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AIR Communities Reports Second Quarter 2023 Results

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**

5

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

12

3

10

1

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.

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 (income) expenses, 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.

 

Contacts

Matthew O’Grady

Senior Vice President, Capital Markets

(303) 691-4566

Mary Jensen

Head of Investor Relations

(303) 691-4349

investors@aircommunities.com

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