions by Aimco Operating Partnership are not guaranteed and may fluctuate with partnership performance. Aimco Operating Partnership does not intend to make regular distributions to holders of OP Units (other than what is required for Aimco to maintain its REIT status).
Responding to proxy contests and other actions by such activist stockholders or others would be costly and time-consuming, disrupt our operations and divert the attention of our Board and senior management team from the pursuit of business strategies, which could adversely affect our results of operations and financial condition.
Responding to proxy contests and other actions by such activist stockholders or others would be costly and time-consuming, disrupt our operations and divert the attention of our board of directors (the "Board") and senior management team from the pursuit of business strategies, which could adversely affect our results of operations and financial condition.
Additionally, the Maryland General Corporation Law provides, among other things, that the Board of Directors has broad discretion in adopting stockholders’ rights plans and has the sole power to fix the record date, time, and place for special meetings of the stockholders. To date, we have not adopted a stockholders’ rights plan.
Additionally, the Maryland General Corporation Law provides, among other things, that the Board has broad discretion in adopting stockholders’ rights plans and has the sole power to fix the record date, time, and place for special meetings of the stockholders. To date, we have not adopted a stockholders’ rights plan.
Complying with the REIT requirements may cause Aimco to forgo otherwise attractive business opportunities. To qualify as a REIT, Aimco must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of its assets, the amounts distributed to its stockholders, and the ownership of our stock.
Complying with the REIT requirements may cause Aimco to forgo otherwise attractive business opportunities. To qualify as a REIT, Aimco must continually satisfy tests concerning, among other things, the sources of its income, the nature and diversification of its assets, the amounts distributed to its stockholders, and the ownership of its stock.
Under Aimco's charter, Aimco's Board of Directors has the authority to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, conversion or other rights, voting power restrictions, limitations as to dividends, qualifications, or terms or conditions of redemptions as the Board of Directors may determine.
Under Aimco's charter, Aimco's Board has the authority to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, conversion or other rights, voting power restrictions, limitations as to dividends, qualifications, or terms or conditions of redemptions as the Board may determine.
The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of Aimco, where there is a difference of opinion between Aimco's Board of Directors and others as to what is in Aimco's stockholders’ best interests.
The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of Aimco, where there is a difference of opinion between Aimco's Board and others as to what is in Aimco's stockholders’ best interests.
REIT distribution requirements limit our available cash. As a REIT, Aimco is subject to annual distribution requirements. Aimco pays distributions, including taxable stock dividends, intended to enable Aimco to satisfy its distribution requirements. This limits the amount of cash available for other business purposes, including amounts to fund our growth.
REIT distribution requirements limit our available cash. As a REIT, Aimco is subject to annual distribution requirements. Aimco pays distributions, including taxable stock dividends, intended to enable it to satisfy its distribution requirements. This limits the amount of cash available for other business purposes, including amounts to fund our growth.
Moreover, even a technical or inadvertent mistake could jeopardize our REIT status. Aimco's continued qualification as a REIT will depend on its satisfaction of certain asset, income, investment, organizational, distribution, stockholder ownership, and other requirements on a continuing basis.
Moreover, even a technical or inadvertent mistake could jeopardize Aimco's REIT status. Aimco's continued qualification as a REIT will depend on its satisfaction of certain asset, income, investment, organizational, distribution, stockholder ownership, and other requirements on a continuing basis.
To 18 the extent that we are recognized as a creditor of such subsidiaries, our claims may still be subordinate to any security interest in or other lien on their assets and to any of their debt or other obligations that are senior to our claims.
To the extent that we are recognized as a creditor of such subsidiaries, our claims may still be subordinate to any security interest in or other lien on their assets and to any of their debt or other obligations that are senior to our claims.
In addition to 10 potential environmental liabilities or costs associated with our current real estate, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or real estate we no longer own or operate.
In addition to potential environmental liabilities or costs associated with our current real estate, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future, or real estate we no longer own or operate.
Aimco's ability to satisfy the asset tests depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we do not obtain independent appraisals.
Aimco's ability to satisfy the asset tests depends upon the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we do not obtain independent appraisals.
As an equity investor in the REIT subsidiaries and our subsidiaries, our right to receive assets upon their liquidation or reorganization are effectively subordinated to the claims of their creditors and any holders of preferred equity senior to our equity investments.
As an equity investor in our subsidiaries, our right to receive assets upon their liquidation or reorganization are effectively subordinated to the claims of their creditors and any holders of preferred equity senior to our equity investments.
This could have a material adverse effect on our financial condition or results of operations. Climate change may adversely affect our business.
This could have a material adverse effect on our financial condition or results of operations. 10 Climate change may adversely affect our business.
Development and redevelopment are subject to numerous risks, including the following: • we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third-party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities; • we may incur costs that exceed our original estimates due to increased material, labor, or other factors and costs, such as those resulting from litigation, program changes, inflation, interest rate increases or supply chain disruptions; • we may be unable to complete construction and lease-up of an apartment community on schedule, including as a result of global supply chain disruptions, resulting in increased construction and financing costs and a decrease in expected rental revenues; • occupancy rates and rents at an apartment community may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development of competing communities; 6 • we may be unable to obtain financing, including construction loans, with favorable terms, or at all, which may cause us to delay or abandon an opportunity; • we may abandon opportunities that we have already begun to explore, or stop projects we have already commenced, for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover costs already incurred in exploring those opportunities; • we are required to pay rent to AIR for any properties we may lease from them in accordance with the Master Leasing Agreement; • we may incur liabilities to third parties during the development or redevelopment process and we may be faced with claims for construction defects after a property has been developed; • we may face opposition from local community or political groups with respect to the development, construction, or operations at a particular site; • health and safety incidents or other accidents on site may occur during development; • unexpected events or circumstances may arise during the development or redevelopment process that affect the timing of completion and the cost and profitability of the development or redevelopment; • loss of a key member of a redevelopment or development team could adversely affect our ability to deliver developments and redevelopments on time and within our budget; • government restrictions, standards or regulations intended to reduce greenhouse gas emissions and potential climate change impacts may increase in the future in the form of restrictions or additional requirements on development in certain areas; and • environmental, social, governance and other sustainability matters and our responses to these matters could impact development.
Development and redevelopment are subject to numerous risks, including the following: • we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third-party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities; • we may incur costs that exceed our original estimates due to increased material, labor, or other factors and costs, such as those resulting from litigation, program changes, inflation, interest rate increases or supply chain disruptions; • we may be unable to complete construction and lease-up of an apartment community on schedule, including as a result of global supply chain disruptions, resulting in increased construction and financing costs and a decrease in expected rental revenues; 6 • occupancy rates and rents at an apartment community may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development of competing communities; • we may be unable to obtain financing, including construction loans, with favorable terms, or at all, which may cause us to delay or abandon an opportunity; • we may abandon opportunities that we have already begun to explore, or stop projects we have already commenced, for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover costs already incurred in exploring those opportunities; • we may incur liabilities to third parties during the development or redevelopment process and we may be faced with claims for construction defects after a property has been developed; • we may face opposition from local community or political groups with respect to the development, construction, or operations at a particular site; • health and safety incidents or other accidents on site may occur during development; • unexpected events or circumstances may arise during the development or redevelopment process that affect the timing of completion and the cost and profitability of the development or redevelopment; • loss of a key member of a redevelopment or development team could adversely affect our ability to deliver developments and redevelopments on time and within our budget; • government restrictions, standards or regulations intended to reduce greenhouse gas emissions and potential climate change impacts may increase in the future in the form of restrictions or additional requirements on development in certain areas; and • environmental, social, governance and other sustainability matters and our responses to these matters could impact development.
Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational, financing, acquisition, and disposition activity.
We depend on our senior management. Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational, financing, acquisition, and disposition activity.
Aimco’s charter may limit the ability of a third-party to acquire control of Aimco. The 8.7% and other ownership limits discussed above may have the effect of delaying or precluding acquisition by a third-party of control of Aimco without the consent of our Board of Directors.
Aimco’s charter may limit the ability of a third-party to acquire control of Aimco. The 8.7% and other ownership limits discussed above may have the effect of delaying or precluding acquisition by a third-party of control of Aimco without the consent of Aimco's Board.
Even as a REIT, Aimco may be subject to United States federal income and excise taxes in various situations, such as on its undistributed income.
Even as a REIT, Aimco may be subject to United States federal income and excise taxes in various situations, such as on its undistributed income, as described above.
Accordingly, there can be no assurance that the Internal Revenue Service (the “IRS”), will not contend that our interests in subsidiaries or other issuers constitutes a violation of the REIT requirements. Moreover, future economic, market, legal, tax, or other considerations may cause Aimco to fail to qualify as a REIT, or the Board may determine to revoke its REIT status.
Accordingly, there can be no assurance that the Internal Revenue Service (the “IRS”), will not contend that Aimco's interests in subsidiaries or other issuers constitute a violation of the REIT requirements. Moreover, future economic, market, legal, tax, or other considerations may cause Aimco to fail to qualify as a REIT, or the Board may determine to revoke its REIT status.
Aimco's charter also limits ownership of Aimco's Common Stock and preferred stock by any single stockholder to 8.7% of the value of the outstanding Common Stock and preferred stock, or 15% in the case of certain pension trusts, registered investment companies, and Mr. Considine.
Aimco's charter also limits ownership of Aimco's Common Stock and preferred stock by any single stockholder to 8.7% of the value of the outstanding Common Stock and preferred stock, or 15% in the case of certain pension trusts, registered investment companies, and certain individuals.
Our indirect interest in the partnership owning the Parkmerced Apartments is subject to certain risks, including, but not limited to, exposure to the skill and capital of the controlling party and those resulting from fluctuations in San Francisco occupancy rates, the operating disruption due to effects of COVID-19, and the current economic situation which may result in all, or a portion of the loan not being repaid.
Our indirect interest in the partnership owning the Parkmerced Apartments is subject to certain risks, including, but not limited to, exposure to the skill and capital of the controlling party and those resulting from fluctuations in San Francisco occupancy rates, operating disruptions due to effects of the pandemic, and the current economic situation which may result in all, or a portion of the loan not being repaid.
We also have certain non-recourse property debt and construction loans that are based on variable interest rate indexes. An increase or decrease in these variable interest rate indexes would likely increase or decrease our interest expense. An increase in interest expense may affect our profitability.
We also have certain non-recourse property debt and construction loans that are based on variable interest rate indexes. An increase or decrease in these variable interest rate indexes would likely increase or decrease our interest expense.
The Maryland General Corporation Law, specifically the Maryland Business Combination Act, restricts mergers and other business combination transactions between us and any person who acquires, directly or indirectly, beneficial ownership of shares of our stock representing 10% or more of the 19 voting power without our Board of Directors’ prior approval.
The Maryland General Corporation Law, specifically the Maryland Business Combination Act, restricts mergers and other business combination transactions between us and any person who acquires, directly or indirectly, beneficial ownership of shares of our stock representing 10% or more of the voting power without our Board's prior approval.
We do not supervise AIR or its managers and employees on a day-to-day basis and we cannot assure you that they will manage such properties in a manner that is consistent with their obligations under our agreements, that they will not be negligent in their performance or engage in any criminal or fraudulent activity, or that they will not otherwise default on their management obligations to us.
We do not supervise our third-party property managers or their employees on a day-to-day basis and we cannot assure you that they will manage such properties in a manner that is consistent with their obligations under our agreements, that they will not be negligent in their performance or engage in any criminal or fraudulent activity, or that they will not otherwise default on their management obligations to us.
As a Maryland corporation, Aimco is subject to various Maryland laws that may have the effect of discouraging offers to acquire us and increasing the difficulty of consummating any such offers, where there is a difference of opinion between our Board of Directors and others as to what is in our stockholders’ best interests.
As a Maryland corporation, Aimco is subject to various Maryland laws that may have the effect of discouraging offers to acquire us and increasing the difficulty of consummating any such offers, where there is a difference of opinion between our Board and others as to what is in our stockholders’ best interests or where our Board does not approve an offer.
Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse impact on our reputation, which could materially adversely affect our business in a number of ways, including causing a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities, and a resulting increased risk of litigation and regulatory enforcement actions.
Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse impact on our reputation, which could materially adversely affect our business in a number of ways, including causing a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities, and a resulting increased risk of litigation and regulatory enforcement actions. 15 Our business could be negatively affected as a result of the actions of activist stockholders.
Our charter limits ownership of Common Stock by any single stockholder (applying certain “beneficial ownership” rules under the federal securities laws) to 8.7% (or up to 12.0% upon a waiver from Aimco’s Board of Directors) of outstanding shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies and Mr.
Aimco's charter limits ownership of Common Stock by any single stockholder (applying certain “beneficial ownership” rules under the federal tax and securities laws) to 8.7% (or up to 12.0% upon a waiver from Aimco’s Board) of outstanding shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies, and certain individuals (or up to 20.0% for such pension trusts or registered investment companies upon a waiver from Aimco’s Board).
Increases in interest rates would increase our interest expense and reduce our profitability, and the phasing out of LIBOR could adversely affect our business, operating results, and financial condition. Our revolving secured credit facility contains a variable interest rate which may be based, in part, on LIBOR.
Increases in interest rates would increase our interest expense and reduce our profitability and could adversely affect our business, operating results, and financial condition. Our revolving secured credit facility contains a variable interest rate, which may be based, in part, on the Secured Overnight Financing Rate ("SOFR").
Holders of OP Units have limited voting rights and are limited in their ability to effect a change of control. Aimco Operating Partnership is managed and operated by its general partner, Aimco. Unlike the holders of common stock in a corporation, holders of OP Units have only limited voting rights on matters affecting Aimco Operating Partnership’s business.
Aimco Operating Partnership is managed and operated by its general partner, Aimco. Unlike the holders of common stock in a corporation, holders of OP Units have only limited voting rights on matters affecting Aimco Operating Partnership’s business.
We rely on our property managers to manage our properties. If our property managers fail to efficiently manage our properties, tenants may not renew their leases, or we may become subject to unforeseen liabilities. A majority of our properties are managed by AIR.
We rely on our property managers to manage our properties. If our property managers fail to efficiently manage our properties, tenants may not renew their leases, or we may become subject to unforeseen liabilities. Our properties are managed by third parties.
We may incur additional indebtedness from time to time in the future to finance working capital, 14 capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our indebtedness could intensify. RISKS RELATED TO TAX LAWS AND REGULATIONS Aimco may fail to qualify as a REIT .
In addition, we may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we increase leverage, the risk related to our indebtedness could also increase. RISKS RELATED TO TAX LAWS AND REGULATIONS Aimco may fail to qualify as a REIT .
Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss, or misuse of the information (which may be confidential, proprietary, or commercially sensitive in nature), and a loss of confidence in our security measures, which could harm our business.
Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss, or misuse of the Confidential Information, and a loss of confidence in our security measures, which could harm our business, operating results, and financial condition.
As climate change concerns continue to grow, legislation and regulations of this nature are expected to continue and become more costly to comply with. In addition, it is possible that some form of expanded energy efficiency legislation may be passed by the 9 U.S.
As climate change concerns continue to grow, legislation and regulations of this nature are expected to continue and increase costs of compliance. In addition, it is possible that some form of expanded energy efficiency legislation may be passed by the U.S.
As a result of these and other factors, there can be no assurance regarding actual levels of cash distributions on OP Units, and Aimco Operating Partnership’s ability to distribute cash may be limited during the existence of any events of default under any of its debt instruments.
As a result of these and other factors, there can be no assurance regarding actual levels of cash distributions on OP Units, and Aimco Operating Partnership’s ability to distribute cash may be limited during the existence of any events of default under any of its debt instruments. 19 Holders of OP Units have limited voting rights and are limited in their ability to effect a change of control.
The maximum United States federal tax rate applicable to income from “qualified dividends” payable to United States stockholders that are individuals, trusts, and estates is currently 20%, plus the 3.8% investment tax surcharge.
Dividends paid by a C-corporation may constitute "qualified dividends." The maximum United States federal tax rate applicable to income from “qualified dividends” payable to United States stockholders that are individuals, trusts, and estates is currently 20%, plus the 3.8% investment tax surcharge.
Our business could be negatively affected as a result of the actions of activist stockholders. Publicly traded companies have increasingly become subject to campaigns by investors advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases, or even sales of assets or the entire company.
Publicly traded companies have increasingly become subject to campaigns by investors advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases, or even sales of assets or the entire company.
In addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted or approvals already obtained depends on factors beyond our control, such as changes in federal, state, and local policies, rules and regulations, and their interpretations and application.
In addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted or approvals already obtained depends on factors beyond our control, such as changes in federal, state, and local policies, rules and regulations, and their interpretations and application. 9 Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps.
We could also be required to pay a 100% tax on any net income on non-arm’s-length transactions between us and a taxable REIT subsidiary (“TRS”) and on any net income from sales of apartment communities that were held for sale primarily in the ordinary course.
Aimco could also be required to pay a 100% tax on any net income on non-arm’s-length transactions between us and a taxable REIT subsidiary (“TRS”) and on any net income from sales of apartment communities or other property treated as held primarily for sale to customers in the ordinary course of its business.
If we fail to make required payments of principal and interest on our non-recourse property debt, our lenders could foreclose on the apartment communities and other collateral securing such debt, which would result in the loss to us of income and asset value. 13 Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity.
If we fail to make required payments of principal and interest on our non-recourse property debt, our lenders could foreclose on the apartment communities and other collateral securing such debt, which would result in the loss to us of income and asset value.
Adverse economic and geopolitical conditions, local, regional, national, or international health crises and dislocations in the credit markets could negatively impact our tenants and our operations. The occurrence of regional epidemics or a global pandemic, such as COVID-19 may adversely affect our operations, financial condition, and results of operations.
Adverse economic and geopolitical conditions, local, regional, national, or international health crises and dislocations in the credit markets could negatively impact our tenants and our operations. The occurrence of regional epidemics or a global pandemic, may adversely affect our operations, financial condition, and results of operations. These conditions also may add uncertainty to operations and may cause supply chain disruptions.
Given our stockholder composition and other factors, it is possible our stockholders or future activist stockholders may attempt to effect such changes.
We have been subject to stockholder activism in the past and given our stockholder composition and other factors, it is possible our stockholders or future activist stockholders may attempt to effect such changes in the future.
In connection with the 2020 spin-off of AIR, the pre-spin Board elected for Aimco to be subject to all of the provisions of MUTA until the 2024 annual meeting of stockholders.
In connection with the Separation, the board of directors of Aimco Predecessor elected for Aimco to be subject to all of the provisions of MUTA until the 2024 annual meeting of stockholders.
Given the nature of the effects of the COVID-19, it remains challenging to predict the ultimate impact of the COVID-19 pandemic on the global economy, our residents and commercial tenants, our communities, and the operations of entities in which we hold an interest (including our economic interest in the partnership owning the “Parkmerced Apartments”), or if disruptions are likely to continue.
Given the nature of the effects of a potential epidemic, pandemic, or other health crisis, it remains challenging to predict the ultimate impact of such events on the global economy, our residents and commercial tenants, our communities, and the operations of entities in which we hold an interest (including our economic interest in the partnership owning the “Parkmerced Apartments”).
Although we anticipate and plan for losses, there can be no assurance that our financial 11 results will not be adversely affected by our exposure to losses arising from natural disasters or severe weather in the future that exceed our previous experience and assumptions. We depend on our senior management.
As a result, our operating and financial results may vary significantly from one period to the next. Although we anticipate and plan for losses, there can be no assurance that our financial results will not be adversely affected by our exposure to losses arising from natural disasters or severe weather in the future that exceed our previous experience and assumptions.
Actual, potential, or perceived conflicts could give rise to investor dissatisfaction, settlements with stockholders, litigation or regulatory inquiries or enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual, or perceived conflicts of interest.
Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual, or perceived conflicts of interest.
Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit markets.
Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity. Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit markets.
Revisions in federal tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT and the tax considerations relevant to an investment in Aimco's Common Stock or could cause us to change our investments and commitments.
Revisions in federal tax laws and interpretations thereof could significantly and negatively affect our ability to qualify as a REIT and the tax considerations relevant to an investment in Aimco's Common Stock or could cause us to change our investments and commitments. 18 If the Aimco Operating Partnership were to fail to qualify as a partnership for federal income tax purposes, Aimco would fail to qualify as a REIT and suffer other adverse consequences.
Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps. If municipalities in which we operate take such actions, it could have an adverse effect on our business by causing delays, increasing our costs, or limiting our ability to operate in those municipalities.
If municipalities in which we operate take such actions, it could have an adverse effect on our business by causing delays, increasing our costs, or limiting our ability to operate in those municipalities.
Aimco generally must distribute annually at least 90% of our “real estate investment trust taxable income,” which is generally equivalent to net taxable ordinary income, determined without regard to the dividends paid deduction and excluding any net capital gain, in order for our distributed earnings not to be subject to United States federal corporate income tax.
Aimco generally must distribute annually at least 90% of its “real estate investment trust taxable income,” which is generally equivalent to net taxable ordinary income, determined without regard to the dividends paid deduction and excluding any net capital gain, in order to qualify as a REIT.
Evolving compliance and operational requirements under the CCPA and the privacy and data security laws of other jurisdictions 12 in which we operate impose significant costs that are likely to increase over time. Our failure to comply with laws, rules, and regulations related to privacy and data protection could harm our business or reputation.
Evolving compliance and operational requirements under the CCPA and the privacy and data security laws of other jurisdictions in which we operate impose significant costs that are likely to increase over time.
Neither the Aimco Operating Partnership agreement nor any of the other agreements, contracts, and arrangements between Aimco Operating Partnership, on the one hand, and the general partner of Aimco Operating Partnership and its affiliates, on the other, are or will be the result of arm’s-length negotiations.
Neither the Aimco Operating Partnership agreement nor any of the other agreements, contracts, and arrangements between Aimco Operating Partnership, on the one hand, and the general partner of Aimco Operating Partnership and its affiliates, on the other, are or will be the result of arm’s-length negotiations. 20 Provisions in the Aimco Operating Partnership agreement may limit the ability of a holder of OP Units to challenge actions taken by the general partner.
Notwithstanding this combined benefit, dividends payable by REITs may result in marginally higher taxes to the stockholder. C-corporations are generally required to pay United States federal income tax on earnings. After-tax earnings are then available for stockholder dividends.
Notwithstanding this combined benefit, as discussed below, dividends payable by REITs may result in marginally higher taxes to the stockholder. C-corporations are generally required to pay a corporate-level United States federal income tax on their income, which will reduce the amount available for distribution to stockholders.
Provisions in the Aimco Operating Partnership agreement may limit the ability of a holder of OP Units to challenge actions taken by the general partner. Delaware law provides that, except as provided in a partnership agreement, a general partner owes the fiduciary duties of loyalty and care to the partnership and its limited partners.
Delaware law provides that, except as provided in a partnership agreement, a general partner owes the fiduciary duties of loyalty and care to the partnership and its limited partners.
In 2022, Aimco was recognized with Healthiest Employers Awards in South Florida, Washington, D.C., and Denver, ranking #1 in its category for South Florida, #2 in its category for Washington, D.C., and a top scorer in Denver's medium sized employer category. The Healthiest Employers Awards honor companies with policies and initiatives promoting the health and well-being of their employees.
In 2023, we were recognized with Healthiest Employers Awards in South Florida, Washington, D.C., and Denver, ranking #1 in our category for South Florida and #2 in our category for Colorado and Washington, D.C. The Healthiest Employers Awards honor companies with policies and initiatives promoting the health and well-being of their employees.
Our secured credit facility matures in December 2023, subject to extension options. Certain of our subsidiaries have existing secured property-level debt equal to approximately $938.5 million and construction loans of approximately $126.3 million as of December 31, 2022.
Our secured credit facility matures in December 2024, prior to consideration of its one-year extension option. Certain of our subsidiaries have existing secured property-level debt equal to approximately $852.5 million and construction loans of approximately $309.5 million as of December 31, 2023.
We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act (the “CCPA” (which became effective on January 1, 2020)), relating to the collection, use, and security of employee and other data.
These requirements, and their application, interpretation and amendment are constantly evolving and developing. 13 We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act (the “CCPA” (which became effective on January 1, 2020 and is amended by the California Privacy Rights Act)), relating to the collection, use, disclosure and security of employee and business contact data.
Available Information Our combined Annual Report on Form 10-K, our combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K filed by us or Aimco Operating Partnership, and any amendments to any of those reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable through our website at www.aimco.com.
Healthiest Employers takes a holistic view of worksite health, evaluating the extent of leadership team buy-in, including how well they understand the needs of the employee population and how they proactively support well-being. 5 Available Information Our combined Annual Report on Form 10-K, our combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K filed by us or Aimco Operating Partnership, and any amendments to any of those reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable after filing through our website at www.aimco.com.
Our ESG policies are in place to guide this commitment and are applicable to all new construction, existing assets, and corporate operations. These policies are also taken into consideration when hiring suppliers and procuring materials.
We remain committed to providing best-in-class living environments that mitigate risk while reducing environmental impacts and creating value. Our ESG policies are in place to guide this commitment and are applicable to all new construction, existing assets, and corporate operations. These policies are also taken into consideration when hiring suppliers and procuring materials.
In 2022, the Board publicly announced its commitment to, effective as of the 2023 annual meeting of stockholders, (i) making us no longer be subject to any of the provisions of MUTA, and (ii) prohibit us from electing to be subject to MUTA without the approval of our stockholders.
As of the 2023 annual meeting of stockholders, (i) Aimco is no longer subject to any of the provisions of MUTA, and (ii) Aimco is prohibited from electing to be subject to MUTA without the approval of its stockholders.
We use these systems to manage our vendor relationships, internal communications, accounting and record-keeping systems, and many other key aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks, which also depend on the strength of our procedures and the effectiveness of our internal controls.
Our operations rely on the secure processing, storage, and transmission of confidential, personal and other information (“Confidential Information") in our computer systems and networks, which also depend on the strength of our procedures and the effectiveness of our internal controls.
Adverse outcomes of disputes or litigation could negatively impact our business, results of operations, and financial condition, particularly if we have not limited the extent of the damages for which we may be liable, or if our liabilities exceed the amounts of the insurance that we carry.
As a result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction defects, negligent performance of work or other similar actions by third parties we have engaged. 8 Adverse outcomes of disputes or litigation could negatively impact our business, results of operations, and financial condition, particularly if we have not limited the extent of the damages for which we may be liable, or if our liabilities exceed the amounts of the insurance that we carry.
It is unlikely that any person will make a market in the OP Units, or that an active market for the OP Units will develop.
There is no public market for the OP Units. Aimco Operating Partnership has no plans to list any OP Units on a securities exchange. It is unlikely that any person will make a market in the OP Units, or that an active market for the OP Units will develop.
The extent of such impact will depend on developments, such as the emergence of new COVID-19 variants. Such developments, depending on their nature, duration, and intensity, could have a material adverse effect on our operating results and financial condition. The COVID-19 pandemic also may have the effect of heightening many of the other risks described below.
Such events, depending on their nature, duration, and intensity, could have a material adverse effect on our operating results and financial condition. An epidemic, pandemic, or other health crisis also may have the effect of heightening many of the other risks described below. Development, redevelopment, and construction risks could affect our profitability.
As compared to other taxable corporations, this ability to reduce or eliminate the REIT’s taxable income by paying dividends to stockholders is a principal benefit of maintaining REIT status, generally resulting in a lower combined tax liability of the REIT and its stockholders 15 as compared to that of the combined tax liability of other taxable corporations and their stockholders.
Through this dividends paid deduction, a REIT may reduce or eliminate its entity-level United States federal income tax liability, which generally results in a lower combined tax liability of the REIT and its stockholders as compared to that of the combined tax liability of other taxable C-corporations and their stockholders.
Some of our existing and/or future debt and other securities may contain covenants that restrict our activities. These may include covenants that limit our operations or impact our ability to make distributions or other payments unless certain financial tests or other criteria are satisfied, as well as certain other customary affirmative and negative covenants.
These may include covenants that limit our operations or impact our ability to make distributions or other payments unless certain financial tests or other criteria are satisfied, as well as certain other customary affirmative and negative covenants. We may increase leverage in executing our development plan, which could further exacerbate the risks associated with our indebtedness.
Although we make efforts to maintain the security and integrity of our systems and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
There can be no assurance that our security efforts and measures will be fully implemented, complied with or effective or that attempted security breaches or disruptions would not be successful or damaging.
If we are unable to lease the properties or we become subject to significant liabilities as a result of AIR’s management performance, our financial condition and results of operations could be substantially harmed.
If we are unable to lease the properties or we become subject to significant liabilities as a result of our third-party property managers’ management performance, our financial condition and results of operations could be substantially harmed. 12 Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.
Aimco's charter authorizes our Board of Directors to issue up to 510,587,500 shares of capital stock. As of December 31, 2022, 500,787,260 shares were classified as Common Stock and 9,800,240 shares were classified as preferred stock.
Aimco's charter authorizes its Board to issue up to 510,587,500 shares of capital stock, which consists entirely of Common Stock as of December 31, 2023.
We actively discuss these matters with our stockholders and solicit their feedback on our program. Environmental, Social, Governance Policies We updated our Environmental, Social, Governance ("ESG ") policies and published a Corporate Responsibility Report reflecting our ESG priorities and performance. 4 We remain committed to providing best-in-class living environments that mitigate risk while reducing environmental impacts and creating value.
We actively discuss these matters with our stockholders and solicit their feedback on our program. Environmental, Social, Governance Policies We update our Environmental, Social, Governance ("ESG") policies and publish a Corporate Responsibility Report reflecting our ESG priorities and performance on an annual basis.
There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR. There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR.
There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR. The Separation was designed to minimize conflicts of interest between us and AIR, and the volume of transactions with AIR has significantly decreased since the Separation.
Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyberattacks.
We own and manage some of these IT Systems, but also rely on third parties for a range of IT Systems and related products and services, including but not limited to cloud computing services. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyberattacks.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur current development and redevelopment portfolio consists of 12 properties, including developable land, located primarily in Southeast Florida, the Washington D.C. Metro Area and Colorado's Front Range. Additional information about our consolidated real estate, including property debt, is contained in “Schedule III - Real Estate and Accumulated Depreciation” in this Annual Report on Form 10-K.
Biggest changeOur current development and redevelopment portfolio consists of 11 properties, including developable land, located primarily in Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range. Additional information about our consolidated real estate, including property debt, is contained in “Schedule III - Real Estate and Accumulated Depreciation” in this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PR OCEEDINGS From time to time, we 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, we believe there are no legal proceedings pending that would have a material effect upon on our financial condition or results of operations.
Biggest changeITEM 3. LEGAL PR OCEEDINGS From time to time, we 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, we believe there are no legal proceedings pending that would have a material effect upon our financial condition or result of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAccordingly, the per share dividends Aimco pays to its stockholders generally equal the per unit distributions paid by Aimco Operating Partnership to holders of its common partnership units. Our revolving credit agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends and distributions as may be necessary to maintain Aimco's REIT status.
Biggest changeOur revolving credit agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends and distributions as may be necessary to maintain Aimco's REIT status. Performance Graph The following graph compares cumulative total returns for Aimco's Common Stock, the FTSE Nareit Equity Apartments Index, and the Russell 2000.
Stockholders receiving any dividend, whether payable in cash or cash and shares of Aimco Common Stock, will be required to include the full amount of such dividend as income to the extent of our current and accumulated earnings and profits, as 21 determined for United States federal income tax purposes for the year of such dividend and may be required to pay income taxes with respect to such dividend in excess of the cash dividend received.
Stockholders receiving any dividend, whether payable in cash or cash and shares of Aimco Common Stock, will be required to include the full amount of such dividend as income to the extent of our current and accumulated earnings and profits, as determined for United States federal income tax purposes for the year of such dividend and may be required to pay income taxes with respect to such dividend in excess of the cash dividend received.
Repurchases of Equity Securities Aimco Operating Partnership’s Partnership Agreement generally provides that after holding OP Units for one-year, limited partners other than us have the right to redeem their OP Units for cash or, at our election, shares of our Common Stock on a one-for-one basis (subject to customary antidilution adjustments).
Repurchases of Equity Securities Aimco Operating Partnership’s Partnership Agreement generally provides that after holding OP Units for one-year, limited partners other than Aimco have the right to redeem their OP Units for cash or, at its election, shares of Aimco Common Stock on a one-for-one basis (subject to customary antidilution adjustments).
Unregistered Sales of Equity Securities From time to time, we may issue shares of our 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 OP Unit.
Unregistered Sales of Equity Securities From time to time, Aimco may issue shares of its 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 OP Unit.
All companies that fit the definitional criteria and existed at the point in time presented are included in the index calculations. The graph assumes the investment of $100 in our Common Stock and in each index on December 31, 2017, and that all dividends paid have been reinvested.
All companies that fit the definitional criteria and existed at the point in time presented are included in the index calculations. The graph assumes the investment of $100 in Aimco Common Stock and in each index on December 31, 2018, and that all dividends paid have been reinvested.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Aimco Our Common Stock is listed and traded on the NYSE under the symbol “AIV.” On February 24, 2023, there were 149,925,165 shares of Common Stock outstanding, held by 825 stockholders of record.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Aimco Aimco's Common Stock is listed and traded on the NYSE under the symbol “AIV.” On February 23, 2024, there were 144,811,666 shares of Common Stock outstanding, held by 934 stockholders of record.
Aimco, through a wholly-owned subsidiary, is the sole general partner of Aimco Operating Partnership. As of December 31, 2022, Aimco owned 92.6% of the legal interest in the common partnership units of Aimco Operating Partnership and 94.9% of the economic interest of Aimco Operating Partnership.
Aimco, through a wholly-owned subsidiary, is the sole general partner of Aimco Operating Partnership. As of December 31, 2023, Aimco owned 92.4% of the legal interest in the OP Units of Aimco Operating Partnership and 94.8% of the economic interest of Aimco Operating Partnership. Aimco Operating Partnership holds all of our assets and manages the daily operations of our business.
During the year ended December 31, 2022, approximately 108,000 OP Units were redeemed in exchange for shares of Common Stock, and approximately 33,000 OP Units were redeemed in exchange for cash at an aggregate weighted average price per unit of $7.07.
During the three months ended December 31, 2023, no OP Units were redeemed in exchange for shares of Common Stock and 57,127 OP Units were redeemed in exchange for cash at an aggregate weighted average price per unit of $6.51. 25 The following table summarizes repurchases, or redemptions in exchange for cash, of the Aimco Operating Partnership's equity securities for the three months ended December 31, 2023.
On February 24, 2023, there were 162,014,847 OP Units and equivalents outstanding (of which 149,925,165 were held by us), that were held by 2,117 unitholders of record. Unregistered Sales of Equity Securities Aimco Operating Partnership did not issue any unregistered OP Units during the twelve months ended December 31, 2022.
Unregistered Sales of Equity Securities Aimco Operating Partnership did not issue any unregistered OP Units during the twelve months ended December 31, 2023.
Aimco Operating Partnership There is no public market for OP Units, and we have no intention of listing OP Units on any securities exchange. In addition, Aimco Operating Partnership’s Partnership Agreement restricts the transferability of OP Units.
These repurchases may be made from time to time in the open market or in privately negotiated transactions. These share repurchase authorizations have no expiration date. Aimco Operating Partnership There is no public market for OP Units, and Aimco Operating Partnership has no intention of listing OP Units on any securities exchange.
Aimco Operating Partnership holds all of our assets and manages the daily operations of our business. The distributions paid by Aimco Operating Partnership to Aimco are used to fund the dividends paid to Aimco's stockholders.
The distributions paid by Aimco Operating Partnership to Aimco are used to fund the dividends paid to Aimco's stockholders. Accordingly, the per share dividends Aimco pays to its stockholders generally equal the per unit distributions paid by Aimco Operating Partnership to holders of its OP Units.
We may also issue shares of our Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. Please refer to Note 10 to the consolidated financial statements in Item 8 for further discussion of such exchanges.
Aimco may also issue shares of its Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the year ended December 31, 2023, no shares of Common Stock were issued in exchange for OP Units in such transactions.
During the year ended December 31, 2022, we issued approximately 108,000 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.
Had any such shares been issued, the issuances would have been effected in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.
For the years ended December 31, Index 2017 2018 2019 2020 2021 2022 Apartment Investment and Management Company 100.00 104.13 126.55 111.27 162.68 150.35 FTSE Nareit Equity Apartment Index 100.00 103.70 130.99 110.89 181.44 123.46 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 Source: Zacks Investment Research, Inc. 22 The Performance Graph will not be deemed to be incorporated by reference into any filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate the same by reference. 23
The Performance Graph will not be deemed to be incorporated by reference into any filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate the same by reference.
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Repurchases of Equity Securities Our Board has, from time to time, authorized us to repurchase shares of our outstanding Common Stock.
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Repurchases of Equity Securities The following table summarizes Aimco's share repurchases, all of which were part of publicly announced programs: Fiscal Period Total Number of Shares Repurchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs (1) October 1 - 31, 2023 577,871 $ 6.53 577,871 21,958,302 November 1 - 30, 2023 568,846 6.74 568,846 21,389,456 December 1 - 31, 2023 271,900 7.20 271,900 21,117,556 Total 1,418,617 $ 6.75 1,418,617 (1) Aimco's Board has, from time to time, authorized Aimco to repurchase shares of its outstanding Common Stock.
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On July 27, 2022, our Board replaced all prior share repurchase authorizations with a new authorization to repurchase up to 15.0 million shares of our outstanding Common Stock, subject to 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.
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In addition, Aimco Operating Partnership’s Partnership Agreement restricts the transferability of OP Units. On February 23, 2024, there were 156,752,191 OP Units and equivalents outstanding (of which 144,811,666 were held by Aimco), that were held by 1,984 unitholders of record.
Removed
During the twelve months ended December 31, 2022, we repurchased approximately 3.5 million shares at a weighted-average price of $7.21 per share. As of December 31, 2022, up to 12.3 million shares remained available for repurchase under the share repurchase authorization.
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Fiscal Period Total Number of Units Repurchased Weighted Average Price Paid per Unit Total Number of Units Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Units That May Yet Be Purchased Under Plans or Programs (1) October 1 - 31, 2023 — $ — N/A N/A November 1 - 30, 2023 — — N/A N/A December 1 - 31, 2023 57,127 6.51 N/A N/A Total 57,127 $ 6.51 (1) The terms of the Aimco Operating Partnership’s Partnership Agreement do not provide for a maximum number of units that may be repurchased, and other than the express terms of its Partnership Agreement, the Aimco Operating Partnership has no publicly announced plans or programs of repurchase.
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Performance Graph The following graph compares cumulative total returns for our Common Stock, the FTSE Nareit Equity Apartments Index, and the Russell 2000.
Added
However, for Aimco to repurchase shares of its Common Stock, the Aimco Operating Partnership must make a concurrent repurchase of its OP Units held by Aimco at a price per unit that is equal to the price per share Aimco pays for its Common Stock.
Removed
The historical information set forth on the following page is not necessarily indicative of future performance.
Added
The historical information set forth on the following page is not necessarily indicative of future performance. 26 For the years ended December 31, Index 2018 2019 2020 2021 2022 2023 Apartment Investment and Management Company 100.00 121.53 106.86 156.23 144.39 158.77 FTSE Nareit Equity Apartment Index 100.00 126.32 106.94 174.97 119.06 126.05 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Source: Zacks Investment Research, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, (in thousands) 2022 2021 $ % Rental and other property revenues, before utility reimbursements: Development and Redevelopment $ 919 $ 2,036 $ (1,117 ) (54.9 %) Operating 135,224 122,303 12,921 10.6 % Other 18,030 14,559 3,471 23.8 % Total 154,173 138,898 15,275 11.0 % Property operating expenses, net of utility reimbursements: Development and Redevelopment 2,198 1,446 752 52.0 % Operating 40,841 39,625 1,216 3.1 % Other 5,560 4,405 1,155 26.2 % Total 48,599 45,476 3,123 6.9 % Proportionate property net operating income: Development and Redevelopment (1,279 ) 590 (1,869 ) (100.0 %) Operating 94,383 82,678 11,705 14.2 % Other 12,470 10,154 2,316 22.8 % Total $ 105,574 $ 93,422 $ 12,152 13.0 % For the year ended December 31, 2022, compared to the same period in 2021: • Development and Redevelopment proportionate net operating income decreased by $1.9 million due primarily to a reduction at The Hamilton, due to its de-leasing in late 2021 for redevelopment. • Operating proportionate property net operating income increased by $11.7 million, or 14.2%.
Biggest changeYear Ended December 31, (in thousands) 2022 2021 $ Change % Change Rental and other property revenues, before utility reimbursements: Development and Redevelopment $919 $2,036 $(1,117) nm Operating 138,137 123,257 14,880 12.1% Other 15,116 13,605 1,511 11.1% Total 154,172 138,898 15,274 11.0% Property operating expenses, net of utility reimbursements: Development and Redevelopment 2,194 1,446 748 nm Operating 41,410 39,694 1,716 4.3% Other 4,993 4,336 657 15.2% Total 48,597 45,476 3,121 6.9% Proportionate property net operating income: Development and Redevelopment (1,275) 590 (1,865) nm Operating 96,727 83,563 13,164 15.8% Other 10,123 9,269 854 9.2% Total $105,575 $93,422 $12,153 13.0% For the year ended December 31, 2022, compared to the same period in 2021: • Development and redevelopment proportionate net operating income decreased by $1.9 million. • Operating proportionate property net operating income increased by $13.2 million, or 15.8% for the year ended December 31, 2022, compared to 2021.
Additionally, our third-party property managers may enter into commitments on our behalf to purchase goods or 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.
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.
This infill project is located adjacent to the Grosvenor-Strathmore Metro station and the Strathmore Performing Arts Campus, and 1.5 miles from the National Institutes of Health main campus.
This suburban infill project is located adjacent to the Grosvenor-Strathmore Metro station and the Strathmore Performing Arts Campus, and is 1.5 miles from The National Institutes of Health main campus.
We also have unfunded commitments in the amount of $2.4 million related to four investments in entities that develop technology related to 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.
We also have unfunded commitments in the amount of $2.0 million related to four investments in entities that develop technology related to 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.
Our Operating segment includes 21 residential apartment communities that have achieved stabilized levels of operations as of January 1, 2021, and maintained it throughout the current year and comparable period. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.
Our Operating segment includes 21 residential apartment communities that have achieved stabilized levels of operations as of January 1, 2022, and maintained it throughout the current year and comparable period. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.
Our income tax benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities.
Our income tax benefit (expense) calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of financial condition and results of operations for the year ended December 31, 2022, compared to 2021, should be read in conjunction with the accompanying consolidated financial statements in Part II, Item 8.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of financial condition and results of operations for the year ended December 31, 2023, compared to 2022, should be read in conjunction with the accompanying consolidated financial statements in Part II, Item 8.
For discussion of the year ended December 31, 2021, compared to 2020, please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form 10-K for the year ended December 31, 2021.
For discussion of the year ended December 31, 2022, compared to 2021, please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form 10-K for the year ended December 31, 2022.
Our Value Add and Opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements. 24 We currently have five 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.
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 in three 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.
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.
We define Adjusted EBITDAre as EBITDAre adjusted to exclude the effect of net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre adjustments attributable to noncontrolling interests, and realized and unrealized (gains) losses 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.
We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property financing activity, cash generated from operations, and the recycling of our equity. Our revolving secured credit facility matures in December 2023, prior to consideration of its two one-year extension options.
We expect to meet our long-term liquidity requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily through property financing activity, cash generated from operations, and the recycling of our equity. Our revolving secured credit facility matures in December 2024, prior to consideration of its one-year extension option.
Operating Property Results We own a diversified portfolio of 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 is part of an assemblage with an adjacent apartment building.
Operating Property Results We own a diversified portfolio of stabilized apartment communities located in eight major U.S. markets with average rents in line with local market averages (generally defined as B class). We also own a commercial office building that is part of an assemblage with an adjacent apartment building.
Financial Results of Operations We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other. Our Development and Redevelopment segment includes properties that are under construction or have not achieved stabilization, as well as land assemblages that are being held for future development.
Financial Results of Operations We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other. Our Development and Redevelopment segment includes properties that are under construction or have not achieved and maintained stabilization throughout the current year and comparable period, as well as land assemblages that are being held for future development.
We provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance with GAAP. 31 Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ( “ 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.
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ( “ 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.
For the year ended December 31, 2022, we had net income subject to tax of $88.8 million, compared to net losses subject to tax of $31.4 million for the same period in 2021.
For the year ended December 31, 2023, we had consolidated net losses subject to tax of $15.2 million, compared to consolidated net income subject to tax of $88.8 million for the same period in 2022.
As of December 31, 2022, our available liquidity was $379.8 million, which consisted of: • $206.5 million in cash and cash equivalents; • $23.3 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.
As of December 31, 2023, our available liquidity was $289.3 million, which consisted of: • $122.6 million in cash and cash equivalents; • $16.7 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.
As of December 31, 2022, we had access to $379.8 million in liquidity, including $206.5 million of cash on hand, $23.3 million of restricted cash, and the capacity to borrow up to $150.0 million on our revolving credit facility. Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.
As of December 31, 2023, we had access to $289.3 million in liquidity, including $122.6 million of cash on hand, $16.7 million of restricted cash, and the capacity to borrow up to $150.0 million on our revolving credit facility. Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.
As a result of changes in NAV, we recorded unrealized losses of $5.9 million during the year ended December 31, 2022, compared to unrealized gains of $6.6 million for the same period in 2021.
As a result of changes in the values of these investments, we recorded unrealized gains of $0.7 million during the year ended December 31, 2023, compared to unrealized losses of $5.9 million for the same period in 2022.
Depreciation and Amortization For the year ended December 31, 2022, compared to the same period in 2021, Depreciation and amortization expense increased by $74.3 million, or 87.7%, due primarily to $85.7 million of accelerated depreciation recognized relating to the 2022 lease termination as described in Note 4 .
Depreciation and Amortization For the year ended December 31, 2023, compared to the same period in 2022, Depreciation and amortization expense decreased by $90.1 million, or 56.7%, due primarily to $85.7 million of accelerated depreciation recognized relating to the 2022 lease termination as described in Note 4 to the consolidated financial statements.
The reconciliation of net (loss) income to EBITDAre and Adjusted EBITDAre for the years ended December 31, 2022 and 2021 is as follows (in thousands): Year Ended December 31, 2022 2021 Net income (loss) $ 92,158 $ (4,980 ) Adjustments: Interest expense 73,842 52,902 Income tax (benefit) expense 17,264 (13,570 ) Gains on dispositions of real estate (175,863 ) — Lease modification income (206,963 ) — Depreciation and amortization 158,967 84,712 Impairment — — Adjustment related to EBITDAre of unconsolidated partnerships 1,004 836 EBITDAre $ (39,591 ) $ 119,900 Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships (8,829 ) (91 ) Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (3,672 ) (1,136 ) EBITDAre adjustments attributable to noncontrolling interests (491 ) (320 ) Mezzanine investment (income) loss, net 179,239 (30,436 ) Realized and unrealized (gains) losses on interest rate options (48,205 ) (6,509 ) Unrealized (gains) losses on IQHQ investment (20,501 ) — Adjusted EBITDAre $ 57,950 $ 81,408 Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions.
Additionally, we exclude the (income) loss recognized on our Mezzanine Investment. 35 The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the years ended December 31, 2023 and 2022 is as follows (in thousands): Year Ended December 31, 2023 2022 Net income (loss) $ (157,319 ) $ 92,158 Adjustments: Interest expense 37,718 73,842 Income tax (benefit) expense (12,752 ) 17,264 Gain on dispositions of real estate (7,984 ) (175,863 ) Lease modification income — (206,963 ) Depreciation and amortization 68,834 158,967 Adjustment related to EBITDAre of unconsolidated partnerships 806 1,004 EBITDAre $ (70,697 ) $ (39,591 ) Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships (13,924 ) (8,829 ) Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships (3,991 ) (3,672 ) EBITDAre adjustments attributable to noncontrolling interests (272 ) (491 ) Mezzanine investment (income) loss, net 155,814 179,239 Realized and unrealized (gains) losses on interest rate options (1,119 ) (48,205 ) Unrealized (gains) losses on IQHQ investment — (20,501 ) Adjusted EBITDAre $ 65,811 $ 57,950 Critical Accounting Estimates We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions.
Cash used in investing activities for the year ended December 31, 2022, decreased by $150.7 million compared to the same period in 2021, due primarily to proceeds received from the disposition of real estate offset by increased capital expenditures and acquisitions.
Net cash used in investing activities for the year ended December 31, 2023, increased by $139.6 million compared to the same period in 2022, due primarily to increased capital expenditures and lower proceeds from dispositions of real estate, offset by decreased funding for net real estate and investment transactions.
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 C onsolidated Statements of Operations. 29 Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT.
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 C onsolidated Statements of Operations.
Changes in Cash, Cash Equivalents, and Restricted Cash The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing, and financing activities, which are presented in our Consolidated Statements of Cash Flows in Item 8 of this report.
Changes in Cash, Cash Equivalents, and Restricted Cash The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing, and financing activities, which are presented in our Consolidated Statements of Cash Flows in Item 8 of this report. 34 Operating Activities For the year ended December 31, 2023, net cash provided by operating activities was $50.5 million.
As a result of the mark-to-market adjustments, we recorded unrealized gains of $36.9 million and $6.5 million during the years ended December 31, 2022, and 2021, respectively. In addition, we realized gains of $11.1 million during the year ended December 31, 2022.
As a result of the mark-to-market adjustments, we recorded unrealized losses of $3.8 million and unrealized gains of $36.9 million during the years ended December 31, 2023, and 2022, respectively.
The increase was attributable to a $5.4 million, or 4.6% increase in rental and other property revenues due to higher average revenues of $47 per apartment home, and a 160-basis point increase in occupancy, offset partially by a $1.7 million, or 4.5% increase in property operating expenses due primarily to higher real estate taxes and insurance.
The increase was attributable primarily to a $11.6 million, or 8.4% increase in rental and other property revenues due to higher average revenues of $194 per apartment home, partially offset by a 70-basis point decrease in occupancy. • Other proportionate property net operating income decreased by $1.4 million, or 13.5%.
As of December 31, 2022, approximately 83% of our outstanding non-recourse property debt had a fixed interest rate and approximately 17% had a variable interest rate. In addition, the weighted-average rate on our non-recourse property debt was 5.2%, and the average remaining term to maturity was 7.1 years.
As of December 31, 2023, approximately 90% of our outstanding non-recourse property debt had a fixed interest rate and approximately 10% had a variable interest rate, all of which was hedged. In addition, the weighted-average contractual rate on our non-recourse debt was 4.8% and 4.6% inclusive of interest rate caps, and the average remaining term to maturity was 6.7 years.
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.
The year-to-year change is due primarily to GAAP income taxes associated with the net lease modification income recognized in 2022. 33 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.
In our Consolidated Statements of Operations, utility reimbursements are included in Rental and other property revenues , in accordance with GAAP; • excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ and the Mezzanine Investment; and • excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.
Proportionate property net operating income is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, including utility reimbursements, for the consolidated communities; but: • excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ, the Mezzanine Investment, and investments in real estate technology funds; and • excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.
Operating Activities For the year ended December 31, 2022, net cash provided by operating activities was $204.2 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.
Our operating cash flow is primarily affected by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities and general and administrative costs.
For the year ended December 31, 2022, compared to the same period in 2021, Other income (expense), net decreased by $16.6 million due primarily to one-time fee revenue earned in 2021 as well as advisory expenses related to a strategic business review and the annual shareholder meeting in 2022 .
For the year ended December 31, 2023, compared to the same period in 2022, Other income (expense), net decreased by $4.8 million, or 36.2%, due primarily to advisory expenses related to a strategic business review and the annual stockholder meeting incurred in 2022.
Please refer to Note 15 to the consolidated financial statements in Item 8 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.
Please refer to Note 14 to the consolidated financial statements in Item 8 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses. 30 Proportionate Property Net Operating Income The results of our segments for the years ended December 31, 2023 and 2022, as presented below, are based on segment classifications as of December 31, 2023.
Investing Activities For the year ended December 31, 2022, cash used in investing activities of $120.8 million consisted primarily of capital expenditures of $237.5 million and $129.2 million of cash used to acquire undeveloped land parcels, offset by $260.0 million of proceeds received from the disposition of real estate.
Investing Activities For the year ended December 31, 2023, net cash used in investing activities of $260.4 million consisted primarily of capital expenditures of $272.5 million, offset by $9.3 million of proceeds received from the disposition of real estate.
If events or circumstances indicate that the carrying amount of an asset may not be recoverable, we assess its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the asset.
If a real estate property or other long-lived asset has an indicator of impairment, we assess its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the asset.
For the year ended December 31, 2022, we recognized income tax expense of $17.3 million, compared to income tax benefit of $13.6 million for the same period in 2021. The year-to-year change is due primarily to GAAP income taxes associated with the net lease modification income recognized in 2022.
For the year ended December 31, 2023, we recognized income tax benefit of 12.8 million, compared to income tax expense of $17.3 million for the same period in 2022.
Under our revolving secured credit facility, we have agreed to maintain a fixed charge coverage ratio of 1.25x, minimum tangible net worth of $625.0 million, and maximum leverage of 60% as defined in the credit 30 agreement. We are currently in compliance and expect to remain in compliance with these covenants during the next twelve months.
As of December 31, 2023, we had no outstanding borrowings under our revolving secured credit facility, which requires that we maintain a fixed charge coverage ratio of 1.25x, minimum tangible net worth of $625.0 million, and maximum leverage of 60% as defined in the credit agreement.
We have commitments for approximately $155.8 million and remaining planned spend of $278.7 million on development and redevelopment projects, with $304.6 million undrawn on our construction loans as of December 31, 2022. The initial allocation to our Edgewater joint venture and Strathmore joint ventures have remaining unfunded commitments of $10.3 million.
As of December 31, 2023, we had sufficient capacity on our construction loans to cover our remaining commitments on development and redevelopment projects of approximately $63.8 million. The initial allocations to our joint ventures have remaining unfunded commitments of $3.0 million.
Highlights for the year ended December 31, 2022 include: • Revenue for the year ended December 31, 2022 was $135.2 million, up 10.6% year over year, resulting from a $211 increase in average monthly revenue per apartment home to $2,087, partially offset by a 60-basis point decrease in Average Daily Occupancy to 97.4%. • Expenses for the year ended December 31, 2022 were $40.8 million, up 3.1% year over year, due primarily to higher real estate taxes and insurance. • Net operating income for the year ended December 31, 2022 was $94.4 million, up 14.2% year over year. • 1001 Brickell Bay Drive, a waterfront office building in Miami, Florida, is owned as part of a larger assemblage with substantial development potential.
Highlights for the year ended December 31, 2023 include: • Revenue for our Operating segment was $149.8 million, up 8.4% year over year, resulting from a $194 increase in average monthly revenue per apartment home to $2,305, partially offset by a 70-basis point decrease in Average Daily Occupancy to 96.7%. • Expenses for our Operating segment were $44.1 million, up 6.4% year over year, due primarily to higher insurance costs. • Net operating income for our Operating segment was $105.7 million, up 9.3% year over year.
As a result of our analysis, we recorded a non-cash impairment charge to reduce the carrying value of the Mezzanine Investment to $158.6 million at December 31, 2022.
As a result, we have recognized a $158.0 million non-cash impairment to reduce the carrying value of the Mezzanine Investment to zero as of December 31, 2023. This non-cash impairment is inclusive of the 20% non-controlling participation sold in June 2023.
Cash provided by operating activities for the year ended December 31, 2022, increased by $191.6 million compared to the same period in 2021, due primarily to cash received from development property lease terminations in 2022.
Cash provided by operating activities for the year ended December 31, 2023, decreased by $153.8 million compared to the same period in 2022, due primarily to cash received from development and redevelopment property lease terminations in 2022, lower net operating income associated with apartment communities sold in the latter part of 2022, and timing of balance sheet position changes, partially offset by decreased interest payments.
For the year ended December 31, 2021, we recognized $30.4 million of income in connection with the mezzanine loan. Realized and Unrealized Gains (Losses) on Interest Rate Options We are required to adjust our interest rate options to fair value on a quarterly basis.
The prior year non-cash impairment charge was partially offset by interest income, which we ceased to recognize in 2023 following the impairment. Realized and Unrealized Gains (Losses) on Interest Rate Options We are required to adjust our interest rate options to fair value on a quarterly basis.
General and administrative expenses incurred during the year ended December 31, 2022 included $6.5 million of expenses for consulting services with respect to strategic growth, direction and advice per the Separation Agreement with AIR. This agreement concluded at December 31, 2022.
General and Administrative Expenses For the year ended December 31, 2023, compared to the same period in 2022, General and administrative expenses decreased by $6.8 million, or 17.2%, primarily due to a decrease in expenses for consulting services per the Separation Agreement with AIR, which concluded at December 31, 2022.
Property Results As of December 31, 2022, our Development and Redevelopment segment included five properties that were under construction. Our Operating segment included 21 communities with 5,582 apartment homes, and our Other segment included our Eldridge Townhomes acquisition, and one office building. We use proportionate property net operating income to assess the operating performance of our segments.
Property Results As of December 31, 2023, our Development and Redevelopment segment included 11 properties, three of which were under construction. Our Operating segment included 21 communities with approximately 5,600 apartment homes, and our Other segment included 1001 Brickell Bay Drive, our only office building and St. George Villas.
For the year ended December 31, 2021, cash provided by financing activities of $204.7 million consisted primarily of $165.2 million of proceeds received from construction loans undertaken and $59.8 million of proceeds received from non-recourse property debt issuances.
Financing Activities For the year ended December 31, 2023, net cash provided by financing activities of $119.4 million consisted primarily of proceeds from construction loans, the sale of a participation in the Mezzanine Investment, and the monetization of interest rate options, partially offset by repayments on non-recourse property debt and common stock repurchases.
Other proportionate property net operating income increased by $1.2 million, or 13.3% for the year ended December 31, 2021, compared to 2020, due primarily to the acquisition of Eldridge Townhomes in the third quarter of 2021.
The increase was attributable to a $14.9 million, or 12.1% increase in rental and other property revenues, offset partially by a $1.7 million, or 4.3% increase in property operating expenses due primarily to higher real estate taxes and insurance. 31 • Other proportionate property net operating income increased by $0.9 million, or 9.2% for the year ended December 31, 2022, compared to 2021, due primarily to the increase in rental and other revenues at 1001 Brickell, offset primarily by the increase in property insurance.
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 December 31, 2022, we had no outstanding borrowings under our revolving secured credit facility.
Our 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 sources of leverage are property-level debt and construction loans, we also have a secured $150.0 million credit facility with a syndicate of financial institutions.
Proportionate Property Net Operating Income The results of our segments for the years ended December 31, 2022 and 2021, as presented below, are based on segment classifications as of December 31, 2022.
The decrease was attributable primarily to a lease termination fee recognized in 2022 and decreases in occupancy following lease expirations earlier in 2023 at our commercial office building in Miami, Florida. The results of our segments for the years ended December 31, 2022 and 2021, as presented below, are based on segment classifications as of December 31, 2023.
Gain on Dispositions of Real Estate During the year ended December 31, 2022, we sold three stabilized multifamily properties and one land parcel for gross proceeds of $267.3 million and recognized $175.9 million of gain on dispositions of real estate.
Gain on Dispositions of Real Estate During the year ended December 31, 2023, we recognized gains on the disposition of real estate of $8.0 million comprised of $1.9 million from the contribution of real estate to an unconsolidated joint venture and a $6.1 million gain that resulted from the sale of one land parcel, compared to gains of $175.9 million recognized for the same period in 2022, that resulted from the sale of three apartment communities and one land parcel.
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 year ended December 31, 2022 was $207.0 million.
Lease Modification Income No lease modifications occurred during the year ended December 31, 2023. For the year ended December 31, 2022, we recognized $207.0 million of lease modification income related to the agreement entered into with AIR for the termination of the leases of four properties.
Funding for the $164.0 million project is fully secured with Aimco’s equity commitment projected to be $31.5 million. • In upper northwest Washington D.C., construction at Upton Place continues on schedule and on budget. The neighboring apartment community, City Ridge, is leasing up well and at rents that provide a positive indicator for Upton Place.
Funding for the project is fully secured with Aimco having already funded 100% of its equity commitment. • In Upper Northwest Washington, D.C., construction at Upton Place is nearing completion and remains on schedule and on budget.
Business” for additional discussion of our business organization and strategy and “Item 2. Properties” and “Schedule III – Real Estate and Accumulated Depreciation” for details regarding the size, location, and key characteristics of our various properties. The Separation On December 15, 2020, we completed the separation of AIR from Aimco, creating two distinct, independent businesses.
Properties” and “Schedule III – Real Estate and Accumulated Depreciation” for details regarding the size, location, and key characteristics of our various properties. 27 Results for the Twelve Months Ended December 31, 2023 The results from the execution of our business plan during the twelve months ended December 31, 2023, are described below.
During the year ended December 31, 2022, we recorded a non-cash impairment charge to reduce the carrying value of the Mezzanine Investment to $158.6 million. The non-cash impairment is reflected in Mezzanine investment income (loss), net , in our Consolidated Statements of Operations , and as a reduction in Mezzanine investment in our Consolidated Balance Sheets .
Mezzanine Investment Income (Loss), Net For the years ended December 31, 2023 and 2022, we recorded Mezzanine Investment (Loss), Net of $155.8 million and $179.2 million, respectively. This is due primarily to non-cash impairment charges of $158.0 million and $212.8 million for the years ended December 31, 2023 and 2022, respectively.
We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements. Capitalized Costs We capitalize costs, including certain indirect costs, incurred in connection with our capital additions activities, including developments, redevelopments, other tangible apartment community improvements, and replacements of existing community 32 components.
We believe that the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements. Impairment of Real Estate and Other Long-Lived Assets Quarterly, or when changes in circumstances warrant, we will assess our real estate properties and other long-lived assets for indicators of impairment.
If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset. In connection with the Separation, we entered into a sublease of office space within our corporate offices to AIR at then-current market rents.
If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset. There were no such impairments for the years ended December 31, 2023, 2022, and 2021. Mezzanine Investment On a periodic basis, we assess the Mezzanine Investment for impairment.
General and Administrative Expenses For the year ended December 31, 2022, compared to the same period in 2021, General and administrative expenses increased by $6.5 million, or 19.7%. General and administrative expenses incurred for the year ended December 31, 2021 were prior to the full build out of our platform.
Interest Income For the year ended December 31, 2023, compared to the same period in 2022, Interest income increased by $5.7 million, or more than 100%. The increase is due primarily to higher rates of interest earned on excess cash invested in treasury bill investments and money market funds in 2023.
To date, 80% of the projects 105K square feet of retail space has been leased. • In Corte Madera, California, construction is ongoing at Oak Shore where 16 luxury single family rental homes and 8 accessory dwelling units are being developed. The Marin County submarket is significantly supply constrained with for-sale starter homes generally priced near $2.0 million.
As of December 31, 2023, we have delivered 234 apartment homes, with the first residents at Upton Place having moved into their new homes during the fourth quarter of 2023. • In Corte Madera, California, construction is ongoing at Oak Shore where 16 luxury single-family rental homes and eight accessory dwelling units are being developed.
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying consolidated financial statement in Item 8. 26 Results of Operations for the Year Ended December 31, 2022, Compared to the same period in 2021 Net income increased by $97.1 million for the year ended December 31, 2022 compared to the same period in 2021, due primarily to the recognition of lease modification income and gains recognized on disposition of real estate partially offset by the non-cash impairment of the Mezzanine Investment.
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying consolidated financial statements in Item 8.
Removed
Prior to the Separation, the consolidated financial statements were prepared on a carve-out basis and reflect significant assumptions and allocations. The consolidated financial statements reflect our historical financial position, results of operations, and cash flows in conformity with U.S. GAAP.
Added
Business” for additional discussion of our business organization and strategy and “Item 2.
Removed
Our financial statements are presented for all historical periods described and at the carrying value of such assets and liabilities reflected in Aimco Predecessor’s books and records. Results for the Twelve Months Ended December 31, 2022 The results from the execution of our business plan during the twelve months ended December 31, 2022, are described below.
Added
Financial Results and 2023 Highlights • For the year ended December 31, 2023, net loss attributable to common stockholders per share, on a fully dilutive basis, was a net loss per share of $1.16, compared to net income per share of $0.49 for the same period in 2022, due primarily to lower transaction-related income in 2023. • For the year ended December 31, 2023, NOI from our Stabilized Operating Properties was $105.7 million, up 9.3% year-over-year, with average monthly revenue per apartment home increasing by $194 to $2,305. • For the year ended December 31, 2023, we delivered over 350 apartment homes at The Hamilton in Miami, Florida, Upton Place in Washington, D.C., and Oak Shore in Corte Madera, California; and we opened the 106-key Benson Hotel and Faculty Club in Aurora, Colorado. • For the year ended December 31, 2023, we monetized $122.7 million of assets, including the sale of a development land parcel in Fort Lauderdale, Florida, the sale of a 20% stake of our Parkmerced mezzanine investment, and the associated swaption.
Removed
Financial Results and 2022 Highlights • For the year ended December 31, 2022, net income attributable to common stockholders per share, on a fully dilutive basis, was $0.49, compared to a net loss per share of $0.04 for the same period in 2021, due primarily to lease modification income and gains on dispositions of real estate. • For the year ended December 31, 2022, we exited $952.8 million of assets including the sales of three stabilized apartment communities and one development land parcel, the termination of leases on four completed and stabilized development and redevelopment projects, and the liquidation of 22% of our investment in the private real estate developer, IQHQ Inc. • For the year ended December 31, 2022, we raised $912.0 million of new debt, which was used to capitalize development projects and payoff the $534.1 million of purchase money notes due to AIR Communities, 18 months prior to their maturity.
Added
In the fourth quarter of 2023, the purchaser of that position forfeited their option to acquire the remaining 80% of the Parkmerced mezzanine investment when they failed to make a required interest payment, resulting in the subordination of their earlier investment.
Removed
This activity facilitated an increase in the weighted average maturity of Aimco's debt from 3.5 years for the year ended December 31, 2021, to 6.7 years for the year ended December 31, 2022. • For the year ended December 31, 2022, we added future development opportunities in each of our target markets with the potential to produce more than 3,600 apartment homes and more than 450,000 square feet of commercial use.
Added
Additionally, we have a pipeline of future value-add opportunities totaling approximately 13 million gross square feet of development in our target markets of Southeast Florida, the Washington, D.C. Metro Area, and Colorado's Front Range.
Removed
During the year ended December 31, 2022, we invested $294.4 million in development and redevelopment activities. Updates include: • In Miami, Florida, construction is nearing completion and fully renovated apartment homes are being leased at The Hamilton. Demand for rental housing in Southeast Florida remains robust, especially for unique luxury properties such as The Hamilton.
Added
During the year ended December 31, 2023, we invested $274.9 million in development and redevelopment activities compared to $279.4 million in the year ended December 31, 2022. 28 Highlights for the year ended December 31, 2023 include: • In Bethesda, Maryland, construction continued on plan at the first phase of Strathmore Square, which will contain 220 highly tailored apartment homes with initial delivery on track for the second half of 2024.
Removed
The building welcomed its first residents in October and at year end the building was 50% occupied at rental rates significantly ahead of our underwritten projections. • In Bethesda, Maryland, construction began on the first phase of Strathmore Square which will contain 220 highly tailored apartment homes when complete in 2025.
Added
As of December 31, 2023, initial homes had been delivered and we welcomed our first residents into their new home. • In Miami, Florida, construction was completed on The Hamilton, a 276-unit waterfront apartment community redevelopment and the property finished the initial lease-up of apartment homes in the third quarter 2023 at rates well ahead of underwritten rents. • In Aurora, Colorado, The Benson Hotel and Faculty Club, a 106-key boutique hotel and event center with 18 thousand square feet of event space, was completed in the second quarter 2023 and is open to guests.
Removed
Aimco plans to start pre-leasing Upton's 689 apartment homes during the summer of 2023 in anticipation of initial delivery in 4Q 2023.
Added
Updates for our alternative investments include: • In 2023, we monetized $91.5 million of our Parkmerced mezzanine investments through the sale of a 20% interest in the loan, pre-paid interest, and the monetization of the associated interest rate swaption.
Removed
The development remains on budget, however major rain events delayed our construction schedule by an estimated eight weeks.
Added
The buyer of the partial interest in the loan received an option to purchase our remaining 80%, however, the option expired when the buyer did not make its contractual payment in the fourth quarter 2023 required to maintain its purchase option. • In accordance with GAAP and because we receive first priority and a higher annualized return than the buyer of the partial interest in the loan, we were required to record the $33.5 million of cash received from the buyer as a balance sheet liability.
Removed
Aimco expects to deliver the first homes in the third quarter with pre-leasing efforts having begun in the first quarter of 2023. • In Aurora, Colorado, The Benson Hotel and Faculty Club, the 106-key boutique hotel and event center, is slated for completion at the end of March.
Added
No amount is due to repay the liability until after we receive cash payments in a subsequent transaction or recapitalization that total $134 million (Aimco's 80% remaining ownership of the loan) plus its annualized return. • Additionally, considering various quantitative and qualitative factors including the buyer’s option expiration, the loan's maturity date, which is concurrent with the property's senior mortgage, and the financial condition of the borrower, we recorded a $158.0 million non-cash impairment to fully write off the remaining investment. • We continue to monitor the mezzanine investment and seek to recover value but expects to do so without a significant investment or allocation of resources.
Removed
As the only ‘on campus’ accommodations, The Benson will serve the surrounding Anschutz Medical Campus which includes the University of Colorado Medical School, UC Health Hospital, Children’s Hospital Colorado, The Rocky Mountain VA Medical Center and the burgeoning Fitzsimons Innovation Community.
Added
Investment and Disposition Activity We are focused on prudently allocating capital and delivering strong investment returns.
Removed
Updates for our alternative investments include: • The borrower on our 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.
Added
Consistent with our capital allocation philosophy, we monetize the value within our assets when accretive uses of the proceeds are identified and invests when the risk adjusted returns are superior to other uses of capital. 29 Highlights for the year ended December 31, 2023 include: • The monetization of the Parkmerced mezzanine investments as described above. • In the fourth quarter 2023, our joint venture in Fort Lauderdale, Florida monetized an additional portion of its investment by closing on the sale of the second of three land parcels along Broward Avenue.
Removed
In the fourth quarter, given the decline in the underlying collateral value, we recorded a non-cash impairment charge to reduce the carrying value of the investment to $158.6 million.
Added
Results of Operations for the Year Ended December 31, 2023, Compared to the same period in 2022 Net income attributable to Aimco common stockholders decreased by $241.9 million for the year ended December 31, 2023 compared to the same period in 2022, as described more fully below.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur 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. We estimate that an increase in our variable rate indices of 100 basis points with constant credit risk spreads, would increase interest expense by $0.5 million on an annual basis.
Biggest changeOur 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.
ITEM 7A. 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 on stabilized properties.
ITEM 7A. 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.
Market Risk As of December 31, 2022 , on a consolidated basis, we had $164.2 million of variable-rate property-level debt outstanding and $113.4 million of variable rate construction loans. The impact of rising interest rates is mitigated by our use of interest rate caps, which as of December 31, 2022 , provided protection for our variable interest rate debt.
Market Risk As of December 31, 2023 , on a consolidated basis, we had approximately $81.3 million of variable-rate property-level debt outstanding and $267.7 million of variable-rate construction loans. The impact of rising interest rates is mitigated by our use of interest rate caps, which as of December 31, 2023 , provided protection for our variable interest rate debt.
These instruments were acquired for $17.7 million and at year end were valued at $62.3 million. As of December 31, 2022 , we had $229.8 million in cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates.
These instruments were acquired for $5.8 million and at December 31, 2023, were valued at $5.2 million. As of December 31, 2023 , we had $139.3 million in cash and cash equivalents and restricted cash, a portion of which earns interest at variable rates.
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 and we do not use them for trading or other speculative purposes.
We primarily use long-dated, fixed-rate, non-recourse property debt on stabilized properties in order to avoid the refunding and repricing risks of short-term borrowings. We use working capital primarily to fund short-term uses. We use derivative financial instruments as a risk management tool and do not use them for trading or other speculative purposes.
We estimate that a decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would reduce interest expense by $1.0 million on an annual basis. As of December 31, 2022 , we held interest rate swaps and caps with $2.0 billion notional value.
We estimate that an increase or decrease in our variable rate indices of 100 basis points with constant credit risk spreads, would have no impact on interest expense on an annual basis. As of December 31, 2023 , we held interest rate caps with $627.4 million notional value.

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