Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2023

APARTMENT INCOME REIT CORP.

(Exact name of Registrant as Specified in Its Charter)


Maryland	1-39686	84-1299717

(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4582 South Ulster Street Suite 1700
Denver, Colorado		80237
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (303) 757-8101

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Apartment Income REIT Corp. Class A Common Stock

AIRC

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

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

Item 2.02 Results of Operations and Financial Condition.

Apartment Income REIT Corp. (“AIR”), furnishes herewith as Exhibit 99.1 its second quarter 2023 earnings release dated July 27, 2023. AIR will hold its second quarter 2023 earnings conference call on July 28, 2023, at 2:00 p.m. Eastern time. You may join the conference call through an internet webcast accessed through AIR’s website at investors.aircommunities.com. Alternatively, you may join the conference call by telephone by dialing 833-886-7786, or 080-0652-2435 for international callers, and using passcode 11736488. If you wish to participate, please call approximately five minutes before the conference call is scheduled to begin.

If you are unable to join the live conference call, you may access the replay until October 26, 2023, by dialing 877-674-7070, or 416-764-8658 for international callers, and using passcode 736488, or you may access the audiocast replay on AIR’s website at investors.aircommunities.com.

The full text of the earnings release and supplemental schedules are available through AIR’s website at investors.aircommunities.com. The information contained on AIR’s website is not incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished with this report:


Exhibit No.			Description
99.1			Second Quarter 2023 Earnings Release dated July 27 , 2023
104			Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

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

APARTMENT INCOME REIT CORP.

Dated:

July 27, 2023

By:

/s/ Paul Beldin

Paul Beldin
Executive Vice President and Chief Financial Officer


Page
3						Earnings Release

11						Consolidated Statements of Operations

12						Consolidated Balance Sheets

13						Schedule 1 – Funds From Operations Reconciliation

14						Schedule 2 – Funds From Operations Information

16						Schedule 3 – Property Net Operating Income

17						Schedule 4 – Apartment Home Summary

18						Schedule 5 – Capitalization and Financial Metrics

20						Schedule 6 – Same Store Operating Results

24						Schedule 7 – Portfolio Data by Market

25						Schedule 8 – Apartment Community Disposition and Acquisition Activity

26						Schedule 9 – Apartment Community Capital Investment Information

27						Glossary and Reconciliations of Non-GAAP Financial and Operating Measures

AIR Communities Reports Second Quarter 2023 Results

Denver, Colorado, July 27, 2023 – Apartment Income REIT Corp. ("AIR" or the "Company") (NYSE: AIRC) announced today results for the second quarter of 2023.

During the second quarter, the Company:

•Delivered Pro forma FFO per share of $0.58, reflecting 13.7% year-over-year growth (adjusting for prior contribution of the Aimco note prepayment) and beating the midpoint of guidance by $0.01 per share;

•Delivered Same Store NOI growth of 10.6%;

•Formed two joint ventures to recapitalize 11 properties valued at $1.2 billion, with nine of 11 properties now closed and the remaining two expected to close by year-end;

•Used proceeds from the joint ventures to reduce Net Leverage to Adjusted EBITDAre to 5.9x on a pro forma basis, within AIR’s targeted range;

•Expects to use the balance of proceeds to purchase properties, now in advanced negotiations, with current returns neutral to 2023 FFO and $0.01 accretive to 2024 FFO, with long-term unlevered IRRs in excess of 10%;

•Raises Same Store Revenue and NOI guidance by 20 and 40-basis points, respectively, at their midpoints;

•Narrows the guidance range for 2023 Pro forma FFO per share to $2.38 to $2.44 while maintaining $2.41 as the midpoint, which is unchanged due to higher than anticipated casualty losses. The $2.41 midpoint represents a 10% growth versus 2022 Run-Rate FFO per share of $2.19; and

•Expects Pro forma FFO per share between $0.61 and $0.65 in the third quarter, and between $1.26 and $1.32 in the second half of 2023, driven primarily by property operations increasing its first half contribution by $20.4 million, or $0.13 of FFO per share.

With more than 80% of 2023 leasing now complete, the Company expects the earn-in to Same Store Revenue growth in 2024 in the low-to-mid 2% range. With largely fixed operating expenses, low G&A, and fixed interest rates, 2024 growth in NOI – from both Same Store and Acquisition portfolios – is expected to translate directly to growth in Pro forma FFO per share.

Financial Results: Second Quarter Run-Rate FFO Per Share Up 13.7%

In the second quarter of 2022, with the support of shareholders, AIR accepted prepayment of the Aimco note, which contributed $0.15 to 2022 Pro forma FFO per share. This makes 2022 not comparable to 2023. Adjusting for this event, second quarter FFO of $0.58 per share is 13.7% higher in 2023 than in 2022.


	SECOND QUARTER						YEAR-TO-DATE
(all items per common share – diluted)	2023		2022		Variance		2023		2022		Variance
Net (loss) income	$	(0.01)	$	1.26	nm		$	(0.09)	$	3.66	nm
NAREIT Funds From Operations (FFO)	$	0.62	$	0.64	(3.1	%)	$	1.11	$	1.06	4.7	%
Pro forma adjustments	(0.04)		0.02		nm		0.01		0.17		nm
Pro forma Funds From Operations (Pro forma FFO)	$	0.58	$	0.66	(12.1	%)	$	1.12	$	1.23	(8.9	%)
Contribution from Aimco note	—		(0.15)		nm		—		(0.19)		nm
Run-Rate FFO	$	0.58	$	0.51	13.7	%	$	1.12	$	1.04	7.7	%

Operating Results: Second Quarter Same Store NOI Up 10.6% YoY and 11.6% YTD

AIR's Same Store portfolio comprises 63 properties and provided 85% of year-to-date rental revenue.


	SECOND QUARTER										YEAR-TO-DATE
	Year-over-Year						Sequential				Year-over-Year
($ in millions) *	2023		2022		Variance		1st Qtr.		Variance		2023		2022		Variance
Revenue, before utility reimbursements	$	158.8	$	146.0	8.8	%	$	156.6	1.5	%	$	315.4	$	288.2	9.4	%
Expenses, net of utility reimbursements	41.0		39.4		4.1	%	40.8		0.4	%	81.8		78.9		3.7	%
Net operating income (NOI)	$	117.8	$	106.6	10.6	%	$	115.7	1.8	%	$	233.5	$	209.3	11.6	%

*Amounts are presented on a rounded basis and the sum of the individual amounts may not foot; please refer to Supplemental Schedule 6.

Second quarter 2023 Same Store NOI margin was 74.2%, up 120-basis points year-over-year and an AIR record for the second quarter, the result of:

•8.8% growth in Residential Rents, and

•Sustained cost control with controllable expenses increasing only 100 basis points.

Components of Same Store Revenue Growth


	SECOND QUARTER 2023				YEAR-TO-DATE
Same Store Revenue Components	Year-over-Year		Sequential		Year-over-Year
Residential Rents	8.8	%	1.3	%	9.4	%
Average Daily Occupancy	(1.1	%)	(1.9	%)	(0.7	%)
Residential Rental Income	7.7	%	(0.6	%)	8.7	%
Bad Debt, net of recoveries	—	%	0.7	%	0.1	%
Other Residential Income	1.0	%	1.1	%	0.6	%
Residential Revenue	8.7	%	1.2	%	9.4	%
Commercial Revenue	0.1	%	0.3	%	—	%
Same Store Revenue Growth	8.8	%	1.5	%	9.4	%

Same Store Rental Rates & Occupancy


	SECOND QUARTER						YEAR-TO-DATE						2023
(amounts represent AIR share)*	2023		2022		Variance		2023		2022		Variance		April		May		June		July**
Transacted Leases
Renewal rent changes	8.0	%	11.5	%	(3.5	%)	8.2	%	11.7	%	(3.5	%)	8.6	%	8.2	%	7.7	%	6.7	%
New lease rent changes	6.6	%	18.8	%	(12.2	%)	7.5	%	18.2	%	(10.7	%)	8.4	%	6.6	%	5.7	%	5.1	%
Weighted-average rent changes	7.4	%	14.6	%	(7.2	%)	7.8	%	14.7	%	(6.9	%)	8.5	%	7.4	%	6.7	%	5.8	%

Signed Leases
Renewal rent changes	7.0	%	11.2	%	(4.2	%)	7.4	%	11.4	%	(4.0	%)	7.8	%	7.5	%	6.1	%	5.7	%
New lease rent changes	6.0	%	18.1	%	(12.1	%)	6.6	%	17.9	%	(11.3	%)	7.6	%	5.5	%	5.3	%	4.7	%
Weighted-average rent changes	6.5	%	14.3	%	(7.8	%)	7.0	%	14.4	%	(7.4	%)	7.7	%	6.5	%	5.7	%	5.1	%

Average Daily Occupancy	95.5	%	96.6	%	(1.1	%)	96.5	%	97.2	%	(0.7	%)	96.4	%	95.6	%	94.7	%	94.6	%

Note: Transacted leases are those that became effective during the reporting period and are therefore the best measure of immediate effect on current revenues. Signed leases are those executed during a reporting period and are therefore the best measure of current pricing and an important driver of future results. All lease-to-lease data is reported on an effective rent basis.

*Amounts are based on our current Same Store population and may differ from those previously reported.

**July leasing results are preliminary and as of July 26, 2023.

•Second quarter signed lease rate growth is higher than assumed in our annual plan with a blended rate increase of 6.5% benefiting from (i) 10-basis points from 2021 acquisitions (now in Same Store) and (ii) 70-basis points from capital enhancement activity.

•Average Daily Occupancy ("ADO") declined 190-basis points sequentially due to (i) normal and expected seasonality (110-basis points of decline) due to the frictional vacancy of the leasing season and (ii) increased move-outs of non-paying residents as COVID-related protections expired (60-basis points).

•ADO is anticipated to reach its low point in July, and then increase in the third and fourth quarters.

Rent Collections & Bad Debt

During the second quarter, AIR recognized 98.8% of all residential revenue billed in the quarter with the remaining 1.2% reserved as gross bad debt. Payments received during the second quarter with respect to revenue treated as bad debt in previous periods, totaled 60-basis points of second quarter residential revenue resulting in bad debt for the second quarter, net of the contra entry, of 0.6% of residential revenue.

•Of the 1.2% in gross bad debt: (i) 50-basis points reflects a level of delinquency that is slightly higher than AIR's experience in 2019, (ii) 40-basis points is due to slower action by courts as a result of backlogs created by pandemic-related government shutdowns, and (iii) 30-basis points is due to the move-out and related fees charged to individuals who were evicted or terminated their lease early.

•There are currently 150 delinquent residents in AIR's portfolio. 70 residents represents a "normalized" rate for credit issues, slightly higher than pre-COVID levels of approximately 50 residents, on average per month. The slower action by courts. noted above, provides more time for delinquent residents and increase the amount of bad debt per defaulting resident, which explains the incremental 80 residents in the process of collection.

•As of June 30, 2023, AIR's proportionate share of residential accounts receivable was $4.8 million, or $0.1 million net of security deposits and reserves for uncollectible amounts.

Acquisition Portfolio Performance

Year-over-Year Variance

Year

Apartment Communities

% of GAV

Rev

Exp

NOI

Class of 2021**

8.0%

19.0%

(2.2%)

30.5%


			Sequential Variance
Year	Apartment Communities	% of GAV	NOI
Class of 2021**	5	8.0%	4.9%
Class of 2022 and 2023*	5	9.0%	3.4%
Acquisition Portfolio	10	17.0%	4.1%

Total Portfolio	73	100.0%	1.7%

*Acquisition property results are often volatile, sometimes by design, when properties are first added to the AIR platform. Common examples are the implementation of AIR’s “no smoking” policy and AIR’s requirement of high credit ratings from new residents. Over three or four years, results become stable as new residents are selected by AIR, increasing numbers of high quality residents renew their leases, and the disturbance of property upgrades is in the past.

**Acquisitions from 2021 are included in, and contribute to, Same Store Portfolio metrics.

Transactions

AIR has property operation expertise, termed the AIR Edge, which results in higher property NOI, enabling AIR to acquire properties and deploy the AIR Edge to improve their profitability and value. This enables AIR to sell properties at market NOI cap rates and unlevered IRRs, and to reinvest capital in acquisition properties which generally enjoy accelerated growth in profitability relative to general market rates.

AIR’s business is to acquire properties, deploy the AIR Edge, and generate returns 200-basis points, or higher, than AIR’s cost of capital, as measured by unlevered IRR. “Paired trades” make agnostic to changes in market conditions insofar as AIR is buying and selling at roughly the same time. The benefits – enhanced total NOI growth and higher FFO – are realized primarily in years two through four as it requires more than one turn of the rent roll to implement AIR’s menu of high credit standards, measured customer satisfaction, customer retention, lowered operating costs, and completion of planned capital improvements.

Joint Venture Transactions

As previously announced, AIR formed two joint ventures in the quarter, the first of which closed on June 30, 2023 through the sale of a 70% interest in Huntington Gateway (the “Value-Add JV”), and the second of which closed on July 17, 2023 through the sale of a 47% interest in eight of ten properties (the “Core JV”). The remaining two properties within the Core JV are expected to close before year-end. AIR now has four separate joint venture partnerships, each (i) with world-class investors interested in doing more with AIR, (ii) paying asset and property management fees, and (iii) providing substantial opportunity to earn “promotes.” For AIR, joint ventures are a strategic source of attractively priced capital, and provide AIR the resources to pursue a broader opportunity set to pursue growth. AIR expects to sell further interests of the existing joint ventures to increase expected returns on its retained investment, and to make available additional capital to invest in future AIR Edge properties with higher returns.

California JV

Washington, D.C. JV

Core JV

Value-Add JV

September 2020

October 2021

July 2023

June 2023

GAV @ 100%

$2.4B

$0.5B

$1.1B

$0.1B

AIR / JV Partner Ownership

61% / 39%

20% / 80%

53% / 47%

30% / 70% *

Number of Properties

Units

4,051

1,748

3,093

443

Average Revenue per Unit

$3,389

$2,070

$2,534

$2,307

*Legal ownership sold is 70%, while AIR will receive 50% of JV cash flow during the hold period.

Dispositions

AIR is nearing completion of its strategic exit from New York City through:

•The sale of two properties with 62 apartment homes to a developer for gross proceeds of $33.2 million and a non-cash GAAP loss of $8.2 million; and

•Signing a contract to sell its remaining New York City property, at a price which resulted in a non-cash GAAP write-down of $15.4 million.

In aggregate since the Separation, AIR has recognized non-cash GAAP gains of $1.5 billion on $2.2 billion of dispositions.

Balance Sheet & Liquidity

To lower its cost of capital and enhance financial returns, AIR targets Net Leverage to EBITDAre between 5.0x to 6.0x with focus on fixed-rate, long-term debt with well laddered maturities. We maintain flexibility through (i) ample unused and available credit, (ii) holding properties with substantial value unencumbered by property debt, and (iii) maintaining an investment grade rating.

Balance sheet highlights, pro forma for the announced joint ventures, include:

•Reduction in Net Leverage to EBITDAre to 5.9x, within AIR’s targeted range, and extension of its weighted-average maturities by more than seven months;

•96% fixed-rate leverage with limited repricing risk before the second quarter of 2025;

•Available liquidity of $2.3 billion and access to more potentially secured by $5.8 billion in unencumbered property value; and

•Limited refunding risk with the ability to fund all maturities through 2027 from cash on hand, and a 10-year commitment to make $1 billion of property loans with up to 10-year maturities.

Dividend & Equity Capital Markets

On July 25, 2023, the AIR Board of Directors declared a quarterly cash dividend of $0.45 per share of Common Stock, payable on August 29, 2023 to shareholders of record on August 18, 2023. The Board of Directors targeted a 75% payout ratio on Pro forma FFO in setting the dividend for 2023, which is also expected to have favorable tax characteristics due to AIR’s tax basis refreshed at the time of the Separation from Aimco.

Components of AIR Pro forma FFO

With a total of approximately $2.2 billion of third party capital assets now under management, third party asset, property management and transaction related fees are a small, but growing component of AIR FFO. In 2023, AIR anticipates 96% of its Pro forma FFO will be earned from levered property operations, with the remaining 4%, or $0.11 per share, largely attributable to property management, asset management, and transactional services provided to third parties and venture partners.


	2023		2022		Variance
Levered Property Operations	$	2.30	$	2.08	10.6	%

Third Party Services, net (1)	0.11		0.11		—	%
Run-rate FFO, at the midpoint	$	2.41	$	2.19	10.0	%

Aimco Note Prepayment (2)	—		0.22		nm
Total Pro forma FFO, at the midpoint	$	2.41	$	2.41	—	%

(1)Third party services are a natural result of AIR’s joint ventures and acquisitions:

(a)Asset management fees are a revenue stream created by the formation of joint ventures, and

(b)Property management fees prior to purchase of the related property permit AIR to begin implementation of the AIR Edge, for example in requirement of high credit standards prior to taking ownership.

Of this amount, approximately $0.06 is expected to continue for the life of the joint ventures. The $0.05 in remaining fees are specific to 2023 activities. AIR earned a similar level of such fees in 2022 and we anticipate a similar amount will be earned in 2024 and beyond.

(2)2022 Pro forma FFO included a non-recurring $0.22 per share contribution from the Aimco note prepayment.

2023 Outlook

AIR’s midpoint of Pro forma FFO per share of $2.41 remains unchanged. Our guidance ranges are shown below and generally tightened based on activities completed year-to-date:


	YEAR-TO-DATE June 30, 2023	FULL YEAR 2023	PREVIOUS FULL YEAR 2023
($ amounts represent AIR share)
Net (loss) income per share	($0.09)	$0.66 to $0.76	($0.18) to ($0.06)
Pro forma FFO per share	$1.12	$2.38 to $2.44	$2.36 to $2.46
Pro forma FFO per share at the midpoint		$2.41	$2.41

Same Store Operating Components
Revenue change compared to prior year	9.4%	7.8% to 8.6%	7.0% to 9.0%
Expense change compared to prior year	3.7%	5.0% to 5.6%	5.0% to 6.5%
NOI change compared to prior year	11.6%	8.6% to 9.8%	7.3% to 10.3%


Other Earnings

Proceeds from dispositions of real estate	$33M	$54M	$50M
Proceeds from joint venture transactions (1)	$554M	$599M	$—

AIR Share of Capital Enhancements
Capital Enhancements	$42M	$80M to $90M	$80M to $90M

Balance Sheet

Net Leverage to Adjusted EBITDAre (1)	5.9x	≤6.0x	≤6.0x

(1)In July 2023, AIR completed the Core JV with a global institutional investor. As part of the transaction, AIR raised $611 million in new mortgage financing. In aggregate, the joint venture partner took title subject to $275 million of the total mortgage obligation reflecting its 47% share of the property debt, and AIR received $185 million in cash. We anticipate that, upon the closing of the final two properties, the joint venture partner will take title subject to $28 million of the related mortgage loan obligation, and AIR will receive $17 million in additional cash. Proceeds, net of transaction costs, were used to repay $292 million on the revolving credit facility, $325 million of term loans, with the remaining invested in short-term liquid investments.

In the third quarter of 2023, AIR anticipates Pro forma FFO between $0.61 and $0.65 per share.

Earnings Conference Call Information


Live Conference Call:			Conference Call Replay:
Friday, July 28, 2023 at 2:00 p.m. ET			Replay available until October 26, 2023
Domestic Dial-In Number: 1-888-886-7786			Domestic Dial-In Number: 1-877-674-7070
International Dial-In Number: 080-0652-2435			International Dial-In Number: 1-416-764-8658
Passcode: 11736488			Passcode: 736488
Live Webcast: investors.aircommunities.com

Supplemental Information

The full text of this Earnings Release and the Supplemental Information referenced in this release is available on AIR’s website at investors.aircommunities.com.

Glossary & Reconciliations of Non-GAAP Financial and Operating Measures

Financial and operating measures found in this Earnings Release and the Supplemental Information include certain financial measures used by AIR management that are measures not defined under accounting principles generally accepted in the United States (“GAAP”). Certain AIR terms and Non-GAAP measures are defined in the Glossary in the Supplemental Information and Non-GAAP measures reconciled to the most comparable GAAP measures.

About AIR

Apartment Income REIT Corp (NYSE: AIRC) is a publicly traded, self-administered real estate investment trust (“REIT”). AIR’s portfolio comprises 73 communities totaling 25,739 apartment homes located in 10 states and the District of Columbia. AIR offers a simple, predictable business model with focus on what we call the AIR Edge, the cumulative result of our focus on resident selection, satisfaction, and retention, as well as relentless innovation in delivering best-in-class property management. The AIR Edge is a durable operating advantage in driving organic growth, as well as making possible the opportunity for excess returns for properties new to AIR’s platform. For additional information, please visit aircommunities.com.

Contact

Matthew O’Grady

Senior Vice President, Capital Markets

(303) 691-4566

Mary Jensen

Head of Investor Relations

(303) 691-4349

investors@aircommunities.com

Forward-looking Statements

This Earnings Release and Supplemental Information contain forward-looking statements within the meaning of the Federal securities laws, including, without limitation, statements regarding projected results and specifically forecasts of 2023 results, including but not limited to: NAREIT FFO, Pro forma FFO, Run-rate FFO and selected components thereof; expectations regarding consumer demand, growth in revenue and strength of other performance metrics and models; expectations regarding acquisitions, as well as sales, and joint ventures and the use of proceeds thereof; and AIR liquidity and leverage metrics. We caution investors not to place undue reliance on any such forward-looking statements.

These forward-looking statements are based on management’s current expectations, estimates and assumptions and subject to risks and uncertainties, that could cause actual results to differ materially from such forward-looking statements, including, but not limited to: real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including inflation, the pace of job growth, and the level of unemployment; the amount, location, and quality of competitive new housing supply, which may be impacted by global supply chain disruptions; the timing and effects of acquisitions and dispositions; changes in operating costs, including energy costs; negative economic conditions in our geographies of operation; loss of key personnel; AIR’s ability to maintain current or meet projected occupancy, rental rate, and property operating results; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; financing risks, including interest rate changes and the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines, or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by AIR. Other risks and uncertainties are described in filings by AIR with the Securities and Exchange Commission (“SEC”), including the section entitled “Risk Factors” in Item 1A of AIR’s Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent filings with the SEC.

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

These forward-looking statements reflect management’s judgment as of this date, and we assume no obligation to revise or update them to reflect future events or circumstances. This earnings release does not constitute an offer of securities for sale.


Consolidated Statements of Operations


(in thousands, except per share data) (unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES
Rental and other property revenues (1)	$	212,492	$	181,012	$	422,415	$	360,273
Other revenues	2,068		2,488		4,138		4,705
Total revenues	214,560		183,500		426,553		364,978

OPERATING EXPENSES
Property operating expenses (1)	72,012		63,787		147,465		127,023
Depreciation and amortization	89,260		78,656		184,926		163,205
General and administrative expenses (2)	6,023		5,333		13,203		11,930

Other expenses (income), net	2,519		(3,076)		6,179		942
Total operating expenses	169,814		144,700		351,773		303,100
Interest income	1,507		25,652		3,032		39,133
Interest expense	(37,554)		(26,027)		(73,741)		(48,134)
Loss on extinguishment of debt	—		—		(2,008)		(23,636)
(Loss) gain on dispositions and impairments of real estate	(17,472)		175,606		(17,472)		587,609
Gain on derivative instruments, net	11,390		—		9,252		—
Loss from unconsolidated real estate partnerships	(842)		(873)		(1,877)		(2,887)
Income (loss) before income tax expense	1,775		213,158		(8,034)		613,963
Income tax expense	(1,177)		(1,499)		(1,316)		(920)
Net income (loss)	598		211,659		(9,350)		613,043

Noncontrolling interests:
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships	(684)		(381)		(1,369)		183
Net income attributable to preferred noncontrolling interests in AIR OP	(1,570)		(1,602)		(3,140)		(3,205)
Net loss (income) attributable to common noncontrolling interests in AIR OP	315		(12,749)		1,141		(36,916)
Net income attributable to noncontrolling interests	(1,939)		(14,732)		(3,368)		(39,938)
Net (loss) income attributable to AIR	(1,341)		196,927		(12,718)		573,105
Net income attributable to AIR preferred stockholders	(42)		(43)		(85)		(85)
Net income attributable to participating securities	(56)		(162)		(93)		(417)
Net (loss) income attributable to AIR common stockholders	$	(1,439)	$	196,722	$	(12,896)	$	572,603

Net (loss) income attributable to AIR common stockholders per share – basic and diluted	$	(0.01)	$	1.26	$	(0.09)	$	3.66


Weighted-average common shares outstanding – basic	148,832		155,927		148,821		156,327
Weighted-average common shares outstanding – diluted	148,832		156,136		148,821		156,607

(1)Rental and other property revenues for the three and six months ended June 30, 2023 are inclusive of $0.2 million and $0.5 million, respectively, of revenues related to sold properties. Rental and other property revenues for the three and six months ended June 30, 2022 are inclusive of $10.3 million and $25.5 million, respectively, of revenues related to sold properties. Property operating expenses for the six months ended June 30, 2023 are inclusive of $0.3 million of expenses related to sold properties. Property operating expenses for the three and six months ended June 30, 2022 are inclusive of $3.4 million and $8.9 million, respectively, of expenses related to sold properties.

(2)In setting our G&A benchmark of 15 bps of Gross Asset Value, we consider asset management fees earned in our joint ventures as a reduction of general and administrative expenses. In accordance with GAAP, general and administrative expenses are shown gross of these asset management fees. The California Joint Venture is consolidated on our balance sheet and accordingly, fees earned in this venture are included in the determination of net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships. The Washington D.C. area Joint Venture is not consolidated on our balance sheet and accordingly, fees earned in this venture are included in loss from unconsolidated real estate partnerships. Fees earned from joint ventures were $1.5 million and $3.0 million for three and six months ended June 30, 2023, respectively, and $1.7 million and $3.4 million for three and six months ended June 30, 2022, respectively. Beginning in the third quarter, AIR’s share of the Core and Value-Add Joint Ventures will be included within loss from unconsolidated real estate partnerships.


Consolidated Balance Sheets


(in thousands) (unaudited)


	June 30, 2023		December 31, 2022
Assets
Real estate	$	8,233,320	$	8,076,394
Accumulated depreciation	(2,562,252)		(2,449,883)
Net real estate	5,671,068		5,626,511
Cash and cash equivalents	106,349		95,797
Restricted cash	23,564		205,608
Goodwill	32,286		32,286
Other assets (1)	573,743		591,681
Total assets	$	6,407,010	$	6,551,883

Liabilities and Equity
Non-recourse property debt	$	2,211,002	$	1,994,651
Debt issue costs	(13,565)		(9,221)
Non-recourse property debt, net	2,197,437		1,985,430
Term loans, net	797,471		796,713
Revolving credit facility borrowings	292,000		462,000
Unsecured notes payable, net	397,669		397,486
Accrued liabilities and other (1)	476,400		513,805
Total liabilities	4,160,977		4,155,434

Preferred noncontrolling interests in AIR OP	77,143		77,143

Equity:
Perpetual Preferred Stock	2,000		2,000
Class A Common Stock	1,492		1,491
Additional paid-in capital	3,430,731		3,436,635
Accumulated other comprehensive income	39,343		43,562
Distributions in excess of earnings	(1,474,101)		(1,327,271)
Total AIR equity	1,999,465		2,156,417
Noncontrolling interests in consolidated real estate partnerships	(80,087)		(78,785)
Common noncontrolling interests in AIR OP	249,512		241,674
Total equity	2,168,890		2,319,306
Total Liabilities and Equity	$	6,407,010	$	6,551,883

(1)Other assets includes the Parkmerced mezzanine investment, and accrued liabilities and other includes the offsetting liabilities. The benefits and risks of ownership of the Parkmerced mezzanine investment have been transferred to Aimco, but legal transfer has not occurred. As of June 30, 2023, the Parkmerced mezzanine investment had an offsetting $158.5 million asset and liability balance. During the second quarter, the interest rate swap option asset and offsetting liability associated with the Parkmerced mezzanine investment was settled for approximately $53 million, resulting in equal decreases in other assets and accrued liabilities and other.


Supplemental Schedule 1


Funds From Operations Reconciliation Three and Six Months Ended June 30, 2023, Compared to Three and Six Months Ended June 30, 2022 (in thousands, except per share data) (unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net (loss) income attributable to AIR common stockholders	$	(1,439)	$	196,722	$	(12,896)	$	572,603
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest	83,749		73,922		173,761		155,379
Loss (gain) on dispositions and impairments of real estate, net of noncontrolling partners’ interest	17,472		(175,450)		17,472		(587,453)

Income tax adjustments related to gain on dispositions and other tax-related items	—		(1,100)		—		(1,100)
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities	(6,889)		6,328		(12,811)		26,577
NAREIT FFO attributable to AIR common stockholders	$	92,893	$	100,422	$	165,526	$	166,006
Adjustments:
Gain on derivative instruments (1)	(11,390)		—		(9,246)		—
Non-cash straight-line rent (2)	3,090		642		6,180		1,284
Business transformation and transition related costs (3)	310		1,593		523		2,462
Loss on extinguishment of debt (4)	—		—		2,008		23,636
Casualty losses and other	281		322		2,127		678
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities	533		(160)		(93)		(1,738)
Pro forma FFO attributable to AIR common stockholders	85,717		102,819		167,025		192,328

Weighted-average common shares outstanding – basic	148,832		155,927		148,821		156,327
Dilutive common share equivalents	55		209		65		280
Total shares and dilutive share equivalents	148,887		156,136		148,886		156,607

Net income attributable to AIR per share – diluted	$	(0.01)	$	1.26	$	(0.09)	$	3.66
NAREIT FFO per share – diluted	$	0.62	$	0.64	$	1.11	$	1.06
Pro forma FFO per share – diluted	$	0.58	$	0.66	$	1.12	$	1.23

(1)During 2023, in anticipation of future financing transactions, we entered into treasury locks that did not qualify for hedge accounting under GAAP. Changes in the fair value of these instruments are included in net (loss) income attributable to AIR common stockholders. Any non-cash changes in fair value is excluded in the determination of Pro forma FFO.

(2)In 2018 and 2022, we assumed 99-year ground leases with scheduled rent increases. Due to the terms of the leases, GAAP rent expense will exceed cash rent payments until 2076 and 2079, respectively. We include the cash rent payments for these ground leases in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. The rent expense for these leases is included in other expenses, net, in our condensed consolidated statements of operations.

(3)During 2023 and 2022, we incurred consulting, placement, legal, and other transformation related costs as we fully implement AIR’s business model, including projects intended to increase efficiency and reduce costs in future periods. As we engage in and finalize our finance transformation initiative that modernizes our systems and processes, including a new ERP system, we expect to continue to incur these costs throughout 2023. We excluded these costs from Pro forma FFO because we believe they are not related to ongoing operating performance.

(4)During 2023 and 2022, we incurred debt extinguishment costs related to the prepayment of debt. In 2023, these costs are related to the prepayment of high-cost, floating-rate debt. We excluded these costs from Pro forma FFO because we believe they are not representative of future cash flows.


Supplemental Schedule 2(a)


Funds From Operations Information Three and Six Months Ended June 30, 2023, Compared to Three and Six Months Ended June 30, 2022 (consolidated amounts, in thousands) (unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Revenues, before utility reimbursements
Same Store	$	174,000	$	160,241	$	345,325	$	316,262
Other Real Estate	29,684		3,718		59,500		4,952
Total revenues, before utility reimbursements	203,684		163,959		404,825		321,214
Expenses, net of utility reimbursements
Same Store	44,815		42,984		89,456		86,162
Other Real Estate	10,640		1,990		21,911		2,928
Total expenses, net of utility reimbursements	55,455		44,974		111,367		89,090
Net operating income	148,229		118,985		293,458		232,124
Lease income	379		6,533		758		13,067
Property management expenses, net	(6,356)		(5,775)		(12,642)		(11,117)
Property income	142,252		119,743		281,574		234,074

General and administrative expenses (1)	(4,613)		(3,691)		(10,413)		(8,725)

Interest expense	(37,554)		(26,027)		(73,741)		(48,134)
Loss on extinguishment of debt	—		—		(2,008)		(23,636)
Preferred dividends	(1,612)		(1,645)		(3,225)		(3,290)
Interest income	1,220		19,301		2,457		26,248
Total cost of capital	(37,946)		(8,371)		(76,517)		(48,812)

Casualty losses	(813)		(1,684)		(4,384)		(1,793)
Land leases	(4,720)		(1,324)		(9,440)		(2,645)
Income from unconsolidated real estate partnerships	261		775		310		1,904
Other income, net	2,201		4,400		2,993		1,703
Gain on derivative instruments	11,390		—		9,246		—
Tax (expense) benefit, net	(1,180)		(2,633)		(1,319)		(2,031)
NOI related to sold communities	251		6,920		323		16,530
Total other	7,390		6,454		(2,271)		13,668

Common noncontrolling interests in AIR OP	(6,630)		(6,583)		(11,763)		(10,756)
Proportionate adjustments	(7,560)		(7,130)		(15,084)		(13,443)

NAREIT FFO attributable to AIR common stockholders	$	92,893	$	100,422	$	165,526	$	166,006
Total pro forma adjustments, net of common noncontrolling interests in AIR OP and participating securities	(7,176)		2,397		1,499		26,322
Pro forma FFO attributable to AIR common stockholders	$	85,717	$	102,819	$	167,025	$	192,328

(1)In setting our G&A benchmark of less than 15 bps of Gross Asset Value, we consider asset management fees earned in our joint ventures as a reduction of general and administrative expenses. In accordance with GAAP, general and administrative expenses are shown gross of these asset management fees. The California Joint Venture is consolidated on our balance sheet and accordingly, fees earned in this venture are included in the determination of net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships. The Washington D.C. area Joint Venture is not consolidated on our balance sheet and accordingly, fees earned in this venture are included in loss from unconsolidated real estate partnerships. Asset management fees earned from joint ventures were $1.5 million and $3.0 million for three and six months ended June 30, 2023, respectively, and $1.7 million and $3.4 million for three and six months ended June 30, 2022, respectively.


Supplemental Schedule 2(b)


Funds from Operations Information, Partially Owned Entities Three and Six Months Ended June 30, 2023, Compared to Three and Six Months Ended June 30, 2022 (in thousands) (unaudited)

The building blocks of FFO and Pro forma FFO, as shown on Supplemental Schedule 2(a), are based on consolidated amounts, and therefore include the third-party share of consolidated joint ventures, and exclude AIR’s share of amounts from unconsolidated real estate partnerships. To arrive at AIR’s proportionate share of the individual line items, one must subtract the third-party share of consolidated amounts and add AIR’s share of unconsolidated joint ventures.

For example, Net Operating Income for the second quarter of 2023 of $148,229, as shown on Supplemental Schedule 2(a), plus AIR’s share of Net Operating Income from unconsolidated real estate partnerships of $1,581, as shown below, less the noncontrolling interests' share of Net Operating Income of $11,916, as shown below, computes AIR’s share of Net Operating Income for the second quarter of 2023 of $137,894.


	Noncontrolling Interests (1)				Unconsolidated (2)				Noncontrolling Interests (1)				Unconsolidated (2)
	Three Months Ended								Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Revenues, before utility reimbursements	$	15,951	$	15,120	$	2,131	$	1,954	$	31,453	$	29,700	$	4,211	$	3,843
Expenses, net of utility reimbursements	4,035		3,853		550		535		7,927		7,606		1,048		997
Net operating income	11,916		11,267		1,581		1,419		23,526		22,094		3,163		2,846

Property management expenses, net	(481)		(470)		(65)		(61)		(955)		(892)		(130)		(120)
Property income	11,435		10,797		1,516		1,358		22,571		21,202		3,033		2,726

Interest expense on non-recourse property debt	(3,745)		(3,791)		(1,538)		(649)		(7,509)		(7,552)		(2,738)		(1,194)
Casualty (loss) gain	(65)		251		(6)		(3)		154		210		(8)		(6)
Other expenses, net	(65)		(127)		289		69		(132)		(417)		23		378
Funds From Operations	$	7,560	$	7,130	$	261	$	775	$	15,084	$	13,443	$	310	$	1,904

Total apartment communities	15		16		4		3
Total apartment homes	5,041		5,369		2,191		1,748
Noncontrolling interests’ share of consolidated apartment homes/AIR share of unconsolidated apartment homes	1,664		1,721		571		350

(1)Amounts represent the noncontrolling interests’ proportionate share of consolidated amounts, including the amounts related to the California Joint Venture.

(2)Amounts represent AIR’s proportionate share of the operations of four unconsolidated properties including the Washington, D.C. Joint Venture and the Value-Add Joint Venture.


Supplemental Schedule 3


Property Net Operating Income Trailing Five Quarters (in thousands) (unaudited)


	Three Months Ended
	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022
Consolidated Property NOI
Revenues, before utility reimbursements
Same Store	$	174,000	$	171,325	$	170,217	$	166,800	$	160,241
Other Real Estate	29,684		29,816		22,803		15,434		3,718
Total revenues, before utility reimbursements	203,684		201,141		193,020		182,234		163,959

Expenses, net of utility reimbursements
Same Store	44,815		44,641		41,844		43,674		42,984
Other Real Estate	10,640		11,271		7,518		5,824		1,990
Total expenses, net of utility reimbursements	55,455		55,912		49,362		49,498		44,974

Property Net Operating Income
Same Store	129,185		126,684		128,373		123,126		117,257
Other Real Estate	19,044		18,545		15,285		9,610		1,728
Total Property Net Operating Income	$	148,229	$	145,229	$	143,658	$	132,736	$	118,985

NOI related to communities sold and held for sale	$	251	$	72	$	2,935	$	5,641	$	6,909

Noncontrolling interests' share of NOI (1)	$	(11,916)	$	(11,610)	$	(11,677)	$	(11,276)	$	(11,267)

AIR's share of unconsolidated apartment community NOI (1)	$	1,581	$	1,582	$	1,596	$	1,582	$	1,419

(1)Represents either noncontrolling interests' share of 15 consolidated apartment communities or AIR’s share of three unconsolidated apartment communities included in the Washington D.C. area Joint Venture. Beginning in the third quarter, AIR’s share of unconsolidated apartment communities will include our share of the Core and Value-Add Joint Ventures. Total Property Net Operating Income, as shown above, is based on consolidated amounts, and therefore include the third-party share of consolidated joint ventures, and exclude AIR’s share of amounts from unconsolidated real estate partnerships. To arrive at AIR’s proportionate share of Property Net Operating Income, one must subtract the third-party share of consolidated amounts and add AIR’s share of unconsolidated joint ventures.


Supplemental Schedule 4


Apartment Home Summary As of June 30, 2023 (unaudited)


	Number of Apartment Communities	Number of Apartment Homes	AIR Share of Apartment Homes

Same Store (1)	63	22,794	19,510
Other Real Estate (2)	10	2,945	2,945
Total Portfolio	73	25,739	22,455

Land and land interests leased (3)	2

(1)During the second quarter of 2023, AIR's share of apartment homes decreased by 222 homes due to closing of the Value Add Joint Venture, and increased by 39 homes due to the buyout of limited partner interests in one of our Same Store apartment communities. Our Same Store portfolio now includes four unconsolidated communities with 2,191 homes, of which AIR’s share is 571 homes.

(2)During the second quarter of 2023, our Other Real Estate portfolio decreased due to the sale of two properties in New York.

(3)Land and land interests have a fair value of approximately $33 million.


Supplemental Schedule 5(a)


Capitalization and Financial Metrics As of June 30, 2023 (dollars in thousands) (unaudited)


Leverage Balances and Characteristics
													Pro Forma (1)

Debt	Consolidated		AIR Share of Unconsolidated Partnerships		Noncontrolling Interests		Total AIR Share		Weighted- Average Maturity (Years)		Weighted- Average Interest Rate		Total AIR Share		Weighted- Average Maturity (Years)	Weighted- Average Interest Rate
Fixed rate loans payable	$	2,211,002	$	26,505	$	(466,200)	$	1,771,307	9.0		3.6	%	$	2,107,826	8.3	3.9	%
Floating rate loans payable	—		79,000		—		79,000		3.5		5.4	%	79,000		3.5	5.4	%
Non-recourse property debt	$	2,211,002	$	105,505	$	(466,200)	$	1,850,307	8.7		3.7	%	$	2,186,826	8.2	3.9	%

Term loans (2)	800,000		—		—		800,000		2.5	(3)	4.7	%	475,000		2.6	3.3	%
Unsecured notes payable	400,000		—		—		400,000		7.0		4.3	%	400,000		7.0	4.3	%
Revolving credit facility borrowings	292,000		—		—		292,000		2.8	(3)	5.9	%	—		—	—	%
Preferred equity	79,143		—		—		79,143		9.8	(4)	8.1	%	79,143		9.8	8.1	%
Total leverage	$	3,782,145	$	105,505	$	(466,200)	$	3,421,450	6.6		4.3	%	$	3,140,969	7.2	4.0	%

Cash and restricted cash (5)	(118,281)		(2,764)		11,846		(109,199)						(280,622)
Net leverage	$	3,663,864	$	102,741	$	(454,354)	$	3,312,251					$	2,860,347


Leverage Ratios Second Quarter 2023 (6)

	Annualized Current Quarter	Annualized Current Quarter Pro forma for the Core Joint Venture Transaction (1)
Proportionate Debt to Adjusted EBITDAre	6.3x	5.7x
Net Leverage to Adjusted EBITDAre	6.5x	5.9x

Unsecured Debt Covenants

June 30, 2023

Covenant

Fixed Charge Coverage Ratio

3.13x

1.50x

Leverage Ratio

37.9%

≤ 60.0%

Secured Indebtedness Ratio

20.9%

≤ 40.0%

Unsecured Leverage Ratio

40.1%

≤ 60.0%

(1)In July 2023, AIR completed the Core Joint Venture. As part of the transaction, AIR raised $611 million in new mortgage financing. In aggregate, the joint venture partner took title subject to $275 million of the total mortgage obligation reflecting its 47% share of the property debt and AIR received $185 million in cash. We anticipate upon the closing of the final two properties, the joint venture partner will take title subject to $28 million of the related mortgage obligation, and AIR will receive $17 million in additional cash. Proceeds, net of transaction costs, were used to repay $292 million on the revolving credit facility, $325 million of term loans, with the remaining invested in short-term liquid investments.

(2)$350 million of our $800 million term loans are fixed using interest rate swaps at a weighted-average all-in cost of 4.3%. In the second quarter, in anticipation of the Core Joint Venture, AIR entered into $480 million of pay floating, receive fixed interest rate swaps which economically offset $480 million of the previously issued pay fixed, receive floating interest rate swaps. As a result of these instruments, we will receive monthly fixed interest income representing the spread between the pay-fixed and receive-fixed legs of our interest rate swap positions, over a weighted-average term of 3.4 years. Using proceeds from this joint venture, AIR repaid $325 million of term loans. The net result of the term loan repayment and the offsetting interest rate swaps is a fixed interest rate of 3.3% on our remaining $475 million of term loans. After consideration for the term loan repayment and offsetting interest rate swaps, AIR's floating rate exposure is now $125 million, or 4%, of total leverage.

(3)Assumes exercise of extension options.

(4)Our preferred OP Units are redeemable at the holder’s option and our preferred stock is redeemable by AIR on or after December 15, 2025. We have computed the weighted-average maturity of our preferred OP Units assuming a 10-year maturity and preferred stock assuming it is called at the expiration of the no-call period.

(5)Restricted cash on the balance sheet includes tenant security deposits, which are excluded for purposes of calculating our net leverage.

(6)We calculate Adjusted EBITDAre used in our leverage ratios based on annualized current quarter amounts. Our Adjusted EBITDAre has been calculated on a pro forma basis as further described in the Glossary. We target a Net Leverage to Adjusted EBITDAre ratio between 5.0x and 6.0x, but anticipate the ratio will vary based on the timing of transactions.


Supplemental Schedule 5(b)


Capitalization and Financial Metrics As of June 30, 2023 (dollar amounts in thousands) (unaudited)


AIR Share of Non-Recourse Property Debt, Term Loans, and Unsecured Notes Payable

	Amortization		Maturities		Sub-Total Non-Recourse Property Debt		Unsecured Debt (1)			Total		Maturities as a Percent of Total		Average Rate on Maturing Debt

2023 Q3	$	6,318	$	—	$	6,318	$	—		$	6,318	—	%	—	%
2023 Q4	6,377		—		6,377		—			6,377		—	%	—	%
Total 2023	12,695		—		12,695		—			12,695		—	%	—	%

2024 Q1	6,429		—		6,429		—			6,429		—	%	—	%
2024 Q2	6,475		—		6,475		—			6,475		—	%	—	%
2024 Q3	6,528		—		6,528		—			6,528		—	%	—	%
2024 Q4	6,731		—		6,731		—			6,731		—	%	—	%
Total 2024	26,163		—		26,163		—			26,163		—	%	—	%

2025	24,549		285,721		310,270		600,000		(2)(3)	910,270		29.0	%	4.3	%
2026	20,384		98,790		119,174		200,000		(3)	319,174		9.8	%	4.2	%
2027	18,905		127,565		146,470		100,000			246,470		7.5	%	4.4	%
2028	15,245		129,257		144,502		—			144,502		4.2	%	4.0	%
2029	15,541		40,877		56,418		100,000			156,418		4.6	%	4.0	%
2030	13,727		267,939		281,666		—			281,666		8.8	%	3.1	%
2031	7,915		149,475		157,390		—			157,390		4.9	%	3.0	%
2032	7,632		67,368		75,000		200,000			275,000		8.8	%	4.0	%
Thereafter	143,181		377,378		520,559		—			520,559		12.4	%	4.9	%
Total	$	305,937	$	1,544,370	$	1,850,307	$	1,200,000		$	3,050,307	90.0	%	4.1	%

(1)Includes $800 million of term loans and $400 million of unsecured notes payable.

(2)Amount shown is assuming exercise of extension options.

(3)Proceeds from the Core Joint Venture transaction were used to repay $292 million of borrowings on the revolving credit facility and $325 million of 2025 maturities.


Preferred Equity

	Amount Outstanding as of June 30, 2023	Date First Available for Redemption by AIR	Coupon		Amount
Class A Perpetual Preferred Stock	20	December 2025	8.50	%	$	2,000
Preferred Partnership Units	2,846,574	n/a	8.14	%	77,143
Total Preferred Equity			8.15	%	$	79,143


Common Stock, Partnership Units and Equivalents (shares and units in thousands)

			June 30, 2023
Class A Common Stock outstanding			148,783
Participating unvested restricted stock			135
Dilutive options, share equivalents and non-participating unvested restricted stock			236
Total shares and dilutive share equivalents			149,154
Common Partnership Units and equivalents outstanding			11,046
Total shares, units, and dilutive share equivalents			160,200


Supplemental Schedule 6(a)


Same Store Operating Results Three Months Ended June 30, 2023, Compared to Three Months Ended June 30, 2022 (proportionate amounts, in thousands, except community, home, and per home data) (unaudited)

The table below presents AIR’s Same Store portfolio as of June 30, 2023.


				Revenues, Before Utility Reimbursements						Expenses, Net of Utility Reimbursements						Net Operating Income						Net Operating Income Margin	Average Daily Occupancy During Period		Average Revenue per AIR Apartment Home
	Apartment Communities	Apartment Homes	AIR Share of Apartment Homes	2Q 2023		2Q 2022		Growth		2Q 2023		2Q 2022		Growth		2Q 2023		2Q 2022		Growth		2Q 2023	2Q 2023	2Q 2022	2Q 2023		2Q 2022
Bay Area	7	1,967	1,412	$	13,843	$	13,161	5.2	%	$	3,484	$	3,428	1.6	%	$	10,359	$	9,733	6.4	%	74.8%	95.8%	97.2%	$	3,412	$	3,196
Boston	5	1,148	1,148	11,101		10,258		8.2	%	3,051		3,172		(3.8	%)	8,050		7,086		13.6	%	72.5%	95.5%	96.8%	3,376		3,076
Denver	7	2,027	2,027	12,350		11,425		8.1	%	3,133		2,917		7.4	%	9,217		8,508		8.3	%	74.6%	95.7%	95.6%	2,121		1,965
Washington, D.C. (1)	10	5,489	3,864	23,950		21,260		12.7	%	6,384		6,363		0.3	%	17,566		14,897		17.9	%	73.3%	96.6%	97.0%	2,138		1,890
Los Angeles	9	3,815	2,966	31,217		30,181		3.4	%	6,722		6,180		8.8	%	24,495		24,001		2.1	%	78.5%	95.9%	97.7%	3,658		3,471
Miami	6	2,425	2,425	20,933		17,501		19.6	%	6,152		5,742		7.1	%	14,781		11,759		25.7	%	70.6%	92.6%	94.5%	3,107		2,545
Philadelphia	9	2,748	2,669	22,723		21,155		7.4	%	5,891		5,925		(0.6	%)	16,832		15,230		10.5	%	74.1%	95.0%	96.3%	2,988		2,744
San Diego	6	2,367	2,191	17,144		15,643		9.6	%	3,415		3,266		4.6	%	13,729		12,377		10.9	%	80.1%	97.6%	97.4%	2,675		2,443
Other Markets	4	808	808	5,561		5,366		3.6	%	2,756		2,397		15.0	%	2,805		2,969		(5.5	%)	50.4%	93.7%	96.4%	2,448		2,296
Total	63	22,794	19,510	$	158,822	$	145,950	8.8	%	$	40,988	$	39,390	4.1	%	$	117,834	$	106,560	10.6	%	74.2%	95.5%	96.6%	$	2,840	$	2,581

(1)Includes AIR’s share of results of four unconsolidated apartment communities.


Supplemental Schedule 6(b)


Same Store Operating Results Three Months Ended June 30, 2023, Compared to Three Months Ended March 31, 2023 (proportionate amounts, in thousands, except community, home, and per home data) (unaudited)

The table below presents AIR’s Same Store portfolio as of June 30, 2023.


				Revenues, Before Utility Reimbursements						Expenses, Net of Utility Reimbursements						Net Operating Income						Net Operating Income Margin	Average Daily Occupancy During Period		Average Revenue per AIR Apartment Home
	Apartment Communities	Apartment Homes	AIR Share of Apartment Homes	2Q 2023		1Q 2023		Growth		2Q 2023		1Q 2023		Growth		2Q 2023		1Q 2023		Growth		2Q 2023	2Q 2023	1Q 2023	2Q 2023		1Q 2023
Bay Area	7	1,967	1,412	$	13,843	$	13,744	0.7	%	$	3,484	$	3,553	(1.9	%)	$	10,359	$	10,191	1.6	%	74.8%	95.8%	98.0%	$	3,412	$	3,310
Boston	5	1,148	1,148	11,101		11,256		(1.4	%)	3,051		3,277		(6.9	%)	8,050		7,979		0.9	%	72.5%	95.5%	98.3%	3,376		3,324
Denver	7	2,027	2,027	12,350		12,405		(0.4	%)	3,133		2,733		14.6	%	9,217		9,672		(4.7	%)	74.6%	95.7%	98.2%	2,121		2,078
Washington, D.C. (1)	10	5,489	3,864	23,950		23,739		0.9	%	6,384		6,450		(1.0	%)	17,566		17,289		1.6	%	73.3%	96.6%	98.3%	2,138		2,084
Los Angeles	9	3,815	2,966	31,217		30,056		3.9	%	6,722		6,546		2.7	%	24,495		23,510		4.2	%	78.5%	95.9%	97.4%	3,658		3,466
Miami	6	2,425	2,425	20,933		20,663		1.3	%	6,152		6,135		0.3	%	14,781		14,528		1.7	%	70.6%	92.6%	94.8%	3,107		2,997
Philadelphia	9	2,748	2,669	22,723		22,430		1.3	%	5,891		5,985		(1.6	%)	16,832		16,445		2.4	%	74.1%	95.0%	97.4%	2,988		2,875
San Diego	6	2,367	2,191	17,144		16,810		2.0	%	3,415		3,568		(4.3	%)	13,729		13,242		3.7	%	80.1%	97.6%	98.2%	2,675		2,604
Other Markets	4	808	808	5,561		5,448		2.1	%	2,756		2,597		6.1	%	2,805		2,851		(1.6	%)	50.4%	93.7%	95.3%	2,448		2,359
Total	63	22,794	19,510	$	158,822	$	156,551	1.5	%	$	40,988	$	40,844	0.4	%	$	117,834	$	115,707	1.8	%	74.2%	95.5%	97.4%	$	2,840	$	2,745

(1)Includes AIR’s share of results of four unconsolidated apartment communities.


Supplemental Schedule 6(c)


Same Store Operating Results Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022 (proportionate amounts, in thousands, except community, home, and per home data) (unaudited)

The table below presents AIR’s Same Store portfolio as of June 30, 2023.


				Revenues, Before Utility Reimbursements						Expenses, Net of Utility Reimbursements						Net Operating Income						Net Operating Income Margin	Average Daily Occupancy During Period		Average Revenue per AIR Apartment Home
	Apartment Communities	Apartment Homes	AIR Share of Apartment Homes	YTD 2Q 2023		YTD 2Q 2022		Growth		YTD 2Q 2023		YTD 2Q 2022		Growth		YTD 2Q 2023		YTD 2Q 2022		Growth		YTD 2Q 2023	YTD 2Q 2023	YTD 2Q 2022	YTD 2Q 2023		YTD 2Q 2022
Bay Area	7	1,967	1,412	$	27,587	$	26,077	5.8	%	$	7,037	$	6,786	3.7	%	$	20,550	$	19,291	6.5	%	74.5%	96.9%	97.8%	$	3,361	$	3,146
Boston	5	1,148	1,148	22,357		20,579		8.6	%	6,328		6,259		1.1	%	16,029		14,320		11.9	%	71.7%	96.9%	97.7%	3,350		3,059
Denver	7	2,027	2,027	24,755		22,771		8.7	%	5,865		5,517		6.3	%	18,890		17,254		9.5	%	76.3%	97.0%	97.0%	2,099		1,930
Washington, D.C. (1)	10	5,489	3,864	47,689		42,614		11.9	%	12,836		12,972		(1.0	%)	34,853		29,642		17.6	%	73.1%	97.4%	97.4%	2,111		1,888
Los Angeles	9	3,815	2,966	61,273		58,402		4.9	%	13,268		12,385		7.1	%	48,005		46,017		4.3	%	78.3%	96.7%	98.1%	3,562		3,345
Miami	6	2,425	2,425	41,596		34,328		21.2	%	12,287		11,597		5.9	%	29,309		22,731		28.9	%	70.5%	93.7%	95.4%	3,051		2,473
Philadelphia	9	2,748	2,669	45,153		41,956		7.6	%	11,876		12,031		(1.3	%)	33,277		29,925		11.2	%	73.7%	96.2%	97.0%	2,931		2,702
San Diego	6	2,367	2,191	33,954		30,788		10.3	%	6,982		6,520		7.1	%	26,972		24,268		11.1	%	79.4%	97.9%	98.0%	2,639		2,391
Other Markets	4	808	808	11,010		10,642		3.5	%	5,354		4,837		10.7	%	5,656		5,805		(2.6	%)	51.4%	94.5%	97.1%	2,403		2,262
Total	63	22,794	19,510	$	315,374	$	288,157	9.4	%	$	81,833	$	78,904	3.7	%	$	233,541	$	209,253	11.6	%	74.1%	96.5%	97.2%	$	2,792	$	2,531

(1)Includes AIR’s share of results of four unconsolidated apartment communities.


Supplemental Schedule 6(d)


Same Store Operating Expense Detail (proportionate amounts, in thousands) (unaudited)


Quarterly Comparison


	2Q 2023		% of Total		2Q 2022		$ Change		% Change
Operating expenses (1)	$	20,791	50.7	%	$	20,589	$	202	1.0	%
Utility expense, net of reimbursement	1,382		3.4	%	1,987		(605)		(30.4	%)
Real estate taxes	16,078		39.2	%	14,716		1,362		9.3	%
Insurance	2,737		6.7	%	2,098		639		30.5	%
Total	$	40,988	100.0	%	$	39,390	$	1,598	4.1	%


Sequential Comparison


	2Q 2023		% of Total		1Q2023		$ Change		% Change
Operating expenses (1)	$	20,791	50.7	%	$	19,193	$	1,598	8.3	%
Utility expense, net of reimbursement	1,382		3.4	%	2,714		(1,332)		(49.1	%)
Real estate taxes	16,078		39.2	%	15,978		100		0.6	%
Insurance	2,737		6.7	%	2,959		(222)		(7.5	%)
Total	$	40,988	100.0	%	$	40,844	$	144	0.4	%


Year-to-Date Comparison


	YTD 2Q 2023		% of Total		YTD 2Q 2022		$ Change		% Change
Operating expenses (1)	$	39,985	48.9	%	$	39,782	$	203	0.5	%
Utility expense, net of reimbursement	4,096		5.0	%	4,453		(357)		(8.0	%)
Real estate taxes	32,056		39.2	%	30,442		1,614		5.3	%
Insurance	5,696		6.9	%	4,227		1,469		34.8	%
Total	$	81,833	100.0	%	$	78,904	$	2,929	3.7	%

(1)Includes onsite payroll, repairs and maintenance, software and technology expenses, marketing, expensed turnover costs, and other property related operating expenses.


Supplemental Schedule 7


Portfolio Data by Market Second Quarter 2023 Compared to Second Quarter 2022 (proportionate amounts) (unaudited)


	Quarter Ended June 30, 2023							Quarter Ended June 30, 2022
	Apartment Communities	Apartment Homes	AIR Share of Apartment Homes	% AIR NOI (1)		Average Revenue per AIR Apartment Home		Apartment Communities	Apartment Homes	AIR Share of Apartment Homes	% AIR NOI (1)		Average Revenue per AIR Apartment Home
Bay Area	8	2,077	1,522	8.4	%	$	3,435	7	1,967	1,412	8.6	%	$	3,196
Boston	6	1,284	1,284	6.7	%	3,345		11	2,462	2,462	11.5	%	2,600
Denver	8	2,280	2,280	7.8	%	2,129		7	2,027	1,988	7.4	%	1,976
Washington, D.C.	11	6,018	4,393	15.0	%	2,170		11	6,011	4,589	13.8	%	1,935
Los Angeles	9	3,815	2,966	18.4	%	3,658		9	3,815	2,966	21.3	%	3,471
Miami	10	3,967	3,967	18.7	%	3,413		7	2,721	2,721	10.9	%	2,659
Philadelphia	9	2,748	2,669	11.8	%	2,822		9	2,748	2,669	12.4	%	2,572
San Diego	6	2,367	2,191	10.3	%	2,675		6	2,367	2,192	11.0	%	2,443
Other Markets	6	1,183	1,183	2.9	%	2,409		8	1,245	1,245	3.1	%	2,196
Total	73	25,739	22,455	100.0	%	$	2,870	75	25,363	22,244	100.0	%	$	2,528

(1)NOI represents the operating results of apartment communities including ancillary commercial rents. NOI does not include any office related rents or other material commercial rents.


Supplemental Schedule 8


Apartment Community Disposition and Acquisition Activity (dollars in millions, except average revenue per home) (unaudited)

Dispositions (1)

Number of Apartment
Communities

Number of
Apartment
Homes

Weighted-
Average
Ownership

Gross
Proceeds

NOI Cap
Rate

Free Cash
Flow Cap
Rate

Property
Debt

Net Sales
Proceeds (2)

Average Revenue
per Home

Second Quarter and Full Year 2023 Dispositions

100.0%

$33.2

$—

$32.1

$2,526

Acquisitions

Apartment Community Name

Location

Month
Acquired

Apartment
Homes

Purchase
Price

Average Revenue per Apartment Home (3)

2023 Acquisitions

Southgate Towers

Miami Beach, FL

January

495

$298.0

$2,693

(1)During the second quarter, we formed a joint venture with a global asset manager through the sale of a 70% interest in our Huntington Gateway property, a 443-unit property located in the Washington, D.C. area, in exchange for $9 million in cash and the assumption of $94.1 million in debt by the joint venture.

(2)Net Sales Proceeds are after repayment of debt, if any, net working capital settlements, payment of transaction costs and debt prepayment penalties, if applicable.

(3)Represents average revenue per apartment home for leases in place at the time of acquisition.


Supplemental Schedule 9


Apartment Community Capital Investment Information Three and Six Months Ended June 30, 2023 (proportionate amounts, in thousands, except per apartment home data) (unaudited)

We classify capital investments as Capital Replacements (“CR”), Capital Improvements (“CI”), Capital Enhancements (“CE”), or Other Capital Expenditures. Recurring capital investments are apportioned between CR and CI based on the useful life of the item under consideration and the period over which we have owned the item. Under this method of classification, CR represents the portion of the item consumed during our ownership of the item, while CI represents the portion of the item consumed prior to our period of ownership.

The table below includes our capital spend in proportionate amounts, adjusted to remove the third-party share of consolidated amounts and to include our share of unconsolidated amounts, and excludes amounts related to properties sold or classified as held for sale.


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Capital Investments (1)
Capital Replacements
Buildings and grounds	$	8,577	$	13,940
Turnover capital investments	841		1,328
Capitalized site payroll and indirect costs	522		884
Capital Replacements	9,940		16,152
Capital Improvements	2,723		6,070
Capital Enhancements	26,830		41,971
Initial Capital Expenditures	10,352		16,813
Casualty	1,442		4,118
Entitlement and Planning	124		123
Total capital additions	$	51,411	$	85,247

Total AIR share of apartment homes	25,739		25,739

Capital Replacements per apartment home	$	386	$	628

(1)For the three and six months ended June 30, 2023, capital investments for our apartment communities included $0.4 million and $0.7 million, respectively, of capitalized interest costs.


GLOSSARY AND RECONCILIATIONS OF NON-GAAP FINANCIAL AND OPERATING MEASURES


This Earnings Release and Supplemental Information include certain financial and operating measures used by AIR management that are not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). Our definitions and calculations of these non-GAAP financial and operating measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial and operating measures should not be considered an alternative to GAAP net income or any other GAAP measurement of performance and should not be considered an alternative measure of liquidity.

AIR OPERATING PARTNERSHIP: Apartment Income REIT, L.P., a Delaware limited partnership, is the operating partnership in AIR’s UPREIT structure. AIR owns approximately 91.3% of the legal interest in the common partnership units of the AIR Operating Partnership and 93.1% of the economic interest in the common partnership units of the AIR Operating Partnership.

AIR PROPORTIONATE FINANCIAL INFORMATION: Within this Earnings Release and Supplemental Information, we provide certain financial information necessary to calculate our share of financial information. This information is not, nor is it intended to be, a presentation in accordance with GAAP. Our proportionate share of financial information includes our share of unconsolidated real estate partnerships and excludes the noncontrolling interest partners’ share of consolidated real estate partnerships.

We do not control the unconsolidated real estate partnerships and the calculation of our share of the assets and liabilities and revenues and expenses does not represent a legal claim to a proportionate share of such items. The amount of cash distributions partners in such partnerships may receive is based upon specific provisions in the partnership agreements and may vary based on whether such distributions are generated from operations, capital events or liquidation.

Proportionate information benefits the users of our financial information by providing the amount of revenues, expenses, assets, liabilities, and other items attributable to our stockholders. Other companies may calculate their proportionate information differently than we do, limiting the usefulness as a comparative measure. Because of these limitations, the non-GAAP AIR proportionate financial information should not be considered in isolation or as a substitute for information included in our financial statements as reported under GAAP.

AVERAGE REVENUE PER APARTMENT HOME: Represents our proportionate average monthly rental and other property revenues, excluding utility cost reimbursements, divided by the number of occupied apartment homes as of the end of the period.

CAPITAL INVESTMENTS DEFINITIONS

CAPITAL IMPROVEMENTS (CI): CI represent capital investments made to replace the portion of acquired apartment communities consumed prior to our period of ownership and not contemplated in our underwriting of an acquisition.

CAPITAL REPLACEMENTS (CR): Unlike CI, CR does not increase the useful life of an asset from its original purchase condition. CR represent capital investments made to replace the portion of acquired capital assets consumed during our period of ownership.

CAPITAL ENHANCEMENTS (CE): CE may include kitchen and bath remodeling; energy conservation projects; and investments in longer-lived materials designed to reduce costs. CE does not significantly disrupt property operations.

INITIAL CAPITAL EXPENDITURES (ICE): ICE represent capital investments contemplated in the underwriting at our recently acquired communities. These amounts are considered in the underwriting of the acquisition and are therefore included when determining expected returns.

CASUALTY: Casualty capital investments represent capitalized costs incurred in connection with the restoration of an apartment community after a casualty event.

FREE CASH FLOW: Free Cash Flow, as calculated for our retained portfolio, represents an apartment community’s property net operating income, less spending for Capital Replacements. Capital Replacement spending is a measure of the cost of capital asset used during the period. We believe that Free Cash Flow is useful to investors as a supplemental measure of apartment community performance because it takes into consideration costs incurred during the period to replace capital assets that have been consumed during our ownership.

FREE CASH FLOW CAP RATE: Free Cash Flow Cap Rate represents the NOI Cap Rate, adjusted for assumed Capital Replacements spending of $1,200 per apartment home.

FREE CASH FLOW MARGIN: Free Cash Flow Margin represents an apartment community’s property net operating income less $1,200 per apartment home of assumed annual Capital Replacement spending, as a percentage of the apartment community’s rental and other property revenues.

LEVERAGE RATIO DEFINITIONS

We target Net Leverage to Adjusted EBITDAre between 5.0x and 6.0x. We also focus on Proportionate Debt to Adjusted EBITDAre. We believe these ratios, which are based in part on non-GAAP financial information, are commonly used by investors and analysts to assess the relative financial risk associated with balance sheets of companies within the same industry, and they are believed to be similar to measures used by rating agencies to assess entity credit quality. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as indicators of performance. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is comparable with that of other real estate investment trusts.

Our net leverage includes our share of long-term, non-recourse property debt, outstanding borrowings on our revolving credit facility, term loans, unsecured notes payable, and preferred equity, reduced by cash and restricted cash on-hand, excluding tenant security deposits. We reconcile consolidated balances to our net leverage on Supplemental Schedule 5(a).

We calculate Adjusted EBITDAre used in our leverage ratios based on annualized current quarter amounts.

EBITDAre AND ADJUSTED EBITDAre

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION FOR REAL ESTATE (“EBITDAre”): NAREIT defines EBITDAre as net income computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, further adjusted for:

•gains and losses on dispositions of depreciated property;

•impairment write-downs of depreciated property; and

•adjustments to reflect our share of EBITDAre of investments in unconsolidated entities and consolidated entities with non-controlling interests.

We believe that EBITDAre is useful to investors, creditors and rating agencies as a supplemental measure of our ability to incur and service debt because it is a recognized measure of performance by the real estate industry and facilitates comparison of credit strength between AIR and other companies.

ADJUSTED EBITDAre: Adjusted EBITDAre is defined as EBITDAre adjusted for the effect of the following items for the reasons set forth below:

•the amount by which GAAP rent expense exceeds cash rent payments for two long-term ground leases until 2076 and 2079 is excluded. The excess of GAAP rent expense over the cash payments for these leases does not reflect a current obligation that affects our ability to service debt; and

•applicable Pro forma FFO adjustments to NAREIT FFO per Supplemental Schedule 1 to exclude certain amounts that are unique or occur infrequently.

A reconciliation of net income to EBITDAre and Adjusted EBITDAre for our portfolio for the quarter ended June 30, 2023, is as follows (in thousands, unaudited):


	Quarter Ended June 30, 2023
Net income	$	598
Adjustments:
Interest expense	37,554

Income tax expense	1,177
Depreciation and amortization	89,260
Loss on dispositions and impairments of real estate	17,472


Net income attributable to noncontrolling interests in consolidated real estate partnerships	(684)
EBITDAre adjustments attributable to noncontrolling interests and unconsolidated real estate partnerships	(6,765)
EBITDAre	$	138,612
Pro forma FFO and other adjustments, net (1)	(8,554)
Quarterly Adjusted EBITDAre	$	130,058
Adjusted EBITDAre, before removal of annualization impact for non-recurring items	$	520,232

Removal of annualization impact for non-recurring items (2)	(7,218)
Adjusted EBITDAre	$	513,014
Core Joint Venture transaction, annualized	(27,410)
Pro forma Adjusted EBITDAre	$	485,604

(1)Includes applicable Pro forma adjustments to NAREIT FFO per Supplemental Schedule 1, and an adjustment of $0.8 million to reflect the disposition of two properties and the Value-Add Joint Venture, as if the transactions closed on April 1, 2023.

(2)Second quarter 2023 EBITDAre benefits from $2.4 million of items that are not expected to recur in the future. As such, they were not annualized in the computation of Adjusted EBITDAre.

FIXED CHARGE COVERAGE RATIO: As defined by our credit agreement, the ratio of (a) EBITDA to (b) fixed charges, which represent the sum of (i) our proportionate share of interest expense (excluding prepayment penalties and amortization of debt issuance costs), (ii) debt amortization, and (iii) Preferred Dividends, for the four fiscal quarters preceding the date of calculation. The calculation of certain of these measures as defined by our Credit Agreement may differ from those used in the calculations of our Leverage Ratios.

PREFERRED DIVIDENDS: Preferred Dividends include dividends paid with respect to AIR’s Preferred Stock and the AIR OP’s Preferred Partnership Units, exclusive of preferred equity redemption related amounts.

PREFERRED EQUITY: Preferred equity represents the redemption amounts for AIR’s Preferred Stock and the AIR OP’s Preferred Partnership Units and may be found in AIR’s consolidated balance sheets and on Supplemental Schedule 5(b).

OTHER LEVERAGE: Other Leverage includes Preferred OP Units and redeemable noncontrolling interests.

PREFERRED OP UNITS: Preferred OP Units represent the redemption amounts for the AIR OP’s Preferred Partnership Units and may be found in our consolidated balance sheets and on Supplemental Schedule 5(b).

PROPORTIONATE DEBT TO ADJUSTED EBITDAre RATIO: The ratio of (a) our share of net leverage as calculated on Supplemental Schedule 5(a), excluding Preferred Equity, to (b) Annualized Adjusted EBITDAre.

NET LEVERAGE TO ADJUSTED EBITDAre RATIO: The ratio of (a) our share of net leverage as calculated on Supplemental Schedule 5(a), to (b) Annualized Adjusted EBITDAre.

NAREIT FUNDS FROM OPERATIONS (NAREIT FFO): NAREIT FFO is a commonly used measure of REIT performance, which the National Association of Real Estate Investment Trusts (NAREIT) defines as net income computed in accordance with GAAP, excluding: (i) depreciation and amortization related to real estate; (ii) gains and losses from sales or impairment of depreciable assets and land used in the primary business of the REIT; (iii) and income taxes directly associated with a gain or loss on sale of real estate; and including (iv) our share of NAREIT FFO of unconsolidated partnerships and joint ventures. We compute NAREIT FFO for all periods presented in accordance with the guidance set forth by NAREIT.

In addition to NAREIT FFO, we use PRO FORMA FUNDS FROM OPERATIONS (Pro forma FFO) and PRO FORMA RUN RATE FUNDS FROM OPERATIONS (Pro forma Run Rate FFO).

Pro forma FFO is used to measure short-term performance. Pro forma FFO represents NAREIT FFO as defined above, excluding certain amounts that are unique or occur infrequently. Our pro forma adjustments are defined in further detail in the footnotes to Supplemental Schedule 1.

Pro forma Run Rate FFO is used to provide a stabilized view of current performance that would be indicative of long-term performance. Pro forma run rate FFO represents Pro forma FFO as defined above, excluding certain amounts that are unique or occur infrequently.

NAREIT FFO and Pro forma FFO are non-GAAP measures that we believe are helpful to investors in understanding our short-term performance because they capture features particular to real estate performance by recognizing that real estate assets generally appreciate over time or maintain residual value to a much greater extent than other capital assets such as machinery, computers or other personal property. NAREIT FFO and Pro forma FFO should not be considered alternatives to net income as determined in accordance with GAAP, as indicators of performance. There can be no assurance that our method of computing NAREIT FFO and Pro forma FFO is comparable with that of other real estate investment trusts.

NET OPERATING INCOME (NOI) CAP RATE: NOI Cap Rate is calculated based on our share of the proportionate property NOI for the trailing twelve months prior to sale, less a 3% management fee, divided by gross proceeds.

NET OPERATING INCOME (NOI) MARGIN: Represents an apartment community’s net operating income as a percentage of the apartment community’s rental and other property revenues.

OTHER EXPENSES, NET: Other expenses, net, allocated to contribution from real estate operations on Supplemental Schedule 2 generally includes franchise taxes, expenses specifically related to our administration of our real estate partnerships (for example, services such as audit, tax, and legal), and risk management activities related to certain other corporate expenses.

PROPERTY NET OPERATING INCOME (NOI) and PROPORTIONATE PROPERTY NOI: NOI is defined as total property rental and other property revenues less direct property operating expenses, including real estate taxes. NOI does not include: property management revenues; casualties; property management expenses; real estate depreciation; or interest expense. NOI is helpful because it helps both investors and management to understand the operating performance of real estate excluding costs associated with decisions about acquisition pricing, overhead allocations, and financing arrangements. NOI is also considered by many in the real estate industry to be a useful measure for determining the value of real estate. Reconciliations of NOI as presented in this Earnings Release and Supplemental Information to our consolidated GAAP amounts are provided below.

Due to the diversity of our economic ownership interests in our apartment communities in the periods presented, we evaluate the performance of the apartment communities in our segments using Proportionate Property NOI, which represents our share of the NOI for the apartment communities that we manage. Proportionate Property NOI is defined as our share of rental and other property revenue less our share of property operating expenses. In our evaluation of community results, we exclude utility cost reimbursement from rental and other property revenues and reflect such amount as a reduction of the related utility expense within property operating expenses.

The following table presents the reconciliation of GAAP rental and other property revenue to the proportionate revenues before utility reimbursements and GAAP property operating expenses to proportionate expenses, net of utility reimbursements. The table also presents the reconciliation of consolidated Same Store revenue before utility reimbursements and expenses, net of utility reimbursements as presented on Supplemental Schedule 2(a) to the proportionate amounts presented on Supplemental Schedule 6.


Segment NOI Reconciliation
(in thousands) (unaudited)	Three Months Ended
	June 30, 2023				June 30, 2022
	Revenues, Before Utility Reimbursements		Expenses, Net of Utility Reimbursements		Revenues, Before Utility Reimbursements		Expenses, Net of Utility Reimbursements
Total Real Estate Operations
Total (per consolidated statements of operations)	$	214,560	$	72,012	$	183,500	$	63,787
Adjustment: Utilities reimbursement (1)	(8,565)		(8,565)		(6,728)		(6,728)
Adjustment: Sold properties and other amounts not allocated (2)	(2,311)		(8,546)		(12,813)		(12,501)
Adjustment: Non-real estate depreciation (3)	—		554		—		416
Total (per Supplemental Schedule 2)	$	203,684	$	55,455	$	163,959	$	44,974
Proportionate adjustment (4)	(13,820)		(3,485)		(13,166)		(3,318)
Proportionate property net operating income	$	189,864	$	51,970	$	150,793	$	41,656

Total Same Store Operations
Same Store amounts (per Supplemental Schedule 2)	$	174,000	$	44,815	$	160,241	$	42,984
Proportionate adjustment (4)	(15,178)		(3,827)		(14,291)		(3,594)
Same Store amounts, adjusted (per Supplemental Schedule 6)	$	158,822	$	40,988	$	145,950	$	39,390


	Six Months Ended
	June 30, 2023				June 30, 2022
	Revenues, Before Utility Reimbursements		Expenses, Net of Utility Reimbursements		Revenues, Before Utility Reimbursements		Expenses, Net of Utility Reimbursements
Total Real Estate Operations
Total (per consolidated statements of operations)	$	426,553	$	147,465	$	364,978	$	127,023
Adjustment: Utilities reimbursement (1)	(17,085)		(17,085)		(13,571)		(13,571)
Adjustment: Sold properties and other amounts not allocated (2)	(4,643)		(20,117)		(30,193)		(25,031)
Adjustment: Non-real estate depreciation (3)	—		1,104		—		669
Total (per Supplemental Schedule 2)	$	404,825	$	111,367	$	321,214	$	89,090
Proportionate adjustment (4)	(27,242)		(6,879)		(25,857)		(6,609)
Proportionate property net operating income	$	377,583	$	104,488	$	295,357	$	82,481

Total Same Store Operations
Same Store amounts (per Supplemental Schedule 2)	$	345,325	$	89,456	$	316,262	$	86,162
Proportionate adjustment (4)	(29,951)		(7,623)		(28,105)		(7,258)
Same Store amounts, adjusted (per Supplemental Schedule 6)	$	315,374	$	81,833	$	288,157	$	78,904

(1)Approximately two-thirds of our utility costs are reimbursed by residents. These reimbursements are included in rental and other property revenues in our consolidated statements of operations prepared in accordance with GAAP. This adjustment represents the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results and as presented on Supplemental Schedules 2, 3, and 6. We also exclude the reimbursement amounts from the calculation of Average Revenue per Apartment Home throughout this Earnings Release and Supplemental Schedules.

(2)Sold properties and other amounts not allocated includes operating results of apartment communities sold during the periods shown or held for sale at the end of the period, property management revenues, as well as property management and casualty expense, which are not included in property operating expenses, net of utility reimbursements in the Supplemental Schedule 2 presentation.

(3)Expenses, net of utility reimbursements, property management expenses, net, and G&A includes the depreciation of capitalized costs of non-real estate assets, which are included in depreciation and amortization expense in our consolidated statements of operations, in accordance with GAAP. This adjustment represents the reclassification of non-real estate depreciation, which was made in Supplemental Schedules 2, 3, and 6.

(4)Proportionate adjustments represent both the noncontrolling interests’ share and AIR’s share of unconsolidated apartment communities’ rental and other property revenues before utility reimbursements and property operating expenses, net of utility reimbursements. Such adjustment is necessary to reconcile consolidated amounts presented on Supplemental Schedule 2 to the amounts allocated to our operating segments, as well as to reconcile Same Store amounts presented on Supplemental Schedule 2 to proportionate Same Store amounts presented on Supplemental Schedule 6.

PORTFOLIO QUALITY RATINGS: We measure the quality of apartment communities in our portfolio based on average rents of our apartment homes compared to local market average rents as reported by a third-party provider of commercial real estate performance and analysis. Under this rating system, we classify as “A” quality apartment communities those earning rents greater than 125% of local market average; as “B” quality apartment communities those earning rents between 90% and 125% of local market average.

REAL ESTATE CLASSIFICATIONS: Our portfolio of apartment communities is diversified by both price point and geography. Our portfolio is classified into two segments, as follows:

SAME STORE: Same Store apartment communities are apartment communities that (a) are owned and managed by AIR, and (b) have reached a stabilized level of operations.

OTHER REAL ESTATE: Includes communities that do not meet the criteria to be classified as Same Store.

SOLD AND HELD FOR SALE APARTMENT COMMUNITIES: Apartment communities either sold since January 1, 2022 or classified as held for sale at the end of the period. For purposes of highlighting results of operations related to our retained portfolio, results for Sold and Held For Sale Apartment Communities are excluded from property net operating income and presented separately on a net basis on Supplemental Schedule 2.

TURNOVER AND RETENTION: Turnover represents the percentage of residents who have moved out in the trailing twelve months. It is calculated by dividing the number of move outs in the trailing twelve months, excluding intra-community transfers, by the daily average number of occupied apartment homes during the trailing twelve months. At June 30, 2023, Turnover, was 38.0%, 10-basis points lower than June 30, 2022. If intra-community transfers were to be included in the calculation, Turnover would be 500-basis points higher.

Retention represents the inverse of Turnover, as defined above.

Cover	Jul. 27, 2023
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Jul. 27, 2023
Entity Registrant Name	APARTMENT INCOME REIT CORP.
Entity Incorporation, State or Country Code	MD
Entity File Number	1-39686
Entity Tax Identification Number	84-1299717
Entity Address, Address Line One	4582 South Ulster Street
Entity Address, Address Line Two	Suite 1700
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80237
City Area Code	303
Local Phone Number	757-8101
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Apartment Income REIT Corp. Class A Common Stock
Trading Symbol	AIRC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001820877
Amendment Flag	false
Entity Incorporation, State or Country Code	MD
Apartment Income Reit LP
Document Information [Line Items]
Entity Central Index Key	0000926660
Amendment Flag	false