ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
(Unaudited)
Note 1 — Organization
Apartment Investment and Management Company (“Aimco”), a Maryland corporation incorporated on January 10, 1994, is a self-administered and self-managed real estate investment trust (“REIT”). Aimco, through a wholly-owned subsidiary, is the general and special limited partner of Aimco OP L.P. (“Aimco Operating Partnership”).
Except as the context otherwise requires, “we,” “our,” and “us” refer to Aimco, Aimco Operating Partnership, and their consolidated subsidiaries, collectively.
The Separation
On December 15, 2020, Aimco completed the separation of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment Income REIT Corp. (“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”).
Prior to the Separation, the condensed consolidated financial statements were prepared on a carve-out basis and reflect significant assumptions and allocations. The condensed consolidated financial statements reflect our historical consolidated financial position, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States (“GAAP”). The historical financial statements of Aimco do not represent the financial position and results of operations of one legal entity, but rather a combination of entities under common control that have been “carved out” from Aimco Predecessor’s financial statements. All significant intercompany balances have been eliminated in consolidation.
All separation related transactions between Aimco and Aimco Predecessor are considered effectively settled through partners’ capital in our condensed consolidated financial statements, other than the notes payable to AIR as discussed in Note 3. The settlement of these transactions is reflected as contributions from Aimco Predecessor, net in our condensed consolidated statements of equity and partners’ capital and as a net change in Aimco Predecessor investment in financing activity in our condensed consolidated statements of cash flows.
Business
As of September 30, 2021, Aimco owned 93.1% of the legal interest in the common partnership units of Aimco Operating Partnership and 95.0% of the economic interest in Aimco Operating Partnership. The remaining 6.9% legal interest is owned by limited partners. As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco Operating Partnership’s day-to-day management.
We own or lease a portfolio of real estate investments focused primarily on the U.S. multifamily sector. These real estate investments include a portfolio of 24 operating apartment communities with 6,067 apartment homes, diversified by both geography and price point, in 12 states; one commercial office building owned as part of a land assemblage; a recently acquired operating community with 58 townhomes; three residential apartment communities, with 1,331 planned apartment homes, a single family rental community, with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, that we are actively developing or redeveloping; land parcels held for development; and three residential apartment communities, with 499 apartment homes, for which we have completed the redevelopment and are in lease-up, but have not achieved stabilization. In addition, we own an interest in four unconsolidated operating apartment communities.
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a
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fair presentation have been included. Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.
The condensed consolidated balance sheets of Aimco and Aimco Operating Partnership as of December 31, 2020, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in Aimco’s and Aimco Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2020. Except where indicated, the footnotes refer to both Aimco and Aimco Operating Partnership.
Principles of Consolidation
Aimco’s accompanying condensed consolidated financial statements include the accounts of Aimco, Aimco Operating Partnership, and their consolidated subsidiaries. Aimco Operating Partnership’s condensed consolidated financial statements include the accounts of Aimco Operating Partnership and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
We consolidate a variable interest entity (“VIE”) in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.
As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company.
Certain reclassifications have been made to prior period amounts to conform to the current period condensed consolidated financial statement presentation with no effect on the Company’s previously reported results of operations, financial position, or cash flows.
Allocations
The 2020 condensed consolidated statements of operations include allocations of general and administrative expenses from Aimco Predecessor. We consider the basis on which expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented. However, the allocations may not include all of the actual expenses that we would have incurred and may not reflect our consolidated results of operations, financial position, and cash flows had it been a stand-alone company during the periods presented. Actual costs that might have been incurred had we been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions we might have performed ourselves or outsourced, and strategic decisions we might have made in areas such as information technology and infrastructure. Following the Separation, AIR, through its subsidiaries, provides Aimco with certain property management and other services, and we perform certain functions using our own resources or purchase services from third parties.
Common Noncontrolling Interests in Aimco Operating Partnership
Common noncontrolling interests in Aimco Operating Partnership consist of common Aimco Operating Partnership Units (“OP Units”) and are reflected in Aimco’s accompanying condensed consolidated balance sheets as common noncontrolling interests in Aimco Operating Partnership. Aimco Operating Partnership’s income or loss is allocated to the holders of common OP Units, other than Aimco, based on the weighted-average number of common OP Units (including Aimco) outstanding during the period. For all periods presented, the holders of common OP Units had a weighted-average economic ownership interest in Aimco Operating Partnership of approximately 5.0%. Substantially all of the assets and liabilities of Aimco are held by Aimco Operating Partnership.
Redeemable Noncontrolling Interest in Consolidated Real Estate Partnership
Redeemable noncontrolling interest consists of equity interests held by a limited partner in a consolidated real estate partnership that has a finite life. We generally attribute to noncontrolling interests their share of income or loss of consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity accounts.
If a consolidated real estate partnership includes redemption rights that are not within our control, the noncontrolling interest is included as temporary equity. If the redemption right is not currently redeemable but probable of being redeemable in the future, changes in redemption value are recognized each quarter with the change in value being reflected in additional paid-in-capital.
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The assets of our consolidated real estate partnerships must first be used to settle the liabilities of the consolidated real estate partnerships. The consolidated real estate partnerships’ creditors do not have recourse to the general credit of Aimco Operating Partnership.
The following table presents a reconciliation of our redeemable noncontrolling interest in consolidated real estate partnership from December 31, 2020, to September 30, 2021 (in thousands):
Balance at December 31, 2020
|
|
$
|
4,263
|
|
Net income
|
|
|
41
|
|
Balance at September 30, 2021
|
|
$
|
4,304
|
|
Revenue from Leases
The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our residents and commercial tenants primarily for utility reimbursements and other services. For the three and nine months ended September 30, 2021 and 2020, our total lease income was comprised of the following amounts for all operating leases (in thousands):
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Fixed lease income
|
|
$
|
39,382
|
|
|
$
|
34,744
|
|
|
$
|
113,726
|
|
|
$
|
104,737
|
|
Variable lease income
|
|
|
3,046
|
|
|
|
2,572
|
|
|
|
8,760
|
|
|
|
7,803
|
|
Total lease income
|
|
$
|
42,428
|
|
|
$
|
37,316
|
|
|
$
|
122,486
|
|
|
$
|
112,540
|
|
Lessee Arrangements
We, as lessee, and AIR, as lessor, have entered into finance leases on five properties currently under construction or in lease-up. Four leases commenced January 1, 2021, two of which have rent escalations that start at the point the property reaches stabilization. Three of the leases have a term of 25 years and one has a term of 10 years. During the nine months ended September 30, 2021, we, as lessee, and AIR, as lessor, entered into a finance lease for a 15-acre plot of land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and 8 accessory dwelling units in June 2021. The lease commenced on June 1, 2021 and has a term of 25 years.
We have provided AIR with residual value guarantees aggregating to $250.8 million, which provide that if the residual value of the leased assets are less than the specified residual value guarantees at the earlier of lease expiration or termination, we are required to pay the difference. See Note 3 for further details.
As of September 30, 2021, operating and financing right-of-use lease assets of $5.2 million and $434.0 million, respectively, are included in the condensed consolidated balance sheets. For the three months and nine months ended September 30, 2021, amortization related to our finance leases was $2.1 million and $5.5 million, respectively, net of amounts capitalized. For the three months and nine months ended September 30, 2021, interest expense related to our finance leases was $2.2 million and $6.1 million, respectively, net of amounts capitalized.
As of September 30, 2021, Aimco’s operating leases and finance leases have weighted-average remaining terms of 7.6 years, and 38.6 years, respectively, and weighted-average discount rates of 3.1% and 5.4%, respectively.
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Combined minimum annual lease payments, under operating and financing leases, reconciled to the lease liabilities in our condensed consolidated balance sheets, are as follows (in thousands):
|
Sublease Income
|
|
|
Operating Lease Future Minimum Rent
|
|
|
Financing Leases Future Minimum Payments
|
|
Remainder of 2021
|
$
|
347
|
|
|
$
|
420
|
|
|
$
|
6,699
|
|
2022
|
|
1,393
|
|
|
|
1,891
|
|
|
|
27,197
|
|
2023
|
|
1,403
|
|
|
|
1,922
|
|
|
|
27,597
|
|
2024
|
|
1,413
|
|
|
|
1,935
|
|
|
|
28,597
|
|
2025
|
|
1,423
|
|
|
|
1,930
|
|
|
|
29,208
|
|
Thereafter
|
|
4,959
|
|
|
|
6,575
|
|
|
|
1,644,138
|
|
Total
|
$
|
10,938
|
|
|
|
14,673
|
|
|
|
1,763,436
|
|
Less: Discount
|
|
|
|
|
|
(1,702
|
)
|
|
|
(1,327,521
|
)
|
Total lease liabilities
|
|
|
|
|
$
|
12,971
|
|
|
$
|
435,915
|
|
For the three and nine months ended September 30, 2021, we capitalized $5.8 million and $18.5 million of lease costs associated with active development and redevelopment projects on certain of the underlying property and ground lease assets. No lease costs were capitalized on leased assets for the three and nine months ended September 30, 2020.
Mezzanine Investment
On November 26, 2019, Aimco made a five-year, $275.0 million mezzanine loan to Maximus PM Mezzanine A LLC, the partnership owning the “Parkmerced Apartments”, located in southwest San Francisco (the “Mezzanine Investment”). The loan bears interest at a 10% annual rate, accruing if not paid from property operations.
The Separation Agreement provides for AIR to transfer ownership of the subsidiaries that originated and hold the mezzanine loan, a related equity option to acquire a 30% interest in the partnership owning Parkmerced Apartments and the interest rate option, or swaption, that provides partial protection against future refinancing risk through 2024 to Aimco. At the time of the Separation and as of the date of this filing, legal title of these subsidiaries had not yet transferred to Aimco. Until legal title of the subsidiaries is transferred, AIR is obligated to pass payments on such loan to us, and we are obligated to indemnify AIR against any costs and expenses related thereto. We have the risks and rewards of ownership of the Mezzanine Investment and have recognized an asset related to our right to receive the Mezzanine Investment from AIR.
We recognize as income the net amounts recognized by AIR on its equity investment that are due to be paid to us when collected, which primarily represent the interest accrued under the terms of the underlying mezzanine loan.
The loan is subject to certain risks, including, but not limited to, those resulting from the ongoing disruption due to the COVID-19 pandemic and associated response, and any similar events that might occur in the future, which may result in all or a portion of the loan not being repaid. In the event we determine that a portion of the Mezzanine Investment is not recoverable, we will recognize an impairment.
Income Tax Benefit
Certain of our operations, including our Development and Redevelopment activities, are conducted through taxable REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold investments in one of our apartment communities and 1001 Brickell Bay Drive.
Our income tax benefit calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in income tax benefit in our condensed consolidated statements of operations.
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and gains retained by the REIT. For the three and nine months ended September 30, 2021, we had consolidated net losses subject to tax of $7.9 million and $26.4 million, respectively. For the three and nine months ended September 30, 2020, we had consolidated net losses subject to tax of $5.7 million and $14.5 million, respectively.
For the three months ended September 30, 2021, we recognized income tax benefit of $2.0 million compared to $2.7 million, during the same period ended 2020. The change is due primarily to lower losses at our TRS entities.
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For the nine months ended September 30, 2021, we recorded income tax benefit of $9.9 million, compared to $6.7 million during the same period ended 2020. The change is due primarily to income tax benefit associated with internal restructuring, changes to our effective state rate expected to apply to the reversal of our existing deferred items, and higher losses at our TRS entities.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.
Cash Equivalents
We classify highly liquid investments with an original maturity of three months or less as cash equivalents. We maintain cash equivalents in financial institutions in excess of insured limits. We have not experienced any losses in these accounts in the past and believe that we are not exposed to significant credit risk because our accounts are deposited with major financial institutions.
Restricted Cash
Restricted cash consists of tenant security deposits, capital replacement reserves, insurance reserves, and cash restricted as required by our debt agreements.
Other Assets, net
Other assets were comprised of the following amounts (in thousands):
|
September 30, 2021
|
|
|
December 31, 2020
|
|
Notes receivable
|
$
|
37,893
|
|
|
$
|
37,045
|
|
Deferred costs, deposits, and other
|
|
25,585
|
|
|
|
17,557
|
|
Interest rate options
|
|
29,778
|
|
|
|
13,315
|
|
Corporate fixed assets
|
|
10,536
|
|
|
|
12,860
|
|
Unconsolidated real estate partnerships
|
|
12,974
|
|
|
|
12,829
|
|
Investment in IQHQ
|
|
24,591
|
|
|
|
12,500
|
|
Prepaid expenses and other
|
|
17,974
|
|
|
|
10,493
|
|
Intangible lease assets, net
|
|
4,756
|
|
|
|
7,264
|
|
Due from affiliates
|
|
3,155
|
|
|
|
4,333
|
|
Accounts receivable, net of allowances of $1,378 and $1,467 respectively
|
|
4,075
|
|
|
|
2,660
|
|
Total other assets, net
|
$
|
171,317
|
|
|
$
|
130,856
|
|
Note 3 —Significant Transactions
Transactions with AIR
In conjunction with the Separation, we entered into various separation and transition services agreements with AIR that provide for a framework of our relationship with AIR after the Separation, including: (i) a separation agreement setting forth the mechanics of the Separation, the key provisions relating to the separation of our assets and liabilities from those of AIR, and certain organizational matters and conditions; (ii) an employee matters agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation, benefits plans and programs, and other related matters (the “Employee Matters Agreement”); (iii) agreements pursuant to which AIR will provide property management and related services to us (collectively, the “Property Management Agreements”); (iv) an agreement pursuant to which AIR will provide us with customary administrative and support services on an ongoing basis (the “Master Services Agreement”); and (v) a master leasing agreement where we may enter into leases with AIR with the option to develop, redevelop, or lease-up the subject leased properties, and under which we will have certain lease termination rights (the “Master Leasing Agreement”).
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Master Services Agreement
We and AIR entered into a Master Services Agreement, in which AIR will provide us with customary administrative and support services. We are obligated to pay AIR the fully burdened costs in performing the services. We may terminate any or all services on 60 days’ prior written notice, and AIR may terminate individual services, at any time after December 31, 2023. During the three and nine months ended September 30, 2021, we incurred administrative and support fees of $0.7 million and $1.8 million, respectively, which are included in general and administrative expenses in our condensed consolidated statements of operations. We did not incur any fees for the three and nine months ended September 30, 2020.
Property Management Agreements
We entered into several Property Management Agreements with AIR, pursuant to which AIR will provide us with certain property management, property accounting and related services for the majority of our operating properties, and we will pay AIR a property management fee equal to 3% of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services. The initial term of each Property Management Agreement is one-year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’ prior written notice to the other party before the end of the term. Neither party is obligated to pay to the other party a termination fee or other penalty upon such termination.
During the three and nine months ended September 30, 2021, we recorded property management and property accounting fees of $1.3 million and $3.8 million, respectively, which we included in property operating expenses in our condensed consolidated statements of operations. We did not incur any fees for the three and nine months ended September 30, 2020.
Notes Payable to AIR
On December 14, 2020, we entered into $534.1 million of notes payable to AIR that are secured by a pledge of the equity interest in the entity that holds a portfolio of assets, however, the assets secure existing senior loans of $243.4 million as of September 30, 2021. The notes mature on January 31, 2024 and bear interest at 5.2%, with accrued interest payable quarterly on January 1, April 1, July 1 and October 1, commencing on April 1, 2021. For the three and nine months ended September 30, 2021, we recognized interest expense of $6.9 million and $20.8 million, respectively associated with the notes payable to AIR. We made interest payments of $6.9 million in the quarter which are included in interest payments on notes payable to AIR in operating activities in the condensed consolidated statement of cash flows for the nine months ended September 30, 2021
Master Leasing Agreement
The Master Leasing Agreement governs the current and any future leasing arrangements between us, as lessee, and AIR, as lessor. The initial term of the Master Leasing Agreement is 18 months (expiring on or about June 14, 2022), with automatic annual extensions (subject to each party’s right to terminate upon notice prior to the end of any such extension term). The Master Leasing Agreement provides that each time the parties thereto wish to execute a lease for a particular property, such parties will cause their applicable affiliates to execute a stand-alone lease. The initial annual rent for any leased property is based on the then-current fair market value of the subject property and market NOI cap rates, subject to certain adjustments, and is further subject to periodic escalation as set forth in the applicable lease, and the other terms thereof, including the initial term and extensions. We have the right to terminate any such lease prior to the end of its term once the leased property is stabilized. In connection with such an early termination, AIR will generally have an option (and not an obligation) to pay us an amount equal to the difference between the property’s fair value at stabilization and the initial value of the leasehold interest, at a five percent discount thereto; if AIR does not exercise such option, we will have the right to cause such property to be sold to a third party, with AIR guaranteed to receive an amount equal to the difference between the property’s fair market value at stabilization and the initial value of the leasehold interest and we will retain any excess proceeds. In the event of such sale of the property, we may also elect to purchase the property at a purchase price equal to the fair market value as agreed upon at the time of lease inception (and may subsequently sell the property to a third party, subject to AIR’s right of first refusal during the first year following our acquisition). If AIR elects not to pay the fee for the development or redevelopment-related improvements, and we decline to purchase the property or cause its sale to a third party, we may elect to rescind our termination of the applicable lease and instead continue such lease in effect in accordance with its terms.
We, as lessee, and AIR, as lessor, have entered into leases of five properties currently under construction or in lease-up. Four of the property leases commenced on January 1, 2021: (i) North Tower at Flamingo Point in Miami Beach, Florida; (ii) The Fremont Residences on the Anschutz Medical Campus in Aurora, Colorado; (iii) Prism in Cambridge, Massachusetts; and (iv) 707 Leahy Apartments in Redwood City, California. According to the terms of the respective lease agreements, we had the option to complete the on-going development and redevelopment of such properties and their lease-ups, which we elected on January 1, 2021. The term of each lease is 25 years except for Prism, which has a lease term of 10 years. During the nine months ended September 30, 2021, we, as lessee, and AIR, as lessor, entered into a 25 year finance lease for a 15-acre plot of
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land in the San Francisco Bay Area on which we began construction of 16 single family rental homes and eight accessory dwelling units in June 2021.
The initial fair market values of the leased assets at the time of lease inception was determined to be $475.1 million in the aggregate. In connection with the commencement of the leases, we assumed $70.8 million of estimated obligations pursuant to certain construction contracts. As of September 30, 2021, the estimated obligations pursuant to the construction contracts assumed with these leases was $16.4 million.
Due to and from AIR
As of September 30, 2021, we have amounts due to and from AIR of $14.2 million and $3.2 million, respectively. The amounts due to AIR primarily consist of invoices paid on our behalf and accrued interest on the notes payable to AIR. The amounts due from AIR primarily consist of net cash flows generated by our operating properties.
Terry Considine Service Agreement/AIR Reimbursement
In conjunction with the Separation, we entered into an arrangement with AIR with respect to the services of Terry Considine, an Aimco board member and our former Chief Executive Officer, for services to be rendered by Mr. Considine separate from his services as a board member, including, but not limited to: (i) short and long term strategic direction and advice; (ii) transition and executive support to officers; and (iii) advice and consultation with respect to strategic growth and acquisition activities. We are obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr. Considine for the calendar year 2021 under the terms of his employment agreement with AIR that are in excess of $1 million, collectively.
During the three months ended September 30, 2021, the Independent Directors set Mr. Considine’s target total compensation for 2021 (including base compensation, short-term incentive, and long-term incentive) at $1.8 million, to be paid out in cash and equity. In addition, we estimate the total 2021 reimbursement to AIR to be $4.0 million for a combined total of $5.8 million. For the three and nine months ended September 30, 2021, we recorded $1.2 million and $4.1 million of expense related to the arrangements and included in general and administrative expense in our condensed consolidated statements of operations. As of September 30, 2021, $3.0 million is included in the amount due to AIR.
Guarantee Liability
Legal liabilities that relate to occurrences prior to the Separation, including environmental liabilities related to properties that were no longer owned by Aimco or AIR at the time of the Separation, pursuant to the terms of the Separation Agreement, are borne by Aimco Operating Partnership up to the first $17.5 million of such liabilities, in the aggregate, and borne by AIR Operating Partnership for any such liabilities in excess of $17.5 million.
On the date of Separation, we recognized a guarantee liability of $16.4 million based on an estimate of the expected future cash flows required to settle the legal liabilities, including, but not limited to, remediation, settlement and legal costs, discounted by an estimated market discount rate of 4.25%. The guarantee liability is systematically reduced as costs related to the legal liabilities are incurred, which we estimate will occur through 2023. For the nine months ended September 30, 2021, the guarantee liability was reduced by $3.4 million. As of September 30, 2021, the guarantee liability of $13.0 million is included in accrued liabilities and other in our condensed consolidated balance sheets.
Acquisitions from AIR
In February 2021, we acquired from AIR the Benson Hotel and Faculty Club. In August 2021, we acquired from AIR the Eldridge Townhomes. Refer to Note 5 for further details regarding these acquisitions.
Other Significant Transactions
Non-recourse Property Debt
On July 2, 2021, we entered into a $13.1 million ten-year non-recourse property note at a fixed interest rate of 4.20% with a maturity date of August 1, 2031 that is secured by one of our operating properties. We recorded deferred financing cost of $0.2 million, which will be amortized over the ten-year note.
On August 20, 2021, we entered into a $46.7 million ten-year non-recourse property note at a fixed interest rate of 2.78% with a maturity date of September 1, 2031 that is secured by one of our operating properties. We recorded deferred financing cost of $0.5 million, which will be amortized over the ten-year note.
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Proceeds from the two non-recourse loans were used to fund the purchase of Eldridge Townhomes for $40.0 million and other investment opportunities.
Construction Loans
On April 15, 2021, we entered into a $150 million variable-rate non-recourse construction loan collateralized by our leasehold interest and AIR’s fee ownership interest in Flamingo North Tower. The initial term of the loan is three years and bears interest at one month LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85%. As of September 30, 2021, we had $118.8 million of principal outstanding. Certain consolidated subsidiaries have indemnified AIR for any losses it incurs as a result of a default on the loan by Aimco. We recorded $3.8 million of deferred financing costs which will be amortized over the three year term of the loan.
On June 21, 2021, we entered into a $100.7 million variable-rate non-recourse construction loan collateralized by our fee ownership interest in Hamilton on the Bay. The initial term of the loan is three years and bears interest at one month LIBOR plus 320 basis points subject to a minimum all-in per annum interest rate of 3.45%. As of September 30, 2021, we had $25.0 million of principal outstanding. We recorded $2.3 million of deferred financing costs which will be amortized over the three year term of the loan.
If LIBOR ceases to exist during the term of these agreements, the documents associated with these agreements contain language to address a transition to another bench mark rate. It is anticipated LIBOR will be replaced with SOFR, however, if SOFR were to not be available the agreements contain alternate provisions.
Fort Lauderdale Consolidated Joint Venture
In July 2021, Aimco entered into a joint venture with Kushner Companies to purchase three undeveloped land parcels located in downtown Fort Lauderdale, Florida. The total contract price for the land is $49 million ($25 million at Aimco’s 51% share). Current zoning allows for the development of approximately three million square feet of multifamily homes and commercial space. The land purchase is expected to close in January 2022. We have paid $2.4 million of the $25 million commitment, related to our share of the contract price.
Note 4 — Commitments and Contingencies
Commitments
In connection with our development, redevelopment, and other capital additions activities, we have entered into various construction-related contracts and we have made commitments to complete development and redevelopment of certain real estate, pursuant to financing or other arrangements. As of September 30, 2021, our commitments related to these capital activities totaled approximately $294.2 million, most of which we expect to incur during the next 24 months.
We enter into certain commitments for future purchases of goods and services in connection with the operations of our apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
We have a commitment to fund an additional $25.4 million to IQHQ and currently expect to contribute this investment through the end of 2022. During the nine months ended September 30, 2021, we contributed a total of $12.1 million. We also have unfunded commitments related to three investments in privately held entities that develop technology related to the real estate industry (“RETV”). During the nine months ended September 30, 2021, we contributed a total of $0.1 million to RETV, leaving an additional funding commitment in the amount of $1.0 million, the timing of which is uncertain.
Legal Matters
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of business. While the outcome of the legal proceedings cannot be predicted with certainty, the Company believes there are no legal proceedings pending that would have a material effect upon our financial condition or results of operations.
Note 5 — Acquisitions
During the three months ended September 30, 2021, we acquired from AIR the Eldridge Townhomes for $40 million based on an independent opinion of its value. The Eldridge Townhomes are a 58-unit townhome community located on 3.6 acres of land contiguous to our Elm Creek community in Elmhurst, Illinois, a western suburb of Chicago. To fund the acquisition of Eldridge Townhomes, we used proceeds from debt placement on the unencumbered Evanston Place asset in Evanston, Illinois.
21
Table of Contents
Number of townhomes
|
|
58
|
|
Purchase price
|
$
|
40,000
|
|
Consideration allocated to land
|
$
|
3,483
|
|
Consideration allocated to building and improvements
|
|
35,630
|
|
Consideration allocated to intangible assets (1)
|
|
913
|
|
Consideration allocated to below-market lease liabilities (2)
|
|
(26
|
)
|
Total consideration
|
$
|
40,000
|
|
|
(1)
|
Intangible assets include in-place leases and leasing costs with a weighted-average term of six months.
|
|
(2)
|
Below-market leases have a weighted average term of six months.
|
During the nine months ended September 30, 2021, we acquired eight land parcels adjacent to our Hamilton on the Bay apartment community, located in Miami’s Edgewater neighborhood, for $19.3 million and we began major redevelopment of the existing apartment building at Hamilton on the Bay. The scope of our investment will completely renew the waterfront high-rise, which benefits from spacious apartment homes (averaging 1,411 square feet) and an abundance of outdoor and amenity space that was previously underutilized.
In February 2021, we acquired The Benson Hotel and Faculty Club development property for $6.2 million, net of outstanding construction liabilities of $0.9 million. The development property consists of land and initial construction costs. The project is expected to be completed in the first quarter of 2023.
Note 6 — Earnings and Dividends per Share and Unit
Aimco and Aimco Operating Partnership calculate basic earnings per share of common stock and basic earnings per common unit based on the weighted-average number of shares of common stock and common partnership units outstanding. We calculate diluted earnings per share of common stock and diluted earnings per unit taking into consideration dilutive shares of common stock and common partnership unit equivalents and dilutive convertible securities outstanding during the period.
The shares of common stock and common partnership units outstanding at the Separation date are reflected as outstanding for all periods prior to the Separation for purposes of determining earnings per share and per unit. Each of our executives and AIR’s executives received one share of AIV stock and one share of AIR stock at the Separation date for unvested shares. We include AIR’s executives’ rights to receive AIV shares upon vesting in our dilutive calculations.
Our common stock and common partnership unit equivalents include options to purchase shares of common stock, which, if exercised, would result in Aimco’s issuance of additional shares of common stock and Aimco Operating Partnership’s issuance to Aimco of additional common partnership units equal to the number of shares of common stock purchased under the options. These equivalents also include unvested TSR restricted stock awards that do not meet the definition of participating securities, which would result in an increase in the number of shares of common stock and common partnership units outstanding equal to the number of the shares that vest. Common partnership unit equivalents also include unvested long-term incentive partnership units. We include in the denominator securities with dilutive effect in calculating diluted earnings per share and per unit during these periods.
Our time-based restricted stock awards receive non-forfeitable dividends similar to shares of common stock and common partnership units prior to vesting, and our TSR LTIP I units and TSR LTIP II units receive non-forfeitable distributions based on specified percentages of the distributions paid to common partnership units prior to vesting and conversion. The unvested restricted shares and units related to these awards are participating securities. We include the effect of participating securities in basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and undistributed earnings when the two-class method is more dilutive than the treasury stock method. No such items were included in the computation of diluted loss per share for the three or nine months ended September 30, 2021 because the effect of inclusion would be anti-dilutive.
22
Table of Contents
Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for the three and nine months ended September 30, 2021 and 2020, are as follows (in thousands, except per share and per unit data):
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Aimco
|
$
|
(5,016
|
)
|
|
$
|
2,011
|
|
|
$
|
(4,492
|
)
|
|
$
|
9,502
|
|
Net (loss) income attributable to participating securities
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(6
|
)
|
Net (loss) income attributable to Aimco common stockholders
|
$
|
(5,016
|
)
|
|
$
|
2,010
|
|
|
$
|
(4,492
|
)
|
|
$
|
9,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator – shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common stock outstanding
|
|
149,762
|
|
|
|
148,549
|
|
|
|
149,517
|
|
|
|
148,549
|
|
Diluted share equivalents outstanding
|
|
—
|
|
|
|
20
|
|
|
|
—
|
|
|
|
20
|
|
Diluted weighted-average common stock outstanding
|
|
149,762
|
|
|
|
148,569
|
|
|
|
149,517
|
|
|
|
148,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.06
|
|
Earnings per share – diluted
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Aimco Operating Partnership
|
$
|
(5,269
|
)
|
|
$
|
2,118
|
|
|
$
|
(4,701
|
)
|
|
$
|
10,009
|
|
Net (loss) income attributable to participating securities
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
(17
|
)
|
Net (loss) income attributable to Aimco Operating Partnership's Common unit holders
|
$
|
(5,269
|
)
|
|
$
|
2,114
|
|
|
$
|
(4,701
|
)
|
|
$
|
9,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator – units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common partnership units outstanding
|
|
157,806
|
|
|
|
156,480
|
|
|
|
157,873
|
|
|
|
156,480
|
|
Diluted partnership unit equivalents outstanding
|
|
—
|
|
|
|
20
|
|
|
|
—
|
|
|
|
20
|
|
Diluted weighted-average common partnership units outstanding
|
|
157,806
|
|
|
|
156,500
|
|
|
|
157,873
|
|
|
|
156,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per unit – basic
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.06
|
|
Earnings per unit – diluted
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7 — Fair Value Measurements
Recurring Fair Value Measurements
In 2020, we paid an upfront premium of $12.1 million for the option to enter into a $1.5 billion notional amount interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against exposure to rising interest rates between now and October 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 1.68% five year swap strike price. The amount of future cash settlement is capped if the prevailing interest rate exceeds 2.78%. Alternatively, if interest rates were to decrease below the specified strike price we would not receive a cash settlement, nor would we have any requirement to make a payment.
During the nine months ended September 30, 2021, we paid an upfront premium of $5.6 million (including transaction costs) for the option to enter into a $500 million notional amount interest rate swap at a future date. This interest rate option, or swaption, provides partial protection against our refinancing interest rate risk relative to our notes payable to AIR and is intended to mitigate interest rate increases between now and January 2024. We receive a cash settlement in the future if the prevailing interest rate is higher than the 3% strike price on the five year swap rate. Alternatively, if interest rates were to decrease below the specified strike price we would not receive a cash settlement, nor would we have any requirement to make a payment.
From time to time we purchase interest rate caps to provide protection against increases in interest rates on our floating rate debt. The fair value of these interest rate caps are included in the fair value table below.
We measure at fair value on a recurring basis our interest rate options, which are presented in other assets in our condensed consolidated balance sheets. Our interest rate options are classified within Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market information, including contractual terms, market
23
Table of Contents
prices, and interest rate yield curves. The fair value adjustment is included in earnings in Unrealized gains on interest rate options in our condensed consolidated statements of operations. Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, and the upfront premium is reflected in purchase of interest rate option in our condensed consolidated statements of cash flows.
We have investments of $4.5 million in RETV consisting of three privately held entities that develop technology related to the real estate industry. These investments are measured at net asset value (“NAV”) as a practical expedient.
The following table summarizes fair value for our interest rate options and our investment in RETV (in thousands):
|
|
As of September 30, 2021
|
|
|
As of December 31, 2020
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Interest rate options
|
|
$
|
29,547
|
|
|
$
|
—
|
|
|
$
|
29,547
|
|
|
$
|
—
|
|
|
$
|
13,315
|
|
|
$
|
—
|
|
|
$
|
13,315
|
|
|
$
|
—
|
|
Investment in RETV (1)
|
|
|
4,497
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,293
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Investments measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
|
Fair Value Disclosures
We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable and payables approximated their fair value as of September 30, 2021, and December 31, 2020, due to their relatively short-term nature and high probability of realization. We estimate the fair value of our non-recourse property debt, construction loans, and notes payable to AIR using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, debt service coverage ratios, and loan to value ratios. We classify the fair value of our non-recourse property debt and construction loans debt within Level 2 of the GAAP fair value hierarchy based on the significance of certain of the unobservable inputs used to estimate its fair value.
The carrying amount of the notes payable to AIR approximated their fair value at both September 30, 2021 and December 31, 2020.
The following table summarizes carrying value and fair value for our non-recourse property debt and construction loans debt (in thousands):
|
As of September 30, 2021
|
|
|
As of December 31, 2020
|
|
|
Carrying Value
|
|
|
Fair Value
|
|
|
Carrying Value
|
|
|
Fair Value
|
|
Non-recourse property debt
|
$
|
488,576
|
|
|
$
|
505,215
|
|
|
$
|
449,510
|
|
|
$
|
467,010
|
|
Construction loans debt
|
|
143,742
|
|
|
|
143,742
|
|
|
|
—
|
|
|
|
—
|
|
Note 8 — Variable Interest Entities
Aimco consolidates Aimco Operating Partnership, a VIE of which Aimco is the primary beneficiary. Aimco, through Aimco Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Substantially all of the assets and liabilities of Aimco are that of Aimco Operating Partnership.
24
Table of Contents
The VIEs that Aimco Operating Partnership consolidates own interests in real estate or commitments to acquire real estate. We are the primary beneficiary of the VIEs because we have the power to direct the activities that most significantly impact the entities’ economic performance and have a substantial economic interest. We have six unconsolidated VIEs for which we are not the primary beneficiary because we are not the decision maker. The six unconsolidated VIE’s include four unconsolidated real estate partnerships that hold four apartment communities in San Diego, California, the Mezzanine Investment, and one other that is insignificant to our condensed consolidated balance sheets for both periods presented.
The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized in the table below as of September 30, 2021 and December 31, 2020 (in thousands, except for VIE count):
|
September 30, 2021
|
|
|
December 31, 2020
|
|
|
Consolidated
|
|
|
Unconsolidated
|
|
|
Consolidated
|
|
|
Unconsolidated
|
|
Count of VIEs
|
9
|
|
|
6
|
|
|
2
|
|
|
6
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate, net
|
$
|
527,065
|
|
|
$
|
—
|
|
|
$
|
310,552
|
|
|
$
|
—
|
|
Mezzanine investment
|
|
—
|
|
|
|
330,016
|
|
|
|
—
|
|
|
|
307,362
|
|
Right-of-use lease assets
|
|
433,983
|
|
|
|
—
|
|
|
|
92,709
|
|
|
|
—
|
|
Other assets, net
|
|
29,615
|
|
|
|
37,565
|
|
|
|
16,949
|
|
|
|
25,329
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
126,851
|
|
|
|
—
|
|
|
|
133,842
|
|
|
|
—
|
|
Accrued liabilities and other
|
|
24,789
|
|
|
|
—
|
|
|
|
7,106
|
|
|
|
—
|
|
Construction loans, net
|
|
143,742
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Lease liabilities
|
|
435,916
|
|
|
|
—
|
|
|
|
86,781
|
|
|
|
—
|
|
As of September 30, 2021, two of our consolidated VIEs closed construction loans. In conjunction with these loans, we made customary guarantees. In certain situations, the lenders may have recourse to our general credit. As of September 30, 2021, we estimate the maximum exposure equals the $143.7 million outstanding loan balances. Other consolidated VIE’s creditors do not have recourse to our general credit.
Unconsolidated Real Estate Partnerships
We own an interest in four apartment communities in San Diego, California, of which we are not the primary beneficiary. Our investment balance of $13.0 million as of September 30, 2021, represents our maximum exposure to loss in these VIE’s.
Mezzanine Investment
Our investment balance of $330 million as of September 30, 2021, reflected in Mezzanine investment in our consolidated balance sheets, represents our maximum exposure to loss in this VIE.
Note 9 — Business Segments
We have three segments: (i) Development and Redevelopment; (ii) Operating Portfolio; and (iii) Other.
Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land assemblages that are being held for development adjacent to our Hamilton on the Bay community and other land purchases. Our Operating Portfolio segment includes 24 majority owned residential communities that have achieved stabilized level of operations as of January 1, 2020 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating Portfolio. Our Other segment consists of properties that are not included in our Developments and Redevelopment or Operating segment. We realigned our segments during the fourth quarter 2020 and have restated historical periods to conform with current segment presentation.
Our chief operating decision maker (“CODM”) uses cash flow, construction timeline to completion and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating Portfolio. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding reimbursements, less direct property
25
Table of Contents
operating expenses, net of utility reimbursements, for consolidated communities. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP.
As of September 30, 2021, our Development and Redevelopment segment includes five real estate investments: Upton Place, Hamilton on the Bay, The Benson Hotel, land parcels adjacent to our Hamilton on the Bay community and land purchased in Colorado Springs, Colorado. The Development and Redevelopment segment also includes our five leased properties of which, two are under construction and three are in lease-up but have not achieved stabilization. Our Operating Portfolio segment includes 24 consolidated apartment communities with 6,067 apartment homes. Our Other segment includes our recent Eldridge Townhomes acquisition, stabilized but not owned for the comparable reporting period, and 1001 Brickell Bay Drive, our only office building.
The following tables present the revenues, proportionate property net operating income, and income before income tax benefit of our segments on a proportionate basis, excluding amounts related to our proportionate share of four apartment communities with apartment homes that we neither manage nor consolidate, for the three and nine months ended September 30, 2021 and 2020 (in thousands):
|
Development and Redevelopment
|
|
|
Operating Portfolio
|
|
|
Other
|
|
|
Proportionate
and Other
Adjustments (1)
|
|
|
Corporate and
Amounts Not
Allocated to
Segments
|
|
|
Consolidated
|
|
Three months ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenues
|
$
|
3,196
|
|
|
$
|
34,591
|
|
|
$
|
3,360
|
|
|
$
|
1,746
|
|
|
$
|
—
|
|
|
$
|
42,893
|
|
Property operating expenses
|
|
2,026
|
|
|
|
11,257
|
|
|
|
1,047
|
|
|
|
1,723
|
|
|
|
2,102
|
|
|
|
18,155
|
|
Other operating expenses not allocated
to segments (2)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,577
|
|
|
|
30,577
|
|
Total operating expenses
|
|
2,026
|
|
|
|
11,257
|
|
|
|
1,047
|
|
|
|
1,723
|
|
|
|
32,679
|
|
|
|
48,732
|
|
Proportionate property net operating
income (loss)
|
|
1,170
|
|
|
|
23,334
|
|
|
|
2,313
|
|
|
|
23
|
|
|
|
(32,679
|
)
|
|
|
(5,839
|
)
|
Other items included in income before
income tax benefit (3)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,028
|
)
|
|
|
(1,028
|
)
|
Income (loss) before income tax benefit
|
$
|
1,170
|
|
|
$
|
23,334
|
|
|
$
|
2,313
|
|
|
$
|
23
|
|
|
$
|
(33,707
|
)
|
|
$
|
(6,867
|
)
|
|
Development and Redevelopment
|
|
|
Operating Portfolio
|
|
|
Other
|
|
|
Proportionate
and Other
Adjustments (1)
|
|
|
Corporate and
Amounts Not
Allocated to
Segments
|
|
|
Consolidated
|
|
Three months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenues
|
$
|
—
|
|
|
$
|
32,376
|
|
|
$
|
3,107
|
|
|
$
|
1,845
|
|
|
$
|
—
|
|
|
$
|
37,328
|
|
Property operating expenses
|
|
—
|
|
|
|
10,182
|
|
|
|
1,077
|
|
|
|
1,584
|
|
|
|
2,308
|
|
|
|
15,151
|
|
Other operating expenses not allocated
to segments (2)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,848
|
|
|
|
20,848
|
|
Total operating expenses
|
|
—
|
|
|
|
10,182
|
|
|
|
1,077
|
|
|
|
1,584
|
|
|
|
23,156
|
|
|
|
35,999
|
|
Proportionate property net operating
income (loss)
|
|
—
|
|
|
|
22,194
|
|
|
|
2,030
|
|
|
|
261
|
|
|
|
(23,156
|
)
|
|
|
1,329
|
|
Other items included in income before
income tax benefit (3)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,006
|
)
|
|
|
(2,006
|
)
|
Income (loss) before income tax benefit
|
$
|
—
|
|
|
$
|
22,194
|
|
|
$
|
2,030
|
|
|
$
|
261
|
|
|
$
|
(25,162
|
)
|
|
$
|
(677
|
)
|
|
Development and Redevelopment
|
|
|
Operating Portfolio
|
|
|
Other
|
|
|
Proportionate
and Other
Adjustments (1)
|
|
|
Corporate and
Amounts Not
Allocated to
Segments
|
|
|
Consolidated
|
|
Nine months ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenues
|
$
|
7,889
|
|
|
$
|
100,609
|
|
|
$
|
9,489
|
|
|
$
|
5,128
|
|
|
$
|
—
|
|
|
$
|
123,115
|
|
Property operating expenses
|
|
5,956
|
|
|
|
33,386
|
|
|
|
3,108
|
|
|
|
4,930
|
|
|
|
4,120
|
|
|
|
51,500
|
|
Other operating expenses not allocated
to segments (2)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
85,627
|
|
|
|
85,627
|
|
Total operating expenses
|
|
5,956
|
|
|
|
33,386
|
|
|
|
3,108
|
|
|
|
4,930
|
|
|
|
89,747
|
|
|
|
137,127
|
|
Proportionate property net operating
income (loss)
|
|
1,933
|
|
|
|
67,223
|
|
|
|
6,381
|
|
|
|
198
|
|
|
|
(89,747
|
)
|
|
|
(14,012
|
)
|
Other items included in income before
income tax benefit (3)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
333
|
|
|
|
333
|
|
Income (loss) before income tax benefit
|
$
|
1,933
|
|
|
$
|
67,223
|
|
|
$
|
6,381
|
|
|
$
|
198
|
|
|
$
|
(89,414
|
)
|
|
$
|
(13,679
|
)
|
26
Table of Contents
|
Development and Redevelopment
|
|
|
Operating Portfolio
|
|
|
Other
|
|
|
Proportionate
and Other
Adjustments (1)
|
|
|
Corporate and
Amounts Not
Allocated to
Segments
|
|
|
Consolidated
|
|
Nine months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other property revenues
|
$
|
—
|
|
|
$
|
98,336
|
|
|
$
|
9,458
|
|
|
$
|
5,008
|
|
|
$
|
—
|
|
|
$
|
112,802
|
|
Property operating expenses
|
|
—
|
|
|
|
31,088
|
|
|
|
3,022
|
|
|
|
4,505
|
|
|
|
7,207
|
|
|
|
45,822
|
|
Other operating expenses not allocated
to segments (2)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
62,612
|
|
|
|
62,612
|
|
Total operating expenses
|
|
—
|
|
|
|
31,088
|
|
|
|
3,022
|
|
|
|
4,505
|
|
|
|
69,819
|
|
|
|
108,434
|
|
Proportionate property net operating
income (loss)
|
|
—
|
|
|
|
67,248
|
|
|
|
6,436
|
|
|
|
503
|
|
|
|
(69,819
|
)
|
|
|
4,368
|
|
Other items included in income before
income tax benefit (3)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,432
|
)
|
|
|
(1,432
|
)
|
Income (loss) before income tax benefit
|
$
|
—
|
|
|
$
|
67,248
|
|
|
$
|
6,436
|
|
|
$
|
503
|
|
|
$
|
(71,251
|
)
|
|
$
|
2,936
|
|
|
(1)
|
Represents adjustments for the redeemable noncontrolling interest in consolidated real estate partnership’s share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP.
|
|
(2)
|
Other operating expenses not allocated to segments consists of depreciation and amortization, general and administrative expense, and miscellaneous other expenses.
|
|
(3)
|
Other items included in income before income tax benefit consists primarily of interest expense, unrealized gain on our interest rate options and mezzanine investment income, net.
|
Net real estate and non-recourse property debt, net, of our segments were as follows (in thousands):
|
Development and Redevelopment
|
|
|
Operating Portfolio
|
|
|
Other
|
|
|
Total
|
|
As of September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements
|
$
|
225,043
|
|
|
$
|
780,606
|
|
|
$
|
196,630
|
|
|
$
|
1,202,279
|
|
Land
|
|
82,132
|
|
|
|
298,459
|
|
|
|
153,501
|
|
|
|
534,092
|
|
Total real estate
|
|
307,175
|
|
|
|
1,079,065
|
|
|
|
350,131
|
|
|
|
1,736,371
|
|
Accumulated depreciation
|
|
(2,185
|
)
|
|
|
(506,065
|
)
|
|
|
(37,249
|
)
|
|
|
(545,499
|
)
|
Net real estate
|
$
|
304,990
|
|
|
$
|
573,000
|
|
|
$
|
312,882
|
|
|
$
|
1,190,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse property debt and construction loans, net
|
$
|
138,439
|
|
|
$
|
485,116
|
|
|
$
|
—
|
|
|
$
|
623,555
|
|
|
Development and Redevelopment
|
|
|
Operating Portfolio
|
|
|
Other
|
|
|
Total
|
|
As of December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements
|
$
|
61,813
|
|
|
$
|
772,786
|
|
|
$
|
160,517
|
|
|
$
|
995,116
|
|
Land
|
|
56,676
|
|
|
|
298,459
|
|
|
|
150,018
|
|
|
|
505,153
|
|
Total real estate
|
|
118,489
|
|
|
|
1,071,245
|
|
|
|
310,535
|
|
|
|
1,500,269
|
|
Accumulated depreciation
|
|
(447
|
)
|
|
|
(469,873
|
)
|
|
|
(24,690
|
)
|
|
|
(495,010
|
)
|
Net real estate
|
$
|
118,042
|
|
|
$
|
601,372
|
|
|
$
|
285,845
|
|
|
$
|
1,005,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recourse property debt, net
|
$
|
—
|
|
|
$
|
447,967
|
|
|
$
|
—
|
|
|
$
|
447,967
|
|
In addition to the amounts disclosed in the tables above, the Development and Redevelopment segment right-of-use lease assets and lease liabilities as of September 30, 2021 aggregated to $434.0 million and $435.9 million, respectively, related to our investments in Upton Place, North Tower of Flamingo Point, 707 Leahy, The Fremont, Prism, and Oak shore. As of December 31, 2020, the Development and Redevelopment segment right-of-use lease assets and lease liabilities totaled $92.7 million and $86.8 million, respectively, related to our investment in Upton Place.
27
Table of Contents
Note 10 – Subsequent Events
We have evaluated subsequent events through the date of this filing. Based on the evaluation, there were no subsequent events to report.
28
Table of Contents