Apartment Investment and Management pany(AIV) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion for the quarter ended June 30, 2025 ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements for Apartment Investment and Management Company (Aimco) and Aimco OP L.P. for the quarter ended June 30, 2025, and comparative periods. It includes balance sheets, statements of operations, equity/partners' capital, and cash flows, along with detailed notes explaining the company's organization, accounting policies, commitments, earnings per share, fair value measurements, variable interest entities, lease arrangements, business segments, and subsequent events Apartment Investment and Management Company: Condensed Consolidated Balance Sheets (Unaudited) This section presents the unaudited condensed consolidated balance sheets for Aimco as of June 30, 2025, and December 31, 2024 Total real estate, net (in thousands) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total real estate, net | $1,269,558 | $1,247,833 | | Cash and cash equivalents | $41,385 | $141,072 | | Assets held for sale, net | $275,892 | $276,079 | | Total assets | $1,869,810 | $1,956,910 | | LIABILITIES AND EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total indebtedness | $1,098,432 | $1,070,660 | | Total liabilities | $1,587,362 | $1,644,613 | | Total Aimco equity | $91,650 | $122,957 | | Total equity | $136,342 | $169,366 | Apartment Investment and Management Company: Condensed Consolidated Statements of Operations (Unaudited) This section presents Aimco's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and comparative periods Rental and other property revenues (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental and other property revenues | $52,758 | $51,148 | $105,110 | $101,350 | | Total operating expenses | $47,353 | $52,244 | $95,019 | $101,460 | | Net income (loss) attributable to Aimco | $(19,305) | $(60,526) | $(33,221) | $(70,712) | | Net income (loss) attributable to Aimco per common share – basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | - Net loss attributable to Aimco decreased by $41.2 million for the three months ended June 30, 2025, and by $37.5 million for the six months ended June 30, 2025, compared to the same periods in 2024[162] Apartment Investment and Management Company: Condensed Consolidated Statements of Equity (Unaudited) This section presents Aimco's unaudited condensed consolidated statements of equity for the six months ended June 30, 2025, and comparative periods Total Aimco Equity (in thousands) | (in thousands) | Balances at June 30, 2025 | Balances at June 30, 2024 | | :------------- | :------------------------ | :------------------------ | | Total Aimco Equity | $91,650 | $253,536 | | Total Equity | $136,342 | $317,905 | - Aimco's total equity decreased from $169,366 thousand at December 31, 2024, to $136,342 thousand at June 30, 2025, primarily due to net loss attributable to Aimco[28] Apartment Investment and Management Company: Condensed Consolidated Statements of Cash Flows (Unaudited) This section presents Aimco's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and comparative periods Net cash provided by operating activities (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $13,494 | $29,718 | | Net cash used in investing activities | $(45,737) | $(77,441) | | Net cash provided by (used in) financing activities | $(72,448) | $17,854 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(104,691) | $(29,869) | | Cash, cash equivalents and restricted cash at end of period | $68,265 | $109,398 | - Net cash provided by operating activities decreased by $16.2 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to timing of changes in operating assets/liabilities and increased interest expense, partially offset by higher rents[205] - Net cash used in financing activities significantly changed from a $17.8 million inflow in 2024 to a $72.4 million outflow in 2025, mainly due to dividend payments and decreased proceeds from non-recourse construction loans[208] Aimco OP L.P.: Condensed Consolidated Balance Sheets (Unaudited) This section presents the unaudited condensed consolidated balance sheets for Aimco OP L.P. as of June 30, 2025, and December 31, 2024 Total real estate, net (in thousands) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total real estate, net | $1,269,558 | $1,247,833 | | Cash and cash equivalents | $41,385 | $141,072 | | Assets held for sale, net | $275,892 | $276,079 | | Total assets | $1,869,810 | $1,956,910 | | LIABILITIES AND PARTNERS' CAPITAL (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total indebtedness | $1,098,432 | $1,070,660 | | Total liabilities | $1,587,362 | $1,644,613 | | Total partners' capital | $136,342 | $169,366 | Aimco OP L.P.: Condensed Consolidated Statements of Operations (Unaudited) This section presents Aimco OP L.P.'s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and comparative periods Rental and other property revenues (in thousands, except per unit data) | (in thousands, except per unit data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental and other property revenues | $52,758 | $51,148 | $105,110 | $101,350 | | Total operating expenses | $47,353 | $52,244 | $95,019 | $101,460 | | Net income (loss) attributable to Aimco Operating Partnership | $(20,364) | $(63,890) | $(35,045) | $(74,630) | | Net income (loss) attributable to Aimco Operating Partnership per common unit – basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | Aimco OP L.P.: Condensed Consolidated Statements of Partners' Capital (Unaudited) This section presents Aimco OP L.P.'s unaudited condensed consolidated statements of partners' capital for the six months ended June 30, 2025, and comparative periods Total Partners' Capital (in thousands) | (in thousands) | Balances at June 30, 2025 | Balances at June 30, 2024 | | :------------- | :------------------------ | :------------------------ | | Total Partners' Capital | $136,342 | $317,905 | Aimco OP L.P.: Condensed Consolidated Statements of Cash Flows (Unaudited) This section presents Aimco OP L.P.'s unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and comparative periods Net cash provided by operating activities (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $13,494 | $29,718 | | Net cash used in investing activities | $(45,737) | $(77,441) | | Net cash provided by (used in) financing activities | $(72,448) | $17,854 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(104,691) | $(29,869) | | Cash, cash equivalents and restricted cash at end of period | $68,265 | $109,398 | Notes to Condensed Consolidated Financial Statements of Apartment Investment and Management Company and Aimco OP L.P. (Unaudited) This section provides detailed notes to the unaudited condensed consolidated financial statements of Aimco and Aimco OP L.P. Note 1 — Organization This note describes Aimco's structure as a REIT, its separation from AIR, and its primary business focus on multifamily properties - Aimco is a self-administered and self-managed real estate investment trust (REIT), which completed a separation of its businesses on December 15, 2020, creating Aimco and Apartment Income REIT Corp. (AIR)[45] - As of June 30, 2025, Aimco owned 92.4% legal interest and 94.8% economic interest in Aimco Operating Partnership, serving as its sole general partner with exclusive control over day-to-day management[46] - The company's portfolio primarily focuses on the U.S. multifamily sector, including 5,243 apartment homes across 20 consolidated stabilized operating properties, several communities in lease-up, a luxury hotel, and land parcels for development[48] Note 2 — Basis of Presentation and Summary of Significant Accounting Policies This note outlines the basis of financial statement preparation and summarizes key accounting policies, including consolidation, redeemable noncontrolling interests, and asset classifications - The unaudited condensed consolidated financial statements are prepared in accordance with Form 10-Q and Article 10 of Regulation S-X, with certain GAAP disclosures condensed or omitted[49] - Aimco consolidates entities where it is the primary beneficiary of a Variable Interest Entity (VIE) or controls through a majority voting interest, including Aimco Operating Partnership[53] - Redeemable noncontrolling interests, classified as temporary equity, include preferred equity interests with specified preferred returns (8.0%, 9.7%, 14.5%) in various real estate partnerships[56] - The Mezzanine Investment, a $275.0 million loan to Parkmerced Apartments, was in maturity default as of June 30, 2025, but the associated liability from a partial sale in 2023 is not derecognized[59][60] - Income tax expense for the three and six months ended June 30, 2025, was $5.6 million and $5.5 million, respectively, a change from a benefit in 2024, primarily due to a non-cash partial valuation allowance against deferred tax assets of TRS entities[64] - The Brickell Assemblage was classified as held for sale as of June 30, 2025, with a net real estate value of $273.15 million and related liabilities of $159.84 million[68] Cash, Cash Equivalents, and Restricted Cash (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $41,385 | $141,072 | | Restricted cash | $26,428 | $31,367 | | Restricted cash held for sale | $452 | $517 | | Total Cash, Cash Equivalents, and Restricted Cash | $68,265 | $172,956 | - The investment in IQHQ, a life sciences real estate development company, had a carrying value of $11.07 million as of June 30, 2025, after a non-cash impairment charge of $48.6 million in 2024[78][79] - A special cash dividend of $0.60 per share was paid in January 2025, distributing net proceeds from 2024 asset sales[81] - The Benson Hotel generated revenues of $2.1 million and $3.5 million for the three and six months ended June 30, 2025, respectively, showing growth from 2024[83] - New accounting pronouncements, ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), are being evaluated for potential impact[84][85] Note 3 — Commitments and Contingencies This note details the company's remaining commitments for construction contracts, unfunded investment commitments, and legal proceedings - As of June 30, 2025, the company had remaining commitments for construction-related contracts of $125.1 million, with $133.2 million undrawn on non-recourse construction loans[86] - Unfunded commitments related to investments in property technology funds totaled $1.2 million as of June 30, 2025[87] - No legal proceedings are pending that are believed to have a material effect on the company's financial condition or results of operations[89] Note 4 — Earnings per Share and per Unit This note provides a breakdown of earnings per share and per unit for Aimco and Aimco Operating Partnership for the reported periods Net income (loss) attributable to Aimco common stockholders (in thousands, except per share/unit data) | (in thousands, except per share/unit data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Aimco common stockholders | $(19,305) | $(60,526) | $(33,221) | $(70,712) | | Earnings (loss) per share - basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | | Net income (loss) attributable to Aimco Operating Partnership's common unit holders | $(20,364) | $(63,890) | $(35,045) | $(74,630) | | Earnings (loss) per unit - basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | - Dilutive share equivalents and participating securities were not included in EPS/EPU computations for the periods presented as their effect would have been antidilutive[91][92] Note 5 — Fair Value Measurements and Disclosures This note details the fair value measurements of financial instruments, including interest rate contracts and debt, as of June 30, 2025 - The company uses interest rate caps to protect against increases in variable interest rates, holding instruments with a maximum notional value of $464.3 million and a fair value of $0.5 million as of June 30, 2025[96][214] Fair Value of Financial Instruments (in thousands) | Category | As of June 30, 2025 (Total) | As of December 31, 2024 (Total) | | :------------------------------------ | :-------------------------- | :------------------------------ | | Interest rate contracts | $504 | $862 | | Investments in stock | $890 | $1,573 | | Investments in real estate technology funds | $3,809 | $3,468 | Carrying Value and Fair Value of Debt (in thousands) | Description | As of June 30, 2025 (Carrying Value) | As of June 30, 2025 (Fair Value) | As of December 31, 2024 (Carrying Value) | As of December 31, 2024 (Fair Value) | | :------------------------------ | :----------------------------------- | :------------------------------- | :--------------------------------------- | :------------------------------- | | Non-recourse property debt | $689,155 | $662,778 | $689,885 | $641,563 | | Non-recourse construction loans | $377,251 | $380,557 | $393,750 | $393,756 | | Total | $1,066,406 | $1,043,335 | $1,083,635 | $1,035,319 | Note 6 — Variable Interest Entities This note describes Aimco's consolidated and unconsolidated variable interest entities, including its primary beneficiary role in Aimco Operating Partnership - Aimco consolidates Aimco Operating Partnership and five other VIEs that own real estate, for which it is the primary beneficiary[103][104][106] - The company has seven unconsolidated VIEs, including four real estate partnerships, the Mezzanine Investment, IQHQ, and land held for development, where it is not the primary decision maker[105] - Maximum exposure to loss from unconsolidated VIEs is limited to the carrying value of their assets[105] Note 7 — Lease Arrangements This note provides details on the company's lease arrangements, including apartment home leases, commercial space leases, and its role as a lessee - Apartment home leases generally have initial terms of 24 months or less, while commercial space leases range from 5 to 15 years and contribute 6% to 7% of total revenue[107] Total Lease Income (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fixed lease income | $46,568 | $45,772 | $92,824 | $91,705 | | Variable lease income | $4,107 | $3,381 | $8,757 | $7,580 | | Total lease income | $50,675 | $49,153 | $101,581 | $99,285 | - Aimco is a lessee for finance leases on land underlying properties (Upton Place, Strathmore Square, Oak Shore) and operating leases for corporate office space[111] Total Lease Costs, Net of Capitalized Amounts (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease costs | $411 | $383 | $849 | $762 | | Finance lease costs (Amortization + Interest) | $2,180 | $1,861 | $4,354 | $3,104 | | Total lease costs, net of capitalized amounts | $2,591 | $2,244 | $5,203 | $3,866 | Note 8 — Business Segments This note outlines the company's three business segments: Development and Redevelopment, Operating, and Other, and their respective financial performance - The company operates in three segments: Development and Redevelopment (9 properties, including one under construction, two in lease-up, one stabilizing), Operating (20 consolidated stabilized operating properties with 5,243 homes), and Other (The Benson Hotel and properties not in other segments)[115][116][117][118] - Property Net Operating Income (PNOI) is the key measure for evaluating segment performance and allocating resources[119] Property Net Operating Income (PNOI) by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Development and Redevelopment | $3,034 | $(149) | $4,757 | $(772) | | Operating | $24,228 | $23,972 | $49,291 | $48,371 | | Other | $(340) | $207 | $(984) | $(365) | | Total PNOI | $26,922 | $24,030 | $53,064 | $47,234 | - Development and Redevelopment PNOI significantly increased due to the lease-up of Upton Place, Strathmore Square, and Oak Shore[174][184] - Operating PNOI increased by 1.1% for the three months and 1.9% for the six months, driven by higher rental revenues, partially offset by increased real estate taxes[174][184] Capital Additions by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Development and Redevelopment | $22,134 | $29,995 | $42,393 | $72,466 | | Operating | $5,455 | $3,855 | $8,151 | $6,099 | | Other | $0 | $0 | $160 | $0 | | Corporate and Amounts Not Allocated to Segments | $105 | $567 | $211 | $1,486 | | Total capital additions | $27,694 | $34,417 | $50,915 | $80,051 | Note 9 — Subsequent Events This note discloses significant events occurring after the quarter-end, including property sales agreements and credit facility retirement plans - In July 2025, the buyer of the Brickell Assemblage exercised its final closing extension, increasing the non-refundable deposit to $50.0 million, with closing scheduled for Q4 2025[126] - The suburban Boston portfolio of five properties is under contract for $740.0 million, with the buyer's $20.0 million deposit becoming non-refundable in August 2025. Four sales are expected in Q3 2025, and the final one in Q4 2025[127] - The revolving credit facility, secured by the Boston portfolio, will be retired upon the sale, with proceeds used to repay the May 2025 borrowings[128] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial condition and operating results, including forward-looking statements, an executive overview of its mission and strategy, and a detailed analysis of financial performance for the three and six months ended June 30, 2025. It also covers critical accounting estimates, non-GAAP measures like EBITDAre, and a comprehensive discussion of liquidity and capital resources Forward Looking Statements This section highlights forward-looking statements regarding future plans, financial goals, and potential risks and uncertainties - The report contains forward-looking statements regarding future plans, goals, capital returns, pipeline investments, debt maturities, value creation, revenue/expense growth, joint ventures, acquisitions/dispositions, and strategic partnerships[132] - These statements are subject to risks and uncertainties, including geopolitical conditions, rising interest rates, inflation, real estate market fluctuations, competition, financing risks, and regulatory changes[133] Executive Overview This section outlines Aimco's mission, strategic goals, financial objectives, and capital allocation strategy for value creation - Aimco's mission is to make real estate investments, primarily in the U.S. multifamily sector, to create substantial value for investors, teammates, and communities[139] - The primary goal is outsized risk-adjusted returns and accelerating growth for stockholders, mainly through capital appreciation, with no current intent to pay a regular quarterly cash dividend[140] - Financial objectives are measured by investment period Internal Rate of Return (IRR) and project-level Multiple on Invested Capital (MOIC), with broader performance based on Net Asset Value (NAV) growth[141] - The capital allocation strategy targets a balanced mix of 'Value Add' and 'Opportunistic' multifamily real estate in Southeast Florida, Washington D.C. Metro Area, and Colorado's Front Range, alongside a diversified portfolio of 'Core' and 'Core-Plus' apartment communities[142] - The company maintains policies to support its strategy, including holding a sizable portion of net equity in stabilized cash-flowing assets and requiring committed capital for development projects[144] Results for the three and six months ended June 30, 2025 This section summarizes Aimco's financial performance and key operational highlights for the three and six months ended June 30, 2025 Financial Results and Highlights This section presents key financial results, including net loss per share and significant property sale agreements, for the reported periods - Net loss attributable to Aimco common stockholders per share was $(0.14) for the three months and $(0.24) for the six months ended June 30, 2025[150] - Net operating income from the Operating segment increased by 1.1% year-over-year to $24.2 million for the three months and by 1.9% to $49.3 million for the six months[150] - Subsequent to quarter end, Aimco agreed to sell its suburban Boston portfolio for $740.0 million and the Brickell Assemblage for $520.0 million, with closings expected in Q3 2025 and Q4 2025[150] - Development properties (Strathmore Square, Upton Place, Oak Shore) are on track to reach stabilized occupancy in 2025[150] - In May, Aimco purchased its development partner's interest in Strathmore Square and used its revolving credit facility to pay off a higher interest rate mezzanine loan for the property[150] Operating Property Results This section details the financial performance of the Operating segment, including revenue, occupancy, and expense changes - Operating segment revenue increased by 1.9% year-over-year to $35.4 million for the three months ended June 30, 2025, with average monthly revenue per apartment home rising by $57 to $2,349[157] - Operating segment occupancy was 95.8%, a 50 basis point decrease year-over-year, partly due to a commercial tenant vacancy in New York City[157] - Operating segment expenses increased by 3.9% year-over-year to $11.2 million, primarily due to higher real estate taxes at the Nashville property[157] Value Add and Opportunistic Investments This section describes the status of multifamily development projects, future pipeline opportunities, and capital investments - The company had one multifamily development project under construction, two substantially completed and in lease-up, and one stabilizing operations as of June 30, 2025[152] - A pipeline of future value-add opportunities totals approximately 7.7 million gross square feet of development in target markets[153] - Investments in development and redevelopment activities were $22.1 million for the three months and $42.4 million for the six months ended June 30, 2025, primarily funded by construction loans and preferred equity[154] - Upton Place (689 units) was 69% leased/pre-leased and 56% occupied, with 92% of retail space leased as of June 30, 2025[158] - Strathmore Square (220 units) was 75% leased and 63% occupied as of June 30, 2025[158] - Oak Shore (24 single-family homes) was 96% leased and occupied as of June 30, 2025[158] - Construction at 34th Street in Miami is on schedule and budget, with first residents expected in Q3 2027 and stabilization in Q4 2028[158] Investment and Disposition Activity This section outlines recent and planned property sales, including the Boston portfolio and Brickell Assemblage, and a strategic equity purchase - Subsequent to quarter end, Aimco entered a definitive agreement to sell its suburban Boston portfolio (2,719 units) for $740.0 million, with a $20.0 million non-refundable deposit. Four sales are expected in Q3 2025, and the final one in Q4 2025[156][159] - In December 2024, an agreement was made to sell the Brickell Assemblage for $520.0 million. The buyer increased its non-refundable deposit to $50.0 million in July 2025, with closing scheduled for Q4 2025[168] - In May, Aimco purchased its development partner's 5% common equity interest in Strathmore Square for $2.1 million and the subordinated interest for $2.9 million[168] Balance Sheet and Financing Activities This section provides an overview of the company's liquidity, revolving credit facility usage, and collateral arrangements - As of June 30, 2025, available liquidity was $173.5 million, comprising $41.4 million cash, $26.4 million restricted cash, and $105.7 million available on the $150.0 million revolving credit facility[160][199] - Aimco borrowed $42.8 million on its revolving credit facility in May 2025 to pay off a mezzanine loan for Strathmore Square, which had a 13.0% interest rate (650 bps higher than the credit facility)[168] - The Boston portfolio, under contract for sale, serves as collateral for the revolving credit facility, which will be retired upon the sale's closing[168] Financial Results of Operations This section provides a detailed analysis of the company's financial performance, including property results, expenses, and income tax impacts Property Results This section categorizes properties into Development and Redevelopment, Operating, and Other segments, detailing their composition and performance metrics - Net loss attributable to Aimco common stockholders decreased by $41.2 million and $37.5 million for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024[162] - The Development and Redevelopment segment includes 9 properties, with one under construction, two in lease-up, and one stabilizing operations[164] - The Operating segment consists of 20 stabilized residential apartment communities with 5,243 apartment homes[165] - The Other segment includes The Benson Hotel and other properties not classified in the other two segments[166] - Property Net Operating Income (PNOI) is used to assess segment operating performance, excluding utility reimbursements, property management costs, and casualty gains/losses[167][169] Property Net Operating Income This section presents a detailed breakdown of Property Net Operating Income (PNOI) across the company's business segments Property Net Operating Income (PNOI) by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Development and Redevelopment | $3,034 | $(149) | $4,757 | $(772) | | Operating | $24,228 | $23,972 | $49,291 | $48,371 | | Other | $(340) | $207 | $(984) | $(365) | | Total PNOI | $26,922 | $24,030 | $53,064 | $47,234 | - Development and Redevelopment PNOI increased by $3.2 million (three months) and $5.5 million (six months) due to lease-up of Upton Place, Strathmore Square, and Oak Shore[174][184] - Operating PNOI increased by $0.3 million (1.1%) for the three months and $0.9 million (1.9%) for the six months, driven by higher rental revenues ($57 to $2,349 increase in average monthly revenue per apartment home), offset by increased real estate taxes[174][184] - Other PNOI decreased by $0.5 million (three months) and $0.6 million (six months) due to higher real estate taxes from a 2025 property assessment[174][184] Non-Segment Real Estate Operations This section details operating expenses not allocated to specific segments and PNOI from properties sold or held for sale - Other property operating expenses not allocated to segments were $1.8 million and $3.3 million for the three and six months ended June 30, 2025, respectively[176][177] - Properties sold or held for sale generated PNOI of $4.5 million (three months) and $9.1 million (six months) for the periods ended June 30, 2025[176][177] Depreciation and Amortization This section explains the changes in depreciation and amortization expense due to asset dispositions and new property completions - Depreciation and amortization expense decreased by $5.7 million (26.0%) for the three months and $8.8 million (21.2%) for the six months ended June 30, 2025, primarily due to the disposition of The Hamilton and classification of the Brickell Assemblage as held for sale, partially offset by completion of Upton Place, Strathmore Square, and Oak Shore[178] General and Administrative Expenses This section outlines the changes in general and administrative expenses for the three and six months ended June 30, 2025 - General and administrative expenses increased by $0.2 million (2.9%) for the three months ended June 30, 2025, but decreased by $0.1 million (0.9%) for the six months[179] Interest Income This section details the decrease in interest income, primarily attributed to reduced interest earned on invested cash - Interest income decreased by $1.0 million (39.0%) for the three months and $1.5 million (29.8%) for the six months ended June 30, 2025, primarily due to a decrease in interest earned on invested cash[180] Interest Expense This section explains the increase in interest expense due to construction loan draws and reduced capitalization - Interest expense increased by $1.2 million (7.0%) for the three months and $5.3 million (17.4%) for the six months ended June 30, 2025, mainly due to increased non-recourse construction loan draws and reduced capitalization, partially offset by loan repayments and use of the revolving credit facility[181] Realized and Unrealized Gains (Losses) on Interest Rate Contracts This section reports realized gains and unrealized losses on interest rate contracts for the reported periods - Unrealized losses on interest rate contracts were $0.3 million (three months) and $0.8 million (six months) for June 30, 2025, compared to losses of $1.3 million and $1.5 million in 2024[182] - Realized gains were $0.2 million (three months) and $0.5 million (six months) for June 30, 2025, down from $1.9 million and $3.8 million in 2024[182] Realized and Unrealized Gains (Losses) on Equity Investments This section details unrealized gains and losses on equity investments, including a significant impairment charge in 2024 - Unrealized losses on equity investments were $0.2 million (three months) and $0.6 million (six months) for June 30, 2025[185] - This compares to significant unrealized losses of $47.3 million (three months) and $47.5 million (six months) in 2024, primarily due to a $47.0 million non-cash impairment on the IQHQ investment[185] Other Income (Expense), Net This section explains the changes in other income and expense, net, driven by the Mezzanine Investment and strategic review costs - Other income (expense), net, changed by $1.2 million (94.4%) for the three months and $2.3 million (80.8%) for the six months ended June 30, 2025, primarily due to increased income from the Mezzanine Investment, offset by strategic review costs[186] Income Tax Benefit (Expense) This section details the income tax expense, primarily due to a valuation allowance against deferred tax assets and reduced depreciation - Income tax expense was $5.6 million (three months) and $5.5 million (six months) for June 30, 2025, compared to a benefit in 2024[190] - The change is mainly due to a non-cash partial valuation allowance against deferred tax assets of TRS entities and reduced depreciation[190] - The company is evaluating the tax consequences of the recently signed One Big Beautiful Bill Act (OBBBA)[191] Critical Accounting Estimates This section confirms no significant changes to critical accounting estimates from the prior annual report - No significant changes have occurred in critical accounting estimates from those reported in the Annual Report on Form 10-K for the year ended December 31, 2024[192] Non-GAAP Measures This section defines and presents non-GAAP financial measures, including EBITDAre and Adjusted EBITDAre, used for performance assessment Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ("EBITDAre") This section provides a reconciliation and explanation of EBITDAre and Adjusted EBITDAre as non-GAAP performance indicators - EBITDAre and Adjusted EBITDAre are non-GAAP measures used to assess the company's ability to incur and service debt, providing comparability within the real estate industry[194] EBITDAre and Adjusted EBITDAre (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(16,976) | $(61,103) | $(28,688) | $(68,299) | | EBITDAre | $23,207 | $(24,144) | $45,580 | $(1,016) | | Adjusted EBITDAre | $18,894 | $19,100 | $38,628 | $37,064 | Liquidity and Capital Resources This section discusses the company's available liquidity, leverage, capital resources, and changes in cash flows Liquidity This section details the company's available cash, restricted cash, and revolving credit facility, assessing sufficiency for future operations - As of June 30, 2025, available liquidity was $173.5 million, consisting of $41.4 million cash, $26.4 million restricted cash, and $105.7 million available on the revolving secured credit facility[198][199] - The company believes current liquidity sources are sufficient for operational needs for the next twelve months, with additional liquidity generation options available if needed[200] - The revolving secured credit facility, maturing in December 2025, will be retired upon the sale of the Boston portfolio[200] Leverage and Capital Resources This section outlines the company's debt structure, interest rates, credit facility status, and compliance with financial covenants - All outstanding non-recourse property debt had a fixed interest rate as of June 30, 2025, with a weighted-average contractual rate of 4.4% and an average remaining term to maturity of 6.3 years[202] - The $150.0 million revolving secured credit facility had $42.8 million outstanding borrowings and $1.5 million in letters of credit as of June 30, 2025[203] - The company is in compliance with credit facility covenants, including a fixed charge coverage ratio of 1.25X, minimum tangible net worth of $625.0 million, and maximum leverage of 60.0%[203] Changes in Cash, Cash Equivalents, and Restricted Cash This section analyzes the changes in cash flows from operating, investing, and financing activities for the reported periods Operating Activities This section details the decrease in net cash provided by operating activities, influenced by operating assets/liabilities and interest expense - Net cash provided by operating activities was $13.5 million for the six months ended June 30, 2025, a decrease of $16.2 million compared to 2024, primarily due to timing of changes in operating assets/liabilities and increased interest expense, partially offset by higher rents[205] Investing Activities This section explains the decrease in net cash used in investing activities, primarily due to reduced capital expenditures - Net cash used in investing activities was $45.7 million for the six months ended June 30, 2025, a decrease of $31.7 million compared to 2024, primarily due to decreased capital expenditures[206] Financing Activities This section outlines the significant shift to net cash used in financing activities, driven by dividends and construction loan changes - Net cash used in financing activities was $72.4 million for the six months ended June 30, 2025, a change of $90.3 million compared to 2024, primarily due to dividend payments and decreased proceeds from non-recourse construction loans, partially offset by increased contributions from redeemable noncontrolling interests[208] Future Capital Needs This section discusses the expected funding sources for future capital needs, including operating cash flows and debt/equity financing - Future capital needs are expected to be funded by operating cash flows, short-term borrowings, and debt/equity financing, with no current plans for equity issuance[209] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section outlines the company's primary market risks, including refunding risk and repricing risk, and describes its strategies for managing these risks, such as using long-dated, fixed-rate debt and derivative financial instruments Market Risk This section identifies primary market risks, such as refunding and repricing risk, and the strategies employed to mitigate them - Primary market risks are refunding risk (availability of debt to refund maturing debt) and repricing risk (increases in interest rates and credit risk spreads)[211] - The company uses long-dated, fixed-rate, non-recourse property debt on stabilized properties and derivative financial instruments (interest rate caps) to manage these risks[211][212][213] - As of June 30, 2025, there was no variable-rate property-level debt, but $155.8 million in variable-rate construction loans were outstanding, with interest rate caps providing protection[213] - An estimated 100 basis point increase or decrease in variable rate indices would have no material impact on interest expense as of June 30, 2025[213] ITEM 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting for both Apartment Investment and Management Company (Aimco) and Aimco OP L.P. for the quarter ended June 30, 2025 Aimco This section confirms the effectiveness of Aimco's disclosure controls and internal control over financial reporting - Aimco's disclosure controls and procedures were evaluated as effective as of June 30, 2025[215] - No material changes in Aimco's internal control over financial reporting occurred during the quarter ended June 30, 2025[216] Aimco Operating Partnership This section confirms the effectiveness of Aimco Operating Partnership's disclosure controls and internal control over financial reporting - Aimco Operating Partnership's disclosure controls and procedures were evaluated as effective as of June 30, 2025[217] - No material changes in Aimco Operating Partnership's internal control over financial reporting occurred during the quarter ended June 30, 2025[218] PART II. OTHER INFORMATION This part provides additional information including risk factors, equity security activities, dividend policies, and required exhibits ITEM 1A. RISK FACTORS This section confirms no material changes to the risk factors previously disclosed in the company's annual report - No material changes to risk factors have occurred since the December 31, 2024, Annual Report on Form 10-K[220] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES This section details equity security activities for Aimco and Aimco Operating Partnership, including outstanding shares/units and repurchases Aimco This section provides details on Aimco's outstanding common stock, unregistered sales, and share repurchase program - As of August 8, 2025, there were 142,331,227 shares of Class A Common Stock outstanding, held by 888 stockholders of record[6][222] - No shares of Common Stock were issued in exchange for OP Units or through other unregistered sales during the three months ended June 30, 2025[224] - Aimco did not repurchase any shares of its outstanding Common Stock during the three months ended June 30, 2025[226] - As of June 30, 2025, Aimco was authorized to repurchase up to an additional 16.2 million shares of its outstanding Common Stock under a program with no expiration date[225] Aimco Operating Partnership This section provides details on Aimco Operating Partnership's outstanding OP Units, unregistered issuances, and unit redemptions - As of August 8, 2025, there were 153,192,728 OP Units and equivalents outstanding, with 142,331,227 held by Aimco[227] - No unregistered OP Units were issued during the three months ended June 30, 2025[228] - 8,609 OP Units were redeemed for cash at an aggregate weighted average price of $8.10 per unit during the three months ended June 30, 2025[229][230] Dividend and Distribution Payments This section outlines Aimco's REIT dividend distribution requirements and the factors influencing dividend determinations - As a REIT, Aimco must distribute at least 90.0% of its 'real estate investment trust taxable income' annually to common stockholders[231] - Dividend determinations by Aimco's Board consider REIT distribution requirements, market conditions, liquidity needs, and other cash uses like deleveraging and accretive investments[231] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q report, including corporate charters, bylaws, partnership agreements, purchase and sale contracts, and certifications required by the Securities Exchange Act of 1934 and Sarbanes-Oxley Act of 2002 - Exhibits include corporate governance documents (Charter, Bylaws), partnership agreements, a Purchase and Sale Contract for Royal Crest Estates, and various certifications (CEO/CFO certifications under Sections 302 and 906 of Sarbanes-Oxley)[233] - The report also includes financial statements formatted in iXBRL (Inline Extensible Business Reporting Language) and the Cover Page Interactive Data File[234] SIGNATURES This section contains the official signatures of authorized representatives for Apartment Investment and Management Company and Aimco OP L.P., certifying the filing of the report pursuant to the Securities Exchange Act of 1934 - The report is signed by H. Lynn C. Stanfield, Executive Vice President and Chief Financial Officer, and Kellie E. Dreyer, Senior Vice President and Chief Accounting Officer, for both Aimco and Aimco OP L.P. (via its General Partner, Aimco OP GP, LLC)[237][238] - The filing date for the report is August 11, 2025[238]