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AIR Reports Second Quarter 2021 Results – Full Year FFO Guidance Increased by 5%; Quarterly Dividend Raised by 2%

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DENVER, July 29, 2021--(BUSINESS WIRE)--Apartment Income REIT Corp. ("AIR") (NYSE: AIRC) announced today second quarter results for 2021 and an increase to full year Same Store Revenue, NOI and FFO guidance.

Chief Executive Officer Terry Considine comments: "Business is good! Strong consumer demand is driving higher occupancy and higher rents. The efficiency of the AIR business model is confirmed with peer-best operating margins, low corporate G&A, driving a 5% increase in full year FFO guidance."

"Asking rents have now surpassed the pre-COVID peak and are at or above their long-term trend. Improving consumer demand and strong execution led to signed new rates up 2.7% in the second quarter… and up 9.5% month-to-date in July."

"We are on track to meet leverage goals. In April, we issued $342 million of equity and used the proceeds to reduce debt. We expect similar proceeds from 3Q activity to sell our New York and Chicago properties, and a like amount from 4Q activities to sell properties outright or to joint ventures, with all proceeds applied to debt reduction."

"We upgraded our portfolio with the $223 million purchase of City Center on 7th, a 700-apartment home community located in Pembroke Pines, Florida. We will increase 4Q property sales so that this purchase is funded on a leverage neutral basis."

"We are well positioned for an excellent second half of 2021 and an even better 2022; our current loss to lease of 10% suggests double-digit revenue growth."

Chief Financial Officer Paul Beldin adds: "Second quarter FFO per share of $0.52 was $0.02 above the high-end of our guidance range due to better than anticipated property operations and lower than anticipated offsite costs."

"With 80% of 2021 anticipated leasing activity completed, we now expect full year Same Store NOI growth between (0.50%) and 1.00%, with Same Store property operations contributing an incremental $0.08 to FFO per share at the midpoint. Our full year FFO expectations, at the mid-point, are now 7% above our beginning of year expectations."

Financial Results: Second Quarter Pro Forma FFO Per Share

2021

(all items per common share - diluted)

SECOND QUARTER

FIRST QUARTER

YEAR-TO-DATE

Net income (loss)

$

(0.12

)

$

0.56

$

0.43

NAREIT Funds From Operations (FFO)

$

0.28

$

0.48

$

0.75

Pro forma adjustments

$

0.24

$

0.02

$

0.27

Pro forma Funds From Operations (Pro forma FFO)

$

0.52

$

0.50

$

1.02

AIR Operating Results: Second Quarter Same Store Revenue Up 0.8% Sequentially

The table below includes the operating results of the 92 properties of AIR that meet our Same Store definition. These properties comprise approximately 99% of AIR’s GAAP revenue.

SECOND QUARTER

YEAR-TO-DATE

Year-over-Year

Sequential

Year-over-Year

($ in millions)

2021

2020

Variance

1st Qtr.

Variance

2021

2020

Variance

Revenue, before utility reimbursements

$154.2

$157.1

(1.9%)

$153.0

0.8%

$307.1

$320.0

(4.0%)

Expenses, net of utility reimbursements

45.1

43.0

5.0%

44.0

2.7%

89.1

85.7

4.0%

Net operating income (NOI)

$109.0

$114.1

(4.5%)

$109.0

—%

$218.0

$234.3

(6.9%)

Components of Same Store Revenue Growth – Second quarter year-over-year Same Store revenue growth was impacted by lower residential rental rates and increased bad debt expense, offset partially by higher average daily occupancy, increased late fees, and a recovery in commercial rents. The table below summarizes the change in the components of our Same Store revenue growth.

SECOND QUARTER

YEAR-TO-DATE

Same Store Revenue Components

Year-over-Year

Sequential

Year-over-Year

Residential Rents

(2.3

%)

0.2

%

(2.1

%)

Average Daily Occupancy

0.3

%

(0.1

%)

(0.6

%)

Residential Net Rental Income

(2.0

%)

0.1

%

(2.7

%)

Bad Debt

(0.6

%)

(0.1

%)

(1.1

%)

Late Fees and Other

0.5

%

0.4

%

%

Residential Revenue

(2.1

%)

0.4

%

(3.8

%)

Commercial Revenue

0.2

%

0.4

%

(0.2

%)

Same Store Revenue Growth

(1.9

%)

0.8

%

(4.0

%)

Same Store Rental Rates – We measure changes in rental rates by comparing, on a lease-by-lease basis, the effective rate on a newly executed lease to the effective rate on the expiring lease for that same apartment. A newly executed lease is classified either as a new lease, where a vacant apartment is leased to a new customer, or as a renewal.

The table below details changes in lease rates, as well as the weighted-average (blended) lease rates for leases executed in the respective period. Transacted leases are those that became effective during a 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 activity.

SECOND QUARTER

YEAR-TO-DATE

2021

2021

2020

Variance

2021

2020

Variance

April

May

June

July*

Transacted Leases

Renewal rent changes

3.2

%

5.0

%

(1.8

%)

2.8

%

5.2

%

(2.4

%)

2.0

%

3.0

%

3.9

%

5.7

%

New lease rent changes

(0.9

%)

(2.8

%)

1.9

%

(3.5

%)

(1.0

%)

(2.5

%)

(3.6

%)

(2.3

%)

1.7

%

5.9

%

Weighted-average rent changes

1.1

%

1.5

%

(0.4

%)

(0.7

%)

2.3

%

(3.0

%)

(0.8

%)

0.1

%

2.8

%

5.8

%

Signed Leases

Renewal rent changes

4.6

%

3.8

%

0.8

%

4.1

%

4.6

%

(0.5

%)

3.9

%

4.5

%

5.2

%

5.9

%

New lease rent changes

2.7

%

(4.0

%)

6.7

%

(0.3

%)

(1.6

%)

1.3

%

(0.2

%)

1.6

%

5.9

%

9.5

%

Weighted-average rent changes

3.8

%

0.5

%

3.3

%

2.2

%

2.2

%

%

2.1

%

3.1

%

5.5

%

7.5

%

Average Daily Occupancy

95.4

%

95.1

%

0.3

%

95.5

%

96.1

%

(0.6

%)

95.4

%

95.3

%

95.5

%

95.8

%

*July leasing results are preliminary and as of July 27, 2021.

Same Store Markets – Market conditions and leasing results in the second quarter exceeded our expectations at the beginning of the year. We continue to emphasize margin and long-tern NOI growth over short-term revenue growth. This approach contributed to sequential revenue growth of 80 basis points from the first to second quarter, and more importantly positioned the business for continued acceleration through the second half of the year and into 2022.

Weighted-average signed lease changes have now trended upwards for 10 consecutive months with July new lease rates up 9.5% through July 27, 2021.

Year-to-date, we have transacted 11,700 leases with a weighted-average rate increase of 70 basis points compared to the prior lease. We have signed an additional 4,000 leases with average rate increases of 8.6%. These 15,700 leases represent approximately 80% of our anticipated full year leasing activity and have weighted-average rent increases of 2.7%. We anticipate another 3,700 leases to be signed with blended rent changes in the range of 6%-8%, and a full year blended rate increase of approximately 3%. Today, asking rents are 6% above our pre-COVID peak.

In addition to accelerating market rents as shown above, leasing pace has also exceeded expectations, with second quarter leasing volume 65% ahead of 2020 and 10% above our previous high in the second quarter of 2019. Average Daily Occupancy remained stable in the second quarter despite significant increases in frictional vacancy due to the number of lease expirations in peak season. While occupancy remained stable, our leased percent, which is the percent of total apartment homes currently leased, improved from 90.7% to 93.1% during the second quarter. As of July 27, 2021, our leased percentage is now 95%; 800 basis points ahead of the same day last year and 400 basis points ahead of 2019.

Rent Collection Update

We measure residential rent collection as the amount of payments received as a percentage of all residential amounts owed. In the second quarter, we recognized 97.9% of all residential revenue owed during the quarter, treating the balance of 2.1% as bad debt. Of the 97.9% of residential revenue recognized, as of quarter-end, we collected in cash all but 120 basis points, with 96.7% of the residential rents collected. Year-to-date we have recognized 97.9% of all residential revenue and collected 97.6% of billed rents.

As of June 30, 2021, our proportionate share of gross residential accounts receivable was $12.7 million. After consideration of tenant security deposits and reserves for uncollectible amounts, our net exposure is $1.1 million. Most of this balance is expected to be collected during the third quarter of 2021. Of our uncollected accounts receivable, 73% relate to California residents.

The state of California has recently expanded the SB-91 rent relief program, to allow for 100% of past due rents to be paid by state funding (vs. 80% previously). As of June 30, 2021, we had received $0.7 million in payments under these programs. We remain cautiously optimistic that this program will allow us to recover rent that was uncollected in 2020 or 2021. We expect bad debt expense to decline as emergency ordinances are lifted that suspended legal action to collect past due rents.

Commercial rental income comprised 2.7% of second quarter revenue. In the second half of 2021, we expect an increased contribution from commercial tenants as their businesses re-open and rent payments resume.

Portfolio Management

Our portfolio of apartment communities is diversified across "A," "B," and "C+" price points, averaging "B/B+" in quality, and is also diversified across several of the largest markets in the United States. The table below relates to the AIR portfolio, excludes the properties retained by Aimco in the separation from AIR, and excludes the properties leased to Aimco for development or redevelopment.

SECOND QUARTER

2021

2020

Variance

Apartment Communities

96

99

(3

)

Apartment Homes

26,422

26,592

(170

)

Average Revenue per Apartment Home

$2,215

$2,294

(3

%)

Percentage A (2Q 2021 Average Revenue per Apartment Home $2,832)

44

%

43

%

1

%

Percentage B (2Q 2021 Average Revenue per Apartment Home $1,982)

34

%

36

%

(2

%)

Percentage C+ (2Q 2021 Average Revenue per Apartment Home $1,760)

22

%

21

%

1

%

NOI Margin

70

%

71

%

(1

%)

Free Cash Flow Margin

66

%

66

%

%

Acquisitions and Dispositions – In the second quarter, we acquired City Center on 7th, a 700-apartment home community located in Pembroke Pines, Florida for $223 million. The acquisition was temporarily funded through borrowings on our revolving credit facility pending the completion of paired trade transactions later in 2021.

We expect an NOI cap rate of 4.2% during our first year of ownership. An additional 160 basis points of growth is expected as we invest approximately $10 million in capital enhancements and implement fully our best-in-class operating platform. Since acquisition 45 days ago, we've signed 27 new leases with rate increases averaging 21.5%, while increasing occupancy by 70 basis points to 97.1%.

Dispositions – We had no dispositions in the second quarter.

Balance Sheet

We seek to increase financial returns by using leverage with appropriate caution. We limit risk through our balance sheet structure, employing low leverage, primarily long-dated debt; and we build financial flexibility by maintaining ample unused and available credit; holding properties with substantial value unencumbered by property debt; maintaining an investment grade rating; and using partners’ capital when it enhances financial returns or reduces investment risk.

Components of Leverage

Our leverage includes our share of long-term, non-recourse property debt encumbering our apartment communities, together with outstanding borrowings under our revolving credit facility, our term loans, and our preferred equity.

AS OF JUNE 30, 2021

($ in millions)

Amount

% of Total

Weighted-Avg.
Maturity (Yrs.)

AIR share of long-term, non-recourse property debt

$

2,601

68

%

8.9

Term loans

800

21

%

4.5

Outstanding borrowings on revolving credit facility

347

9

%

4.8

Preferred equity*

81

2

%

9.9

Total Leverage

$

3,830

100

%

7.6

Cash and restricted cash

(67

)

Notes receivable from Aimco**

(534

)

Net Leverage

$

3,229

* AIR’s Preferred equity is perpetual in nature; however, for illustrative purposes, 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.

** We have notes receivable from Aimco with an aggregate principal amount of $534 million. The notes will mature on January 31, 2024, and are secured by a pool of properties owned by Aimco. We consider the notes a reduction of leverage as we expect proceeds to be used to repay current amounts outstanding.

We entered 2021 with approximately $3.2 billion of net leverage. We anticipate ending 2021 with net leverage of approximately $2.5 billion. The April equity offering and 2021 property sales are expected to reduce leverage by $920 million. This decline is somewhat offset by borrowing to fund capital projects and the City Center acquisition at a loan to value of approximately 25%.

Equity Issuance & Financing Activity

As previously announced in April, we sold 7.825 million shares of our Class A Common Stock in a private placement to a large global real estate-focused investment firm for a cash purchase price of $342 million. Proceeds raised were used to repay $318.4 million of property debt with a weighted-average interest rate of 4.6%, which resulted in a ~0.9x reduction in Net Leverage to Adjusted EBITDAre. Prepayment penalties incurred in connection with the debt repayment totaled $33.8 million. The economic cost of these prepayment penalties is expected to be substantially recovered through lower future interest expense.

On July 15, 2021, we closed on a new $350 million term loan. The loan matures on January 14, 2023, inclusive of a six month extension option, and bears interest at a LIBOR spread of 95 basis points. We used the proceeds to repay borrowings on our revolving credit facility, whose $600 million capacity is fully available.

Leverage Reduction – On Track

We target Net Leverage to Adjusted EBITDAre below 6.0x, with a current target of 5.5x by year-end.

At June 30, 2021, Net Leverage to Adjusted EBITDAre was 7.3x, a 0.5x reduction from March 31, 2021.

Liquidity

We use our revolving credit facility for working capital and other short-term purposes and to secure letters of credit. At June 30, 2021, our share of cash and restricted cash was $67 million and we had the capacity to borrow up to $249 million, under our revolving credit facility, bringing total liquidity to $316 million. Pro-forma for the closing of the July term loan, our liquidity increased to $666 million.

We manage our financial flexibility by maintaining an investment grade rating and holding communities that are unencumbered by property debt. AIR has been rated BBB by Standard & Poor’s. As of June 30, 2021, we held unencumbered communities with property debt with an estimated fair market value of approximately $4.2 billion; an increase of 50% from December 31, 2020. We anticipate seeking an investment grade credit rating from Moody’s. In assigning ratings, Moody’s places significant emphasis on the amount of non-recourse property debt as percentage of the undepreciated book value of a company’s assets. To achieve Moody’s required thresholds, we estimate that a Moody’s investment grade rating will require property debt to approximate $1.8 billion. At June 30, 2021 our share of property debt is $2.6 billion.

Dividend

On July 27, 2021, our Board of Directors increased our quarterly cash dividend from $0.43 to $0.44 per share of AIR Common Stock. This amount is payable on August 27, 2021, to stockholders of record on August 13, 2021.

2021 Outlook

At the midpoint, we expect FFO per share to be $2.12, up $0.11 from our previous expectations due primarily to increased Same Store NOI.

Our guidance ranges are based on the following components:

YEAR-TO-DATE JUNE 30, 2021

FULL YEAR 2021

PREVIOUS
FULL YEAR 2021

($ Amounts represent AIR Share)

Net Income (loss) per share (1)

$0.43

$(0.13) to $0.00

$0.01 to $0.14

Pro forma FFO per share

$1.02

$2.09 to $2.15

$1.96 to $2.06

Pro forma FFO per share at the mid-point

$1.02

$2.12

$2.01

Same Store Operating Components of NAREIT FFO

Revenue change compared to prior year

(4.0%)

0.50% to 1.50%

(1.50%) to 0.50%

Expense change compared to prior year

4.0%

3.00% to 2.50%

3.20% to 2.80%

NOI change compared to prior year

(6.9%)

(0.50%) to 1.00%

(3.40%) to (0.40%)

Offsite Costs

Property management expenses

$12M

~$23M

~$24M

General and administrative expenses, net of asset management income (2)

$8M

~$15M

~$16M

Other Earnings

Lease income (3)

$13M

~$27M

~$27M

Tax expense (3)

($0.8M)

~($1M)

~($1M)

Proceeds from dispositions of real estate, net

~$800M

~$580M

AIR Share of Capital Investments

Capital Enhancements

$35M

$65M to $75M

$45M to $55M

(1)

Does not include any gain from future property sales.

(2)

In 2021, AIR G&A is expected to be reduced by a $5.8 million payment from Aimco.

(3)

Presented net of FFO and Pro forma FFO adjustments.

In the third quarter, AIR anticipates Pro forma FFO between $0.51 and $0.55 per share.

Total Shareholder Return

The separation of AIR from Aimco created significant value for shareholders. The combined outperformance since the announcement of the separation translates to ~$1.3 billion of incremental shareholder value creation, or approximately $8.00 per share. This accretive capital allocation decision, builds on a long-track record of delivering strong returns to shareholders.

AIR Strategic Objectives

We created AIR to be an efficient way to invest in U.S. multi-family real estate, due to its simplified business model and diversified portfolio of stabilized apartment communities. Upon AIR’s separation from Aimco, we identified 10 strategic objectives. The following table outlines our progress against these objectives.

Objective

Progress

Simple business model without complex investments or development/lease-up risk

Done

High quality and diversified portfolio of stabilized multi-family properties

Done

Best-in-class property operations

Done

Efficient cost structure with the lowest G&A as a % of total assets

Done

Predictable and diversified cash flow to support dividend payout ratio

Done

Refreshed tax basis reduces tax friction on transactions driving more efficient capital allocation

Done

Committed focus on ESG

Done

Strong growth from economic expansion, portfolio management, and accretive acquisitions of properties with upside from AIR operations

Done

Strong, flexible balance sheet with low cost of leverage

Done

Reduce net leverage to EBITDA to 5.5:1

Ahead of Plan

Earnings Conference Call Information

Live Conference Call:

Conference Call Replay:

Friday, July 30, 2021 at 12:00 p.m. ET

Replay available until October 30, 2021

Domestic Dial-In Number: 1-888-317-6003

Domestic Dial-In Number: 1-877-344-7529

International Dial-In Number: 1-412-317-6061

International Dial-In Number: 1-412-317-0088

Passcode: 9955051

Passcode: 10158457

Live webcast and replay:

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

AIR is a real estate investment trust focused on the ownership and management of quality apartment communities located in the largest markets in the United States. AIR is one of the country’s largest owners and operators of apartments, with 96 communities in 12 states and the District of Columbia. AIR common shares are traded on the New York Stock Exchange under the ticker symbol AIRC, and are included in the S&P 400. For more information about AIR, please visit our website at www.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 2021 results, including but not limited to: NAREIT FFO, Pro forma FFO and selected components thereof; expectations regarding consumer demand, growth in revenue and strength of other performance metrics and models; expectations regarding sales of AIR apartment communities 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 judgment as of this date, which is subject to risks and uncertainties. Risks and uncertainties that could cause actual results to differ materially from our expectations include, but are not limited to: the effects of the coronavirus pandemic on AIR’s business and on the global and U.S. economies generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, all of which heightens the impact of the other risks and factors described herein, and the impact on entities in which AIR holds a partial interest, and the impact of governmental lockdowns on AIR’s residents, commercial tenants, and operations; real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing and effects of acquisitions 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 the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by AIR; Aimco’s and AIR’s relationship with each other after the business separation; the ability and willingness of Aimco and AIR and their subsidiaries to meet and/or perform their obligations under any contractual arrangements that were entered into among the parties in connection with the business separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; and the ability to achieve some or all the benefits that we expect to achieve from the business separation; and such other risks and uncertainties described from time to time in filings by AIR with the Securities and Exchange Commission ("SEC").

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

Readers should carefully review AIRs financial statements and the notes thereto, as well as the section entitled "Risk Factors" in Item 1A of AIR’s Annual Report on Form 10-K for the year ended December 31, 2020, and subsequent documents AIR files from time to time with the SEC. Readers should also carefully review the "Risk Factors" section of the registration statements relating to the business separation, that have been filed with the Securities and Exchange Commission. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.

These forward-looking statements reflect management’s judgment as of this date, and AIR assumes 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)

The separation resulted in Aimco being presented as the predecessor for AIR’s financial statements. This presentation is in accordance with GAAP and is due primarily to the relative significance of AIR’s business as compared to Aimco before the separation. The financial results prior to the separation on December 15, 2020, include the financial results of AIR’s predecessor, and the financial results attributable to the apartment communities retained by Aimco in the separation are presented as discontinued operations.

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

REVENUES

Rental and other property revenues (1)

$

176,721

$

181,643

$

351,451

$

367,686

Other revenues

1,612

3,295

Total revenues

178,333

181,643

354,746

367,686

OPERATING EXPENSES

Property operating expenses (1)

64,758

63,959

129,375

129,921

Depreciation and amortization

75,791

78,949

151,071

160,395

General and administrative expenses (2)

5,221

7,566

9,635

15,055

Other expenses, net

2,515

4,156

5,391

5,647

Total operating expenses

148,285

154,630

295,472

311,018

Interest income (3)

15,684

2,303

31,656

6,292

Interest expense, including prepayment penalties (4)

(70,807

)

(44,239

)

(107,842

)

(81,045

)

Gain on derecognition of leased properties and dispositions
of real estate

3,353

47,282

87,385

47,295

Mezzanine investment income, net (5)

6,936

13,683

Income (loss) from continuing operations before income tax (expense)
benefit and discontinued operations

(21,722

)

39,295

70,473

42,893

Income tax (expense) benefit

2,035

783

(1,045

)

2,097

Income (loss) from continuing operations

(19,687

)

40,078

69,428

44,990

Income (loss) from discontinued operations, net of tax

3,126

7,191

Net income (loss)

(19,687

)

43,204

69,428

52,181

Noncontrolling interests:

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

2,397

17

2,632

(1

)

Net income attributable to preferred noncontrolling interests in AIR OP

(1,603

)

(1,859

)

(3,207

)

(3,728

)

Net (income) loss attributable to common noncontrolling interests in AIR OP

945

(2,107

)

(3,491

)

(2,475

)

Net (income) loss attributable to noncontrolling interests

1,739

(3,949

)

(4,066

)

(6,204

)

Net income (loss) attributable to AIR

(17,948

)

39,255

65,362

45,977

Net income attributable to AIR preferred stockholders

(43

)

(93

)

Net income attributable to participating securities

(39

)

(43

)

(103

)

(86

)

Net income (loss) attributable to AIR common stockholders

$

(18,030

)

$

39,212

$

65,166

$

45,891

Earnings (loss) per common share – basic and diluted:

Income (loss) from continuing operations attributable to AIR per common share

$

(0.12

)

$

0.30

$

0.43

$

0.32

Income from discontinued operations attributable to AIR per common share

0.03

0.06

Net income (loss) attributable to AIR common stockholders per share – basic and diluted

$

(0.12

)

$

0.33

$

0.43

$

0.38

Weighted-average common shares outstanding – basic (6)

154,608

119,959

151,609

119,953

Weighted-average common shares outstanding – diluted (6)

154,608

119,974

152,083

120,068

(1)

Prior to the separation, Aimco sold two apartment communities in 2020. Rental and other property revenues for the three and six months ended June 30, 2020, is inclusive of $2.7 million and $6.1 million, respectively, of revenues related to Aimco’s sold properties. Property operating expenses for the three and six months ended June 30, 2020, is inclusive of $0.9 million and $1.9 million, respectively, of expenses related to Aimco’s sold properties.

(2)

In setting our G&A benchmark of 15 bps of total assets, we consider platform fees earned on our California joint venture as a reduction of general and administrative expenses. In accordance with GAAP, general and administrative expenses are shown gross of these platform fees and they are instead included in the determination of net income (loss) attributable to noncontrolling interests in consolidated real estate partnerships.

(3)

Interest income for the three and six months ended June 30, 2021, includes $6.9 million and $13.9 million, respectively, of income associated with our notes receivable from Aimco, and $6.5 million and $12.8 million, respectively, of interest income associated with the four properties leased to Aimco commencing on January 1, 2021.

(4)

Interest expense for the three and six months ended June 30, 2021, includes $37.2 million and $38.2 million, respectively, of costs related to prepayment penalties from the repayment of property debt and the write-off of deferred financing costs associated with our previous credit facility.

(5)

In connection with the Separation, Aimco was allocated economic ownership of the mezzanine loan investment and option to acquire a 30% equity interest in the partnership. Subsequent to the Separation, all risks and rewards of ownership are Aimco’s, but legal transfer is not complete. During the three and six months ended June 30, 2020, we recognized $6.9 million and $13.7 million of income, respectively, in connection with the mezzanine loan. For the three and six months ended June 30, 2021, the mezzanine investment income was entirely offset by an expense to recognize the requirement that this income be contributed to Aimco.

(6)

During the fourth quarter of 2020, Aimco completed a reverse stock split and a special dividend paid primarily in stock. For stock splits, GAAP requires the restatement of weighted-average shares as if the reverse stock split occurred at the beginning of the period presented, while shares issued in the special dividend are included in weighted-average shares outstanding from the date issued. Basic and diluted weighted-average common shares outstanding were 148,535 and 148,553, respectively, as previously reported for the three months ended June 30, 2020. Basic and diluted weighted-average common shares outstanding were 148,527 and 148,670, respectively, as previously reported for the six months ended June 30, 2020.

Consolidated Balance Sheets

(in thousands) (unaudited)

June 30,

December 31,

2021

2020

Assets

Real estate

$

7,258,778

$

7,468,864

Accumulated depreciation

(2,510,690

)

(2,455,505

)

Net real estate

4,748,088

5,013,359

Cash and cash equivalents

59,401

44,214

Restricted cash

21,300

29,266

Notes receivable from Aimco

534,127

534,127

Leased real estate assets

479,441

Goodwill

32,286

32,286

Other assets (1)

555,189

576,026

Total Assets

$

6,429,832

$

6,229,278

Liabilities and Equity

Non-recourse property debt

$

3,079,576

$

3,646,093

Debt issue costs

(14,773

)

(17,857

)

Non-recourse property debt, net

3,064,803

3,628,236

Term loans, net

796,658

349,164

Revolving credit facility borrowings

347,200

265,600

Accrued liabilities and other (1)

570,040

598,736

Total Liabilities

4,778,701

4,841,736

Preferred noncontrolling interests in AIR OP

79,375

79,449

Equity:

Perpetual preferred stock

2,000

2,000

Class A Common Stock

1,569

1,489

Additional paid-in capital

3,773,173

3,432,121

Accumulated other comprehensive income

3,039

Distributions in excess of earnings

(2,197,843

)

(2,131,798

)

Total AIR equity

1,578,899

1,306,851

Noncontrolling interests in consolidated real estate partnerships

(67,531

)

(61,943

)

Common noncontrolling interests in AIR OP

60,388

63,185

Total Equity

1,571,756

1,308,093

Total Liabilities and Equity

$

6,429,832

$

6,229,278

(1)

Other assets includes the Parkmerced mezzanine investment and the fair value of our interest rate swap option, and accrued liabilities and other includes the offsetting liabilities. The benefits and risks of ownership of both the Parkmerced mezzanine investment and the interest rate swap option have been transferred to Aimco, but legal transfer is not complete.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729006168/en/

Contacts

Beth Hagan
(303) 757-8101
investors@aircommunities.com

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