UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-13232 (Apartment Investment and Management Company)
Commission file number 0-56223 (Aimco OP L.P.)
Apartment Investment and Management Company
Aimco OP L.P.
(Exact name of registrant as specified in its charter)
Maryland (Apartment Investment and Management Company)
84-1259577
Delaware (Aimco OP L.P.)
85-2460835
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
4582 South Ulster Street, Suite 1450
Denver, Colorado
80237
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code (303-224-7900)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Class A Common Stock (Apartment Investment and Management
Company)
AIV
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None (Apartment Investment and Management Company)
Partnership Common Units (Aimco OP L.P.)
(title of each class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Apartment Investment and Management Company: Yes ☒ No ☐
Aimco OP L.P.: Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Apartment Investment and Management Company: Yes ☐ No ☒
Aimco OP L.P.: Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Apartment Investment and Management Company: Yes ☒ No ☐
Aimco OP L.P.: Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Apartment Investment and Management Company: Yes ☒ No ☐
Aimco OP L.P.: Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Apartment Investment and Management Company:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company ☐
Emerging growth company ☐
Aimco OP L.P.:
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company ☐
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.
Apartment Investment and Management Company: ☐
Aimco OP L.P.: ☒
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Apartment Investment and Management Company: Yes ☒ No ☐
Aimco OP L.P.: Yes ☒ No ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Apartment Investment and Management Company: Yes ☐ No ☒
Aimco OP L.P.: Yes ☐ No ☒
The aggregate market value of the voting and non-voting common stock of Apartment Investment and Management Company held by non-affiliates of Apartment Investment and
Management Company was approximately $1.1 billion based upon the closing price of $8.29 on June 30, 2024.
As of February 21, 2025, there were 141,967,654 shares of Class A common stock ("Common Stock") outstanding.
Documents Incorporated by Reference
Portions of Apartment Investment and Management Company's definitive proxy statement to be issued in conjunction with Apartment Investment and Management Company's annual
meeting of stockholders to be held June 10, 2025, are incorporated by reference into Part III of this Annual Report.
EXPLANATORY NOTE
Apartment Investment and Management Company ("Aimco" or the "Company"), a Maryland corporation, is a self-
administered and self-managed real estate investment trust ("REIT"). On December 15, 2020, Aimco completed the separation
of its businesses (the "Separation"), creating two, separate and distinct, publicly traded companies, Aimco and Apartment
Income REIT Corp. (“AIR”) (Aimco and AIR together, as they existed prior to the Separation, "Aimco Predecessor"). Events
noted in this filing as occurring before December 15, 2020, were those entered into by Aimco Predecessor.
Aimco, through a wholly-owned subsidiary, is the general partner and directly is the special limited partner of Aimco OP
L.P. ("Aimco Operating Partnership"). As of December 31, 2024, Aimco owned 92.3% of the legal interest in the common
partnership units of Aimco Operating Partnership and 94.8% of the economic interest in Aimco Operating Partnership. The
remaining 7.7% legal interest is owned by limited partners. The common partnership units of Aimco Operating Partnership are
referred to as "OP Units". As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco
Operating Partnership’s day-to-day management.
Aimco Operating Partnership holds all of Aimco's assets and manages the daily operations of Aimco's business. Pursuant to
the Aimco Operating Partnership agreement, Aimco is required to contribute to Aimco Operating Partnership all proceeds from
the offerings of its securities. In exchange for the contribution of such proceeds, Aimco receives additional interests in Aimco
Operating Partnership with similar terms (e.g., if Aimco contributes proceeds of a stock offering, Aimco receives partnership
units with terms substantially similar to the stock issued by Aimco).
This filing combines the Annual Reports on Form 10-K for the fiscal year ended December 31, 2024, of Aimco and Aimco
Operating Partnership. Where it is important to distinguish between the two entities, we refer to them specifically. Otherwise,
references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.
We believe combining the periodic reports of Aimco and Aimco Operating Partnership into this single report provides the
following benefits:
•
We present our business as a whole, in the same manner our management views and operates the business;
•
We eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial
portion of the disclosures apply to both Aimco and Aimco Operating Partnership; and
•
We save time and cost through the preparation of a single combined report rather than two separate reports.
We operate Aimco and Aimco Operating Partnership as one enterprise; the management of Aimco directs the management
and operations of Aimco Operating Partnership; and Aimco OP GP, LLC, Aimco Operating Partnership’s general partner, is
managed by Aimco.
We believe it is important to understand the few differences between Aimco and Aimco Operating Partnership in the
context of how Aimco and Aimco Operating Partnership operate as a consolidated company. Aimco has no assets or liabilities
other than its investment in Aimco Operating Partnership. Also, Aimco is a corporation that issues publicly traded equity from
time to time, whereas Aimco Operating Partnership is a partnership that has no publicly traded equity. Except for the net
proceeds from stock offerings by Aimco, which are contributed to Aimco Operating Partnership in exchange for additional
limited partnership interests (of a similar type and in an amount equal to the shares of stock sold in the offering), Aimco
Operating Partnership generates all remaining capital required by its business. These sources include Aimco Operating
Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility, the
issuance of debt and equity securities, including additional partnership units, and proceeds received from the sale of real estate.
Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the consolidated financial
statements of Aimco and those of Aimco Operating Partnership. Interests in Aimco Operating Partnership held by entities other
than Aimco are classified within partners’ capital in Aimco Operating Partnership’s consolidated financial statements and as
noncontrolling interests in Aimco’s consolidated financial statements.
To help investors understand the differences between Aimco and Aimco Operating Partnership, this report provides:
separate consolidated financial statements for Aimco and Aimco Operating Partnership; a single set of consolidated notes to
such financial statements that includes separate discussions of each entity’s stockholders’ equity or partners’ capital, and
earnings per share or earnings per unit, as applicable; and a combined Management’s Discussion and Analysis of Financial
Condition and Results of Operations section that includes discrete information related to each entity, where appropriate.
This report also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32
certifications for Aimco and Aimco Operating Partnership in order to establish that the requisite certifications have been made
and that Aimco and Aimco Operating Partnership are both compliant with Rule 13a-15 or Rule 15d-15 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP, L.P.
TABLE OF CONTENTS
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2024
Item
Page
PART I
1.
Business
2
1A.
Risk Factors
6
1B.
Unresolved Staff Comments
25
1C.
Cybersecurity
25
2.
Properties
26
3.
Legal Proceedings
26
4.
Mine Safety Disclosures
26
PART II
5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
27
6.
[Reserved]
7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
29
7A.
Quantitative and Qualitative Disclosures About Market Risk
40
8.
Financial Statements and Supplementary Data
40
9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
40
9A.
Controls and Procedures
40
9B.
Other Information
45
9C.
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
45
PART III
10.
Directors, Executive Officers and Corporate Governance
46
11.
Executive Compensation
46
12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
46
13.
Certain Relationships and Related Transactions, and Director Independence
46
14.
Principal Accounting Fees and Services
46
PART IV
15.
Exhibits and Financial Statement Schedules
47
16.
Form 10-K Summary
50
1
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in
certain circumstances. Certain information included in this Annual Report contains or may contain information that is
forward-looking, within the meaning of the federal securities laws. Forward-looking statements include all statements that are
not historical statements of fact and those regarding our intent, belief, or expectations. Words such as “anticipate(s),”
“expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar
expressions, or the negative of these terms, are intended to identify such forward-looking statements. The forward-looking
statements in this Annual Report include, without limitation, statements regarding: our future plans and goals, including the
timing and amount of capital expected to be returned to stockholders, our pipeline investments and projects, our plans to
eliminate certain near term debt maturities, our estimated value creation and potential, our timing, scheduling and budgeting,
projections regarding revenue and expense growth, our plans to form joint ventures, our plans for new acquisitions or
dispositions, our strategic partnerships and value added therefrom, the potential for adverse economic and geopolitical
conditions, which negatively impact our operations, including on our ability to maintain current or meet projected occupancy,
rental rate and property operating results; the effect of acquisitions, dispositions, developments, and redevelopments; our
ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment
investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and
cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios.
These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and
uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to:
geopolitical events which may adversely affect the markets in which our securities trade, and other macro-economic conditions,
including, among other things, rising interest rates and inflation, which heightens the impact of the other risks and factors
described herein; 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, dispositions, developments and redevelopments; 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; supply chain disruptions, particularly with respect to raw materials such as lumber,
steel, and concrete; 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; and possible environmental liabilities, including costs, fines or penalties that
may be incurred due to necessary remediation of contamination of apartment communities presently owned by us.
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.
Readers should carefully review our financial statements and the notes thereto, as well as Item 1A. Risk Factors of this
Annual Report and subsequent documents we file from time to time with the SEC. These risk factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Annual
Report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required by law.
As used herein and except as the context otherwise requires, “we,” “our,” and “us” refer to Apartment Investment
and Management Company (which we refer to as Aimco), Aimco OP L.P. (which we refer to as Aimco Operating Partnership)
and their consolidated entities, collectively.
Certain financial and operating measures found herein and used by management are not defined under accounting
principles generally accepted in the United States (“GAAP”). These measures are defined and reconciled to the most
comparable GAAP measures under the Non-GAAP Measures heading.
2
PART I
ITEM 1. BUSINESS
The Company
Aimco, a Maryland corporation is a self-administered and self-managed REIT. On December 15, 2020, Aimco completed
the Separation, creating two separate and distinct, publicly traded companies, Aimco and AIR. Aimco, through a wholly-owned
subsidiary, is the general partner and directly is the special limited partner of Aimco Operating Partnership, a Delaware Limited
Partnership. Aimco conducts all of its business and owns all of its assets through Aimco Operating Partnership.
Please refer to Note 14 to the consolidated financial statements in Item 8 for discussion regarding our business segments.
Executive Overview
Our mission is to make real estate investments, primarily focused on the multifamily sector within targeted U.S. markets,
where outcomes are enhanced through our human capital and substantial value is created for investors, teammates, and the
communities in which we operate.
Our value proposition includes our:
•
Platform, consisting of a cohesive, talented, and tenured team with diverse real estate industry experience combined
with a disciplined and proven investment process;
•
Diversified portfolio, consisting of value-add investments, a pipeline of land for potential future development, a
national portfolio of stabilized multifamily real estate and limited indirect and passive investments; and
•
Capital redeployment plan which includes the prudent recycling of capital, reallocating our equity to higher returning
investments, and return of capital to stockholders when appropriate.
Our primary goal is outsized risk-adjusted returns and accelerating growth for our stockholders. We are focused on
providing superior total-return performance to stockholders, primarily through capital appreciation driven by accretive
investment and active portfolio management over multi-year periods. We do not presently intend to pay a regular quarterly cash
dividend, but may periodically pay dividends for REIT tax purposes or to return a portion of profits to stockholders.
Our financial objectives are to create value and produce superior, asset level, risk-adjusted returns on equity as measured by
the investment period Internal Rate of Return (“IRR”) and the project-level Multiple on Invested Capital (“MOIC”). We
measure broader performance based on Net Asset Value (“NAV”) growth over time.
Our capital allocation strategy is designed to leverage our investment platform and optimize risk-adjusted returns for our
stockholders.
We target a balanced allocation, which includes investments in “Value Add” and “Opportunistic” multifamily real estate,
primarily located in Southeast Florida, the Washington, D.C. Metro Area, and Colorado's Front Range, plus investment in a
geographically diversified portfolio of “Core” and “Core-Plus” apartment communities.
In addition, we currently hold select alternative assets, consisting primarily of indirect, real estate related debt and equity
investments. We have reduced our allocation and have no plans to increase our allocation to these investments.
We have policies in place that support our current strategy, guide our investment allocations, and manage risk, including to
hold at all times a sizeable portion of our net equity in stabilized cash-flowing assets and to require cash or committed credit
necessary for completion of development and redevelopment projects prior to their commencement.
3
Given our current strategy, it is expected that at any point in time the value-creation process will be ongoing at numerous of
our investments. Over time, we expect our enterprise to produce superior returns on equity on a risk-adjusted basis and it is our
plan to do so by:
•
Benefiting from a national platform while leveraging local and regional expertise
We have corporate headquarters in Denver, Colorado and Washington, D.C. Our investment platform is managed by
experienced regional professionals with a pipeline supporting new investment activity in Southeast Florida, the
Washington, D.C. Metro Area, and Colorado's Front Range. By regionalizing this platform, we are able to leverage the
in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating,
and executing investment opportunities.
•
Owning a portfolio of stabilized core and core plus real estate
We own a geographically diversified portfolio of 24 apartment communities (20 consolidated properties and four
unconsolidated properties) with average rents in line with local market averages (generally defined as B class). We
also own an apartment building and its adjacent office building, Yacht Club Apartments and 1001 Brickell Bay Drive
(together referred to as the "Brickell Assemblage"), in a land assemblage that is under contract to be sold. The target
composition of our stabilized portfolio will continue to include primarily B multifamily assets, spread across
geographically diversified markets, with a bias toward long established residential neighborhoods that rank highly in
regard to schools, employment fundamentals and state and regional governance. Core-Plus opportunities offer the
opportunity for incremental capital investment while maintaining stabilized cashflow to accelerate income growth and
improve asset values.
•
Managing and investing in value-add and opportunistic real estate
Our dedicated team will source and execute development and redevelopment projects, and various other direct
investment strategies. Our development and redevelopment portfolio currently includes projects in construction and
lease-up. In addition, our team has secured significant, high-quality, future development opportunities, including total
potential of more than 7.7 million gross square feet, located in high-growth markets. Generally, we seek direct
investment opportunities in locations where barriers to entry are high, target customers can be clearly defined and
where we have a comparative advantage over others in the market. From time to time, we may choose to monetize
certain pipeline assets prior to vertical construction in an effort to maximize value and risk adjusted returns. In any
time period, the amount of our capital that is allocated to development activities may vary based on market conditions
and other factors.
•
Maintaining sufficient liquidity and utilizing safe financial leverage
We will guard our liquidity at all times by maintaining sufficient cash and committed credit. From time-to-time, we
will allocate capital to financial assets designed to mitigate risks. Existing examples include our use of interest rate
caps to provide protection against increases in interest rates on in-place loans. We expect to capitalize our activities
through a combination of non-recourse property debt, non-recourse construction loans, third-party equity, and the
recycling of our equity, including retained earnings. We plan to limit the use of recourse leverage, with a strong
preference towards non-recourse property-level debt to limit risk to our enterprise. When warranted, we plan to seek
equity capital from joint venture partners to improve our cost of capital, further leverage our equity, reduce exposure
to a single investment and, in certain cases, for strategic benefits.
4
Competition
There are many developers, managers, and owners of apartment real estate and underdeveloped land, as well as REITs,
private real estate companies, and investors, that compete with us in acquiring, developing, obtaining financing for, and
disposing of apartment communities. This competition affects our ability to realize our real estate development and
transactional objectives.
In addition, our apartment communities compete for residents with other housing alternatives, including other rental
apartments and condominiums, and single-family homes that are available for rent, as well as new and existing condominiums
and single-family homes for sale. Competitive residential housing, as well as household formation and job creation in a
particular area, could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.
Taxation
Aimco
Aimco has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing
with its initial taxable year, and intends to continue to operate in such a manner. The Code imposes various requirements
related to organizational structure, distribution levels, diversity of stock ownership, and certain restrictions with regard to
owned assets and categories of income that must be met in order to continue to qualify as a REIT. If Aimco continues to qualify
for taxation as a REIT, it will generally not be subject to United States federal corporate income tax on its taxable income that
is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and
stockholder levels) that generally results from an investment in a corporation.
Certain of our operations, or a portion thereof, are conducted through taxable REIT subsidiaries, each of which we refer to
as a “TRS”. A TRS is a corporate subsidiary that has elected to be a TRS instead of a REIT and, as such, is subject to United
States federal corporate income tax.
Aimco Operating Partnership
Aimco Operating Partnership is treated as a “pass-through” entity for United States federal income tax purposes and is not
subject to United States federal income taxation. Partners in Aimco Operating Partnership, however, are subject to tax on their
allocable share of partnership income, gains, losses, deductions, and credits, regardless of whether the partners receive any
actual distributions of cash or other property from Aimco Operating Partnership during the taxable year. Generally, the
characterization of any particular item is determined by Aimco Operating Partnership rather than at the partner level, and the
amount of a partner’s allocable share of such item is governed by the terms of Aimco Operating Partnership’s Partnership
agreement. Aimco Operating Partnership is subject to tax in certain states.
Regulation
General
Apartment development is subject to various laws, ordinances, and regulations, including those concerning entitlement,
building, health and safety, site and building design, environment, zoning, and sales, and similar matters apply to or affect the
real estate development industry.
Apartment communities and their owners are subject to various laws, ordinances, and regulations, including those related to
real estate broker licensing and regulations relating to recreational facilities such as swimming pools, activity centers, and other
common areas.
Changes in laws increasing the potential liability for environmental conditions existing on communities or increasing the
restrictions on discharges or other conditions, as well as changes in laws affecting development, construction, and safety
requirements, may result in significant unanticipated expenditures, which could adversely affect our net income and cash flows
from operating activities.
In addition, existing rent control laws, as well as future enactment of rent control or rent stabilization laws, or other laws
and ordinances regulating multifamily housing, may reduce rental revenue or increase operating costs in particular markets.
5
Environmental
Various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of
removal or remediation, of certain potentially hazardous materials that may be present. These materials may include lead-based
paint, asbestos, polychlorinated biphenyls, and petroleum-based fuels. Such laws often impose liability without regard to fault
or whether the owner or operator knew of, or was responsible for, the release or presence of such materials. In connection with
the ownership of real estate, we could potentially be liable for environmental liabilities or costs associated with our real estate,
whether currently owned, acquired in the future, or owned in the past. These and other risks related to environmental matters
are described in more detail in Item 1A. Risk Factors.
Corporate Responsibility
Corporate responsibility is an important part of our business. As with all other aspects of our business, our corporate
responsibility program focuses on continuous improvement, to the benefit of our stockholders, our residents, our teammates,
our communities, and the environment. We actively discuss these matters with our stockholders and solicit their feedback on
our program.
We publish a Corporate Responsibility Report reflecting our corporate responsibility priorities and performance on an
annual basis.
We remain committed to providing best-in-class living environments that mitigate risk while reducing environmental
impacts and creating value for all new construction, existing assets, and corporate operations.
Human Capital and Culture
We believe our most valuable asset is our human capital. Our success is reliant on the collective sum of individual talents.
We seek to hire and retain a highly qualified workforce in compliance with applicable federal and other laws and regulations.
We hire and promote employees based upon their unique experiences, abilities, talents, and drive.
We continuously invest in our teammates and company culture to ensure employee satisfaction, health, and well-being.
We focus on succession planning and talent development to produce a strong, stable team that is the foundation of our
success. We are responsible for and implement succession planning in all leadership positions, both in the short term and the
long term.
We offer benefits and support reinforcing our emphasis on the health and well-being of our teammates, including 16 weeks
of paid time for parental leave to new mothers and fathers, a longstanding policy of workplace flexibility for our teammates to
attend to personal and family matters during the workweek, office environments focused on natural light and ergonomic office
furniture including adjustable height desks, access to Company-provided healthy snacks and drinks, paid time annually to
volunteer in local communities, and a bonus structure at all levels of the organization.
We evaluate team engagement and retention and include those in our goals on which all teammates are compensated. Every
teammate is surveyed annually via a third-party confidential survey. The teammate engagement score consists of the average of
the responses to the questions that comprise the engagement index, on a scale of 1 to 5, for all teammates who complete the
survey during the year. Our overall team engagement score for the 2024 annual engagement survey was 4.69, with a 100%
overall response rate, compared to the target score of 4.50.
As of December 31, 2024, we had 58 full-time teammates performing asset management, development or transactional
services and managing corporate and area functions. None of our employees are represented by labor unions.
In 2024, we were recognized with Healthiest Employers Awards in South Florida, Washington, D.C., and Denver, ranking
#2 in our category for South Florida and Colorado and #3 in our category for Washington, D.C. The Healthiest Employers
Awards honor companies with policies and initiatives promoting the health and well-being of their employees. Healthiest
Employers takes a holistic view of worksite health, evaluating the extent of leadership team buy-in, including how well they
understand the needs of the employee population and how they proactively support well-being.
6
Available Information
Our combined Annual Report on Form 10-K, our combined Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
filed by Aimco or Aimco Operating Partnership, and any amendments to any of those reports that we file with the Securities
and Exchange Commission are available free of charge as soon as reasonably practicable after filing through our website at
www.aimco.com. The information contained on our website is not incorporated into this Annual Report.
ITEM 1A. RISK FACTORS
The risk factors noted in this section, and other factors noted throughout this Annual Report, describe certain risks and
uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement.
SUMMARY RISK FACTORS
•
Adverse economic and geopolitical conditions, health crises and dislocations in the financial and credit markets could
adversely affect our financial condition and results of operations.
•
Development, redevelopment, and construction risks could affect our profitability.
•
Failure to generate sufficient net operating income may adversely affect our liquidity, limit our ability to fund necessary
capital expenditures, or adversely affect our ability to pay dividends or distributions.
•
Failure to generate sufficient net operating income may adversely affect our liquidity, limit our ability to fund necessary
capital expenditures, or adversely affect our ability to pay dividends or distributions.
•
Our business and financial results could be adversely affected by significant inflation, higher interest rates or deflation.
•
Our ability to continue to grow or maintain our pipeline of development and redevelopment opportunities may be
constrained.
•
Our properties are geographically concentrated.
•
Our development projects may subject us to certain liabilities, and we are subject to risks associated with developing
properties in partnership with others.
•
Development of properties may entail a lengthy, uncertain, and costly entitlement process.
•
Government regulations and legal challenges may delay the start or completion of the development of our communities,
increase our expenses or limit our building of apartments or other activities.
•
Competition could limit our ability to lease apartment homes, increase or maintain rents or execute our development
strategy.
•
Because real estate investments are relatively illiquid, we may not be able to sell apartment communities or other assets
when appropriate.
•
Climate change may adversely affect our business.
•
Potential liability or other expenditures associated with potential environmental contamination may be costly.
•
Rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental
income and profitability.
•
Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
•
Moisture infiltration and resulting mold remediation may be costly.
•
Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from
casualty events may affect our financial condition and results of operations.
•
Natural disasters and severe weather may affect our financial condition and results of operations.
•
We depend on our senior management.
•
We rely on our property managers to manage our properties.
•
Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information
technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.
7
•
Compliance with ever evolving federal and state laws relating to the handling of information about individuals involves
significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability,
negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of
operations, and financial condition.
•
We do not have control over the operations of our alternative investments, which could adversely affect our financial
condition and results of operations.
•
There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR.
•
Our business could be negatively affected as a result of the actions of activist stockholders.
•
We are seeking to maximize shareholder value by exploring strategic alternatives. There can be no assurance that we
will be successful in executing a strategic transaction.
•
We are subject to risks associated with our debt financing.
•
Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and
could adversely affect our liquidity.
•
Increases in interest rates would increase our interest expense and reduce our profitability and could adversely affect
our business, operating results, and financial condition.
•
Covenant restrictions may limit our operations and impact our ability to make payments to our investors.
•
We may increase leverage in executing our development plan.
•
Aimco may fail to qualify as a REIT.
•
REIT distribution requirements limit our available cash.
•
Aimco may be subject to federal, state, and local income taxes in certain circumstances.
•
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
•
Complying with the REIT requirements may cause Aimco to forgo otherwise attractive business opportunities.
•
Changes to United States federal income tax laws could materially and adversely affect Aimco and Aimco’s
stockholders.
•
If the Aimco Operating Partnership were to fail to qualify as a partnership for federal income tax purposes, Aimco
would fail to qualify as a REIT and suffer other adverse consequences.
•
There are restrictions on the ability to transfer and redeem Aimco Operating Partnership Units, there is no public market
for Aimco Operating Partnership Units and holders of Aimco Operating Partnership Units are subject to dilution.
•
Cash distributions by Aimco Operating Partnership are not guaranteed and may fluctuate with partnership performance.
•
Holders of OP Units have limited voting rights and are limited in their ability to effect a change of control.
•
Holders of OP Units may not have limited liability in specific circumstances.
•
Aimco may have conflicts of interest with holders of OP Units.
•
Provisions in the Aimco Operating Partnership agreement may limit the ability of a holder of OP Units to challenge
actions taken by the general partner.
•
Aimco Operating Partnership and its subsidiaries may be prohibited from making distributions and other payments.
•
Aimco’s charter includes limits on ownership of Aimco shares.
•
Aimco’s charter and the Maryland General Corporations Law may limit the ability of a third-party to acquire control of
Aimco.
8
RISKS RELATED TO BUSINESS
Adverse economic and geopolitical conditions, health crises and dislocations in the financial and credit markets could affect
our ability to collect rents and late fees from tenants, and our ability to evict tenants, in addition to having other negative
effects on our business, which in turn could adversely affect our financial condition and results of operations.
Adverse economic and geopolitical conditions, local, regional, national, or international health crises and dislocations in the
credit markets could negatively impact our tenants and our operations. The occurrence of regional epidemics or a global
pandemic, may adversely affect our operations, financial condition, and results of operations. These conditions also may add
uncertainty to operations and may cause supply chain disruptions.
The effects of a health crisis, adverse economic or geopolitical events or dislocation in the financial and credit markets have
negatively impacted or would negatively impact our operations or those of entities in which we hold a partial interest,
including:
•
our ability to collect rents and late fees on a timely basis or at all, without reductions or other concessions;
•
our ability to evict residents for non-payment or for other reasons;
•
our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly
implemented or deployed during a disruption;
•
fluctuations in regional and local economies, local real estate conditions, and rental rates;
•
interruptions in real estate development and redevelopment activities due to supply chain disruptions;
•
our ability to dispose of communities at all or on terms favorable to us; and
•
our ability to complete developments and redevelopments and other construction projects as planned.
Given the nature of the effects of a potential epidemic, pandemic, or other health crisis, it remains challenging to predict the
ultimate impact of such events on the global economy, our residents and commercial tenants, our communities, and the
operations of entities in which we hold an interest. Such events, depending on their nature, duration, and intensity, could have a
material adverse effect on our operating results and financial condition. An epidemic, pandemic, or other health crisis also may
have the effect of heightening many of the other risks described below.
Development, redevelopment, and construction risks could affect our profitability.
Development and redevelopment are subject to numerous risks, including the following:
•
we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required
governmental or third-party permits and authorizations, which could result in increased costs or the delay or
abandonment of opportunities;
•
we may incur costs that exceed our original estimates due to increased material, labor, or other factors and costs, such
as those resulting from litigation, program changes, inflation, interest rate increases, the implementation of tariffs, or
supply chain disruptions;
•
we may be unable to complete construction and lease-up of an apartment community on schedule, including as a result
of global supply chain disruptions, resulting in increased construction and financing costs and a decrease in expected
rental revenues;
•
occupancy rates and rents at an apartment community may fail to meet our expectations for a number of reasons,
including changes in market and economic conditions beyond our control and the development of competing
communities;
•
we may be unable to obtain financing, including construction loans, with favorable terms, or at all, which may cause us
to delay or abandon an opportunity;
•
we may abandon opportunities that we have already begun to explore, or stop projects we have already commenced, for
a number of reasons, including changes in local market conditions or increases in construction or financing costs, and,
as a result, we may fail to recover costs already incurred in exploring those opportunities;
•
we may incur liabilities to third parties during the development or redevelopment process and we may be faced with
claims for construction defects after a property has been developed;
•
we may face opposition from local community or political groups with respect to the development, construction, or
operations at a particular site;
9
•
health and safety incidents or other accidents on site may occur during development;
•
unexpected events or circumstances may arise during the development or redevelopment process that affect the timing
of completion and the cost and profitability of the development or redevelopment;
•
loss of a key member of a development team could adversely affect our ability to deliver developments and
redevelopments on time and within our budget;
•
government restrictions, standards or regulations intended to reduce greenhouse gas emissions and potential climate
change impacts may increase in the future in the form of restrictions or additional requirements on development in
certain areas; and
•
environmental, social, governance and other sustainability matters and our responses to these matters could impact
development.
Some of these development risks may be heightened given current uncertain and potentially volatile market conditions. If
market volatility causes economic conditions to remain unpredictable or to trend downwards, we may not achieve our expected
returns on properties under development and we could lose some or all of our investments in those properties. In addition, the
lead time required to develop, construct, and lease-up a development property may increase, which could adversely impact our
projected returns or result in a termination of the development project.
In addition, we may serve as either the construction manager or the general contractor for our development projects. The
construction of real estate projects entails unique risks, including risks that the project will fail to conform to building plans,
specifications, and timetables. These failures could be caused by labor strikes, weather, government regulations, and other
conditions beyond our control. In addition, we may become liable for injuries and accidents occurring during the construction
process that are underinsured.
Failure to generate sufficient net operating income may adversely affect our liquidity, limit our ability to fund necessary
capital expenditures, or adversely affect our ability to pay dividends or distributions.
Our ability to fund necessary capital expenditures on our communities and make payments to our investors depends on,
among other things, our ability to generate net operating income in excess of required debt payments and our ability to collect
on interest and principal payments due to us. If we are unable to fund capital expenditures on our communities, we may not be
able to preserve the competitiveness of our communities, which could adversely affect their net operating income and long-term
value.
Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including:
•
the general economic climate;
•
an inflationary environment in which the costs to operate and maintain our communities increase at a rate greater than
our ability to increase rents, which we can only do upon renewal of existing leases or at the inception of new leases;
•
competition from other apartment communities and other housing options;
10
•
local conditions, such as loss of jobs, unemployment rates, or an increase in the supply of apartments, that might
adversely affect apartment occupancy or rental rates;
•
changes in governmental regulations and the related cost of compliance;
•
changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily
housing; and
•
changes in interest rates and the availability of financing.
Our business and financial results could be adversely affected by significant inflation, higher interest rates or deflation.
Inflation can adversely affect us by increasing costs of land, materials and labor. In addition, significant inflation is often
accompanied by higher interest rates, which have a negative impact on housing affordability. Rising interest rates increase the
borrowing costs on new debt and could affect fair value of our investments. In an inflationary environment, our cost of capital,
labor and materials can increase and the purchasing power of our cash resources can decline, which can have an adverse impact
on our business or financial results.
Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels. This could
lead to deterioration in economic conditions, including an increase in the rate of unemployment. Deflation could also cause the
value of our real estate to decline. These, or other factors related to deflation, could have a negative impact on our business or
financial results.
Our ability to continue to grow or maintain our pipeline of development and redevelopment opportunities may be
constrained.
We source development and redevelopment opportunities through various means, including from our operating portfolio
and property acquisitions. We may be unable to identify and complete acquisitions of properties compatible with our
investment strategy. We may be unable to locate properties that will produce returns with a sufficient spread to our cost of
capital. The inability to source opportunities could impede our growth and could have a material adverse effect on us.
Our properties are geographically concentrated in Florida, Chicago, the Washington, D.C. Metro Area, and in the
Northeast region of the United States, which makes us more susceptible to regional and local adverse economic and other
conditions than if we owned a more geographically diversified portfolio.
The majority of our properties are located in Florida, Chicago, the Washington, D.C. Metro Area, and in the Northeast
region of the United States. As a result, we are particularly susceptible to adverse economic or other conditions in these markets
(such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of
businesses, increases in real estate and other taxes, and the cost of complying with governmental regulations or increased
regulation), as well as to natural disasters (including earthquakes, storms, and hurricanes), potentially adverse effects of “global
warming,” and other disruptions that occur in these markets (such as terrorist activity or threats of terrorist activity and other
events), any of which may have a greater impact on the value of our assets or on our operating results than if we owned a more
geographically diversified portfolio.
We cannot assure you that these markets will grow or that underlying real estate fundamentals will be favorable to owners,
operators, and developers of multifamily, retail, or office assets, or future development assets. Our operations may also be
affected if competing assets are built in these markets. Moreover, submarkets within our core markets may be dependent upon a
limited number of industries. Any adverse economic or other conditions, or any decrease in demand for office, multifamily, or
retail assets could adversely impact our financial condition and results of operations.
Our development projects may subject us to certain liabilities, and we are subject to risks associated with developing
properties in partnership with others.
We may hire and supervise third-party contractors to provide construction, engineering, and various other services for
development projects. Certain of these contracts may be structured such that we are the principal rather than the agent. As a
result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction
defects, negligent performance of work or other similar actions by third parties we have engaged.
11
Adverse outcomes of disputes or litigation could negatively impact our business, results of operations, and financial
condition, particularly if we have not limited the extent of the damages for which we may be liable, or if our liabilities exceed
the amounts of the insurance that we carry. Moreover, our tenants may seek to hold us accountable for the actions of
contractors because of our role even if we have technically disclaimed liability as a legal matter, in which case we may
determine it necessary to participate in a financial settlement for purposes of preserving the tenant or customer relationship or
to protect our corporate brand. To the extent our tenants are obligated to reimburse us, acting as a principal may also mean that
we pay a contractor before we have been reimbursed by our tenants. This exposes us to additional risks of collection in the
event of a bankruptcy, insolvency, or a condominium purchaser default. The reverse can occur as well, where a contractor we
have paid files for bankruptcy protection or commits fraud with the funds before completing a project that we have funded in
part or in full.
Additionally, we use partnerships and limited liability companies to develop some of our real estate investments. Acting
through our wholly-owned subsidiaries, we typically will be the general partner or managing member in these partnerships or
limited liability companies. There are, however, instances in which we may not control or even participate in management or
day-to-day operations of these properties. The use of partnerships and limited liability companies involve special risks
associated with the possibility that:
•
a partner or member may have interests or goals inconsistent with ours;
•
a general partner or managing member may take actions contrary to our instructions, requests, policies, or objectives
with respect to our real estate investments;
•
a partner or member could experience financial difficulties that prevent it from fulfilling its financial or other
responsibilities to the project; or
•
a partner may not fulfill its contractual obligations.
In the event any of our partners or members file for bankruptcy, we could be precluded from taking certain actions affecting
our project without bankruptcy court approval, which could diminish our control over the project even if we were the general
partner or managing member. In addition, if the bankruptcy court were to discharge the obligations of our partner or member, it
could result in our ultimate liability for the project being greater than originally anticipated.
Further, disputes between us and a partner may result in litigation or arbitration that may increase our expenses and prevent
our management from focusing their time and attention on our business.
To the extent we are a general partner, we may be exposed to unlimited liability, which may exceed our investment or
equity in the partnership. If one of our subsidiaries is a general partner of a particular partnership, it may be exposed to the
same kind of unlimited liability.
Development of properties may entail a lengthy, uncertain, and costly entitlement process.
Approval to develop real property sometimes requires political support and generally entails an extensive entitlement
process involving multiple and overlapping regulatory jurisdictions and often requires discretionary action by local
governments. Real estate projects must generally comply with local land development regulations and may need to comply with
state and federal regulations. We may incur substantial costs to comply with legal and regulatory requirements. An increase in
legal and regulatory requirements may cause us to incur substantial additional costs, or in some cases cause us to determine that
the property is not feasible for development. In addition, our competitors and local residents may challenge our efforts to obtain
entitlements and permits for the development of properties. The process to comply with these regulations is usually lengthy and
costly, may not result in the approvals we seek, and can be expected to materially affect our development activities.
Government regulations and legal challenges may delay the start or completion of the development of our communities,
increase our expenses or limit our building of apartments or other activities.
Various local, state, and federal statutes, ordinances, rules, and regulations concerning building, health and safety, site and
building design, environment, zoning, sales, and similar matters apply to or affect the real estate development industry. In
addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted or
approvals already obtained depends on factors beyond our control, such as changes in federal, state, and local policies, rules
and regulations, and their interpretations and application.
12
Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps. If
municipalities in which we operate take such actions, it could have an adverse effect on our business by causing delays,
increasing our costs, or limiting our ability to operate in those municipalities. These measures may reduce our ability to develop
apartment communities and to build and sell other real estate development projects in the affected markets, including with
respect to land we may already own, and create additional costs and administration requirements, which in turn may harm our
future sales, margins, and earnings.
In addition, there is a variety of legislation being enacted, or considered for enactment, at the federal, state, and local level
relating to energy and climate change. This legislation relates to items such as carbon dioxide emissions control and building
codes that impose energy efficiency standards. New building code requirements that impose stricter energy efficiency standards
could significantly increase our cost to construct buildings. Such environmental laws may affect, for example, how we manage
storm water runoff, wastewater discharges, and dust; how we develop or operate properties on or affecting resources such as
wetlands, endangered species, cultural resources, or areas subject to preservation laws; and how we address contamination. As
climate change concerns continue to grow, legislation and regulations of this nature are expected to continue and increase costs
of compliance. In addition, it is possible that some form of expanded energy efficiency legislation may be passed by the U.S.
Congress or federal agencies and certain state legislatures, which may, despite being phased in over time, significantly increase
our costs of building apartment communities and the sale price to our buyers and adversely affect our sales volumes. We may
be required to apply for additional approvals or modify our existing approvals because of changes in local circumstances or
applicable law.
Energy-related initiatives affect a wide variety of companies throughout the United States and the world and, because our
operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, they could have
an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are
burdened with expensive cap and trade and similar energy-related taxes and regulations. Our noncompliance with
environmental laws could result in fines and penalties, obligations to remediate, permit revocations, other sanctions and
reputational harm. In addition, regulations and other expectations related to environmental matters and climate change are not
uniform, and may be inconsistently interpreted or applied, which can increase the complexity and costs of compliance as well
as any associated litigation or enforcement risks.
Governmental regulation affects not only construction activities but also sales activities, mortgage lending activities, and
other dealings with consumers. Further, government agencies routinely initiate audits, reviews, or investigations of our business
practices to ensure compliance with applicable laws and regulations, which can cause us to incur costs or create other
disruptions in our business that can be significant. Further, we may experience delays and increased expenses as a result of
legal challenges to our proposed communities, whether brought by governmental authorities or private parties.
Competition could limit our ability to lease apartment homes, increase or maintain rents or execute our development
strategy.
Our apartment communities compete for residents with other housing alternatives, including other rental apartments and
condominiums, and, to a lesser degree, single-family homes that are available for rent, as well as new and existing
condominiums and single-family homes for sale. Competitive residential housing, as well as the lack of household formation
and job creation in a particular area, could adversely affect our ability to lease apartment homes and to increase or maintain
rental rates.
In addition, there are many developers, managers, and owners of apartment real estate and underdeveloped land, as well as
REITs, private real estate companies, and investors, that compete with us, some of whom have greater financial resources and
market share than us. If our competitors prevent us from realizing our real estate development objectives, our performance may
fall short of our expectations and adversely affect our business.
Because real estate investments are relatively illiquid, we may not be able to sell apartment communities or other assets
when appropriate.
Real estate investments are relatively illiquid and generally cannot be sold quickly. REIT tax rules also restrict our ability to
sell apartment communities. Thus, we may not be able to change our portfolio promptly in response to changes in economic or
other market conditions. Our ability to dispose of apartment communities in the future will depend on prevailing economic and
market conditions, including the cost and availability of financing. This could have a material adverse effect on our financial
condition or results of operations.
13
Climate change may adversely affect our business.
To the extent that significant changes in the climate occur in areas where our properties are located, we may experience
extreme weather and changes in precipitation and temperature, all of which may result in physical damage to or a decrease in
demand for properties located in these areas or affected by these conditions. Climate change may also have indirect effects on
our business by increasing the costs of (or making unavailable) insurance on favorable terms, or at all, or requiring us to spend
funds to repair and protect our properties against such risks. Should the impact of climate change be material in nature,
including significant property damage to or destruction of our properties, or occur for lengthy periods of time, our financial
condition or results of operations may be adversely affected. In addition, changes in federal, state and local legislation and
regulations based on concerns about climate change could result in increased capital expenditures on our properties (for
example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in
revenue, resulting in adverse impacts to our net income.
Potential liability or other expenditures associated with potential environmental contamination may be costly.
Various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of
removal or remediation of certain potentially hazardous materials that may be present in the land or buildings. Potentially
hazardous materials may include polychlorinated biphenyls, petroleum-based fuels, lead-based paint, or asbestos, among other
materials. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible
for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may
adversely affect occupancy at such real estate as well as the ability to sell or finance such real estate. In addition, governmental
agencies may bring claims for costs associated with investigation and remediation actions, damages to natural resources, and
for potential fines or penalties in connection with such damage or with respect to the improper management of hazardous
materials. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur, or
personal injury, disease, disability, or other infirmities related to the alleged presence of hazardous materials at an apartment
community. In addition to potential environmental liabilities or costs associated with our current real estate, we may also be
responsible for such liabilities or costs associated with communities we acquire or manage in the future, or real estate we no
longer own or operate.
Rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental
income and profitability.
State and local governmental agencies may introduce rent control laws or other regulations that limit our ability to increase
rental rates, which may affect our rental income. Especially in times of recession and economic slowdown, rent control
initiatives can acquire significant political support. If rent controls unexpectedly became applicable to certain of our properties,
our revenue from and the value of such properties could be adversely affected.
Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
Under the Americans with Disabilities Act of 1990 (“ADA”), all places intended to be used by the public are required to
meet certain federal requirements related to access and use by disabled persons. The Fair Housing Amendments Act of 1988
(“FHAA”) requires apartment communities first occupied after March 13, 1991, to comply with design and construction
requirements for disabled access. For those apartment communities receiving federal funds, the Rehabilitation Act of 1973 also
has requirements regarding disabled access. These and federal, state, and local laws may require structural modifications to our
apartment communities or changes in policy/practice or affect renovations of the communities. Noncompliance with these laws
could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any
non-complying feature, which could result in substantial capital expenditures. Although we believe that our apartment
communities are substantially in compliance with present requirements, we may incur unanticipated expenses to comply with
the ADA, the FHAA, and the Rehabilitation Act of 1973 in connection with the ongoing operation or redevelopment of our
apartment communities.
Moisture infiltration and resulting mold remediation may be costly.
Although we are proactively engaged in managing moisture intrusion and preventing the presence of mold at our apartment
communities, it is not unusual for periodic moisture intrusion to cause mold in isolated locations within an apartment
community. We have implemented policies, procedures, and training, and include a detailed moisture intrusion and mold
assessment during acquisition due diligence. We believe these measures will manage mold exposure at our apartment
communities and will minimize the effects that mold may have on our residents. To date, we have not incurred any material
costs or liabilities relating to claims of mold exposure or to abate mold conditions. We have only limited insurance coverage for
property damage claims arising from the presence of mold and for personal injury claims related to mold exposure.
14
Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty
events may affect our financial condition and results of operations.
We are insured for a portion of our real estate assets’ exposure to casualty losses resulting from fire, earthquake, hurricane,
tornado, flood, and other perils, which insurance is subject to deductibles and self-insurance retention. We recognize casualty
losses or gains based on the net book value of the affected asset and the amount of any related insurance proceeds. In many
instances, the actual cost to repair or replace the apartment community may exceed its net book value and any insurance
proceeds. We recognize the uninsured portion of losses as casualty losses in the periods in which they are incurred. In addition,
we are self-insured for a portion of our exposure to third-party claims related to our workers’ compensation coverage and
general liability exposure. With respect to our exposure to claims of third parties, we establish reserves at levels that reflect our
known and estimated losses. The ultimate cost of losses and the impact of unforeseen events may vary materially from recorded
reserves, and variances may adversely affect our operating results and financial condition. We purchase insurance to reduce our
exposure to losses and limit our financial losses on large individual risks. The availability and cost of insurance are determined
by market conditions outside our control. No assurance can be made that we will be able to obtain and maintain insurance at the
same levels and on the same terms as we do today. If we are not able to obtain or maintain insurance in amounts we consider
appropriate for our business, or if the cost of obtaining such insurance increases materially, we may have to retain a larger
portion of the potential loss associated with our exposures to risks.
Natural disasters and severe weather may affect our financial condition and results of operations.
Natural disasters such as earthquakes and severe weather such as hurricanes may result in significant damage to our real
estate assets. The extent of our casualty losses and loss in operating income in connection with such events is a function of the
severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of
exposures, a single catastrophe (such as an earthquake) or destructive weather event (such as a hurricane) affecting a region
may have a significant adverse effect on our financial condition and results of operations. We cannot accurately predict natural
disasters or severe weather, or the number and type of such events that will affect us. As a result, our operating and financial
results may vary significantly from one period to the next. Although we anticipate and plan for losses, there can be no
assurance that our financial results will not be adversely affected by our exposure to losses arising from natural disasters or
severe weather in the future that exceed our previous experience and assumptions.
We depend on our senior management.
Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our
senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our
operational, financing, acquisition, and disposition activity. Members of our senior management team have national or regional
industry reputations that attract business and investment opportunities and assist us in negotiations with lenders, existing and
potential tenants, and other industry participants. The loss of services of one or more members of our senior management team,
or our inability to attract and retain similarly qualified personnel, could adversely affect our business, diminish our investment
opportunities, and weaken our relationships with lenders, business partners, existing and prospective tenants, and industry
participants, which could adversely affect our financial condition, results of operations, and cash flow.
We rely on our property managers to manage our properties. If our property managers fail to efficiently manage our
properties, tenants may not renew their leases, or we may become subject to unforeseen liabilities.
Our properties are managed by third parties. We do not supervise our third-party property managers or their employees on a
day-to-day basis and we cannot assure you that they will manage such properties in a manner that is consistent with their
obligations under our agreements, that they will not be negligent in their performance or engage in any criminal or fraudulent
activity, or that they will not otherwise default on their management obligations to us. If any of the foregoing occurs, the
relationships with our tenants at such properties could be damaged, which may cause the tenants not to renew their leases, and
we could incur liabilities resulting from loss or injury to the properties or to persons at the properties. If we are unable to lease
the properties or we become subject to significant liabilities as a result of our third-party property managers’ management
performance, our financial condition and results of operations could be substantially harmed.
15
Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information
technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.
Information technology, communication networks, and related systems (“IT Systems”), including systems maintained by
third-party vendors with which we do business are essential to the operation of our business. We use these systems to manage
our vendor relationships, internal communications, accounting and record-keeping systems, and many other key aspects of our
business. Our operations rely on the secure processing, storage, and transmission of confidential, personal and other
information (“Confidential Information") in our computer systems and networks, which also depend on the strength of our
procedures and the effectiveness of our internal controls. We own and manage some of these IT Systems, but also rely on third
parties for a range of IT Systems and related products and services, including but not limited to cloud computing services.
Information security risks have generally increased in recent years due to the rise in new technologies and the increased
sophistication and activities of perpetrators of cyberattacks.
We face numerous and evolving risks associated with energy blackouts, natural disasters, terrorism, war, telecommunication
failures, and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems. The risk
of a cyber incident has generally increased as the number, intensity and sophistication of attempted attacks have increased
globally, including by computer hackers, foreign governments, information service interruptions and cyber terrorists,
opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware
(including ransomware), malfeasance by insiders, human or technological error, and as a result of bugs, misconfigurations or
exploited vulnerabilities in software or hardware. Techniques used in cyber incidents evolve frequently, may originate from less
regulated and remote areas of the world and be difficult to detect and may not be recognized until launched against a target.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative
measures, making it impossible for us to entirely eliminate this risk. Because we make use of third-party suppliers and service
providers that support our internal- and external-facing operations, successful cyberattacks that disrupt or result in unauthorized
access to third party IT Systems can materially impact our operations and financial results. Aimco Predecessor and our third-
party vendors have been impacted by security incidents in the past and we and our third-party vendors will likely continue to
experience security incidents of varying degrees. For example, unauthorized parties, whether within or outside the Company,
may disrupt or gain access to our IT Systems, or those of third parties with whom we do business, through human error,
misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering,
phishing, computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering. While we
do not believe that past incidents have had a material impact to date, as our reliance on technology increases, so do the risks of
a security incident. The occurrence of any of the foregoing risks could have a material adverse effect on us.
We may also incur additional costs to remedy damages caused by such disruptions. There can be no assurance that our
security efforts and measures will be fully implemented, complied with or effective or that attempted security breaches or
disruptions would not be successful or damaging. Any compromise of our security could also result in a violation of applicable
privacy and other laws, significant legal and financial exposure, damage to our reputation, loss, or misuse of the Confidential
Information, and a loss of confidence in our security measures, which could harm our business, operating results, and financial
condition. We also cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by
our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable
terms or at all.
Compliance with ever evolving federal and state laws relating to the handling of information about individuals involves
significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability,
negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations,
and financial condition.
We receive, store, handle, transmit, use and otherwise process business information and information related to individuals,
including from and about actual and prospective tenants, as well as our employees and service providers. We also depend on a
number of third-party vendors in relation to the operation of our business, a number of which we rely on to process personal
data on our behalf. While we may not be responsible for the compliance with certain laws, failure by such third parties to
comply with those laws could result in harm to our reputation and brand and require us to expend significant resources.
We and our vendors are subject to a variety of federal and state data privacy laws, rules, regulations, industry standards and
other requirements, including those that apply generally to the handling of information about individuals, and those that are
specific to certain industries, sectors, contexts, or locations. These requirements, and their application, interpretation and
amendment are constantly evolving and developing.
16
We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act (the
“CCPA” (which became effective on January 1, 2020 and is amended by the California Privacy Rights Act)), relating to the
collection, use, disclosure and security of employee and business contact data. For other personal data, including tenant, we rely
on our third-party partners to store and process such data. Among other things, the CCPA: requires disclosures to such residents
about the data collection, use and disclosure practices of covered businesses; provides such individuals expanded rights to
access, delete, and correct their personal information, and opt-out of certain sales or transfers of personal information; and
provides such individuals with a private right of action and statutory damages for certain data breaches. The enactment of the
CCPA is prompting a wave of similar legislative developments in other states in the United States, which creates the potential
for a patchwork of overlapping but different state laws. Evolving compliance and operational requirements under the CCPA
and the privacy and data security laws of other jurisdictions in which we operate impose significant costs that are likely to
increase over time. Our failure, or the failure of third-party partners we rely on to process data, to comply with laws, rules, and
regulations related to privacy and data protection could harm our business or reputation.
Additionally, we rely on third-party property managers to run background checks on prospective tenants. Those third-party
managers are considered “users” of consumer reports provided by consumer reporting agencies (“CRAs”) under the Fair Credit
Reporting Act, as amended by the Fair and Accurate Credit Transactions Act (collectively, “FCRA”). FCRA regulates and
protects consumer information and, among other things, imposes specific obligations “users” of consumer reports. Such
obligations include notifying consumers when such reports are used to make an adverse decision, and, in the context of
completing employee background checks, providing a notice containing certain disclosures to the consumer and obtaining their
consent. Noncompliance with the FCRA can lead to civil and even criminal penalties, and it permits consumers to bring a
private right of action if they are unsatisfied with the dispute resolution process.
Further, laws, regulations, and standards covering marketing, advertising, and other activities conducted by telephone,
email, mobile devices, and the internet may be or become applicable to our business, such as the Telephone Consumer
Protection Act (the “TCPA”), the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the
“CAN-SPAM Act”), and similar state consumer protection and communication privacy laws, such as California’s Invasion of
Privacy Act.
Third-party property managers send short message service, or SMS, text messages to tenants. The actual or perceived
improper sending of such text messages may subject us to potential risks, including liabilities or claims relating to consumer
protection laws such as the TCPA. Numerous class-action suits under federal and state laws have been filed in recent years
against companies who conduct telemarketing and/or SMS texting programs, with many resulting in multi-million-dollar
settlements to the plaintiffs. Any future such litigation against us could be costly and time-consuming to defend. In particular,
the TCPA imposes significant restrictions on the ability to make telephone calls or send text messages to mobile telephone
numbers without the prior consent of the person being contacted. Federal or state regulatory authorities or private litigants may
claim that the notices and disclosures we provide, form of consents we obtain or our SMS texting practices are not adequate or
violate applicable law. This may in the future result in civil claims against us. Claims that we have violated the TCPA could be
costly to litigate, whether or not they have merit, and could expose us to substantial statutory damages or costly settlements.
Third-party property managers send marketing messages via email and are subject to the CAN-SPAM Act. The CAN-
SPAM Act imposes certain obligations regarding the content of emails and providing opt-outs (with the corresponding
requirement to honor such opt-outs promptly). While we strive to ensure that all of our marketing communications comply with
the requirements set forth in the CAN-SPAM Act, any violations could result in the FTC seeking civil penalties against us.
Moreover, as our third-party property managers accept debit and credit cards for payment, they are subject to the Payment
Card Industry Data Security Standard (“PCI-DSS”), issued by the Payment Card Industry Security Standards Council. PCI-DSS
contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and
transmission of cardholder data. If our third-party property managers or other service providers are unable to comply with the
security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion
from card acceptance programs, which could materially and adversely affect our business.
Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other
requirements could result in proceedings or actions against us by individuals, consumer rights groups, government agencies, or
others. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages
or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may
subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, results of
operations, and financial condition could be materially adversely affected.
17
We do not have control over the operations of our alternative and equity method investments, which could adversely affect
our financial condition and results of operations.
Our interests in alternative investments consist of the mezzanine loan to the partnership owning the Parkmerced Apartments
(the “Mezzanine Investment”), as well as our investments in IQHQ and real estate technology funds. Our equity method
investments include ownership interests in unconsolidated real estate partnerships that own four operating properties and one
land parcel held for development. These investments are subject to certain risks, including, but not limited to, exposure to the
skill and capital of the controlling party, local market conditions, increases in construction financing costs (when applicable),
and occupancy rates.
In 2023 and 2022, we recognized non-cash impairment charges on our Mezzanine Investment of $158.0 million and $212.6
million, respectively. The carrying value of the Mezzanine Investment was zero as of December 31, 2024 and 2023. While we
have impaired and written down the carrying value of the Mezzanine Investment to zero and the mezzanine loan is in maturity
default, the risk remains that all or a portion of the loan will not be repaid.
In 2024, we recognized a non-cash impairment of $48.6 million on our passive equity investment in IQHQ reducing the
carrying value to $11.1 million.
There can be no assurances that we will not take additional charges in the future related to the impairment of our alternative
and equity method investments. Any future impairment could have a material adverse effect on our financial condition and
results of operations.
There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR.
There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR. The Separation was
designed to minimize conflicts of interest between us and AIR, and the volume of transactions with AIR has significantly
decreased since the Separation. While AIR is not a related party, there can be no assurance that such conflicts, or appearance of
conflicts, do not exist.
Actual, potential, or perceived conflicts could give rise to investor dissatisfaction, settlements with stockholders, litigation
or regulatory inquiries or enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our
reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual, or perceived
conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse
impact on our reputation, which could materially adversely affect our business in a number of ways, including causing a
reluctance of counterparties to do business with us, a decrease in the prices of our equity securities, and a resulting increased
risk of litigation and regulatory enforcement actions.
Our business could be negatively affected as a result of the actions of activist stockholders.
Publicly traded companies have increasingly become subject to campaigns by investors advocating corporate actions such
as financial restructuring, increased borrowing, special dividends, stock repurchases, or sales of assets or the entire company.
We have been subject to stockholder activism in the past and given our stockholder composition and other factors, it is possible
our stockholders or future activist stockholders may attempt to effect such changes in the future. Responding to proxy contests
and other actions by such activist stockholders or others would be costly and time-consuming, disrupt our operations and divert
the attention of our board of directors (the "Board") and senior management team from the pursuit of business strategies, which
could adversely affect our results of operations and financial condition. Additionally, perceived uncertainties as to our future
direction as a result of stockholder activism or changes to the composition of our Board may lead to the perception of a change
in the direction of the business, instability, or lack of continuity, which may be exploited by our competitors, cause concern to
our current or potential lenders, partners, or others with whom we do business, and make it more difficult to attract and retain
qualified personnel.
We are seeking to maximize shareholder value by exploring strategic alternatives. There can be no assurance that we will be
successful in executing a strategic transaction.
We are actively considering strategic alternatives in an effort to unlock and maximize stockholder value. These strategic
alternatives may include, but not be limited to, exploration of potential sales of the major components of the business (in one or
a series of transactions), an acceleration of individual asset sales, or a sale or merger of the Company as a whole. We may not
be able to identify or consummate a suitable transaction and do not currently have any commitments relating to any
transactions. We may not be able to successfully implement a strategic transaction we pursue, and even if we determine to
pursue one or more strategic transactions, we may be unable to do so on acceptable financial terms and any such transaction
may not improve the market price of our common stock. Pursuing a strategic opportunity is subject to risks, including those
outlined herein, and if we are unsuccessful in consummating a strategic transaction, our business could be materially adversely
affected.
18
RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING
Our debt financing could result in foreclosure of our apartment communities, prevent us from making distributions on our
equity, or otherwise adversely affect our liquidity.
A significant number of our assets, including apartment communities, land, and construction projects serve as collateral for
our credit facility, property debt and construction loans. Our secured credit facility matures in December 2025. Certain of our
subsidiaries have existing secured property-level debt equal to approximately $689.9 million and construction loans of
approximately $393.8 million as of December 31, 2024. Over time, we are likely to become party to additional financing
arrangements, which may include credit facilities or other bank debt, bonds, and mortgage financing. Our organizational
documents do not limit the amount of debt that we may incur, and we have significant amounts of debt outstanding. Payments
of principal and interest may leave us with insufficient cash resources to operate our communities or pay distributions required
to maintain our qualification as a REIT.
In connection with such financing activities, we are subject to the risk that our cash flow from operations will be insufficient
to make required payments of principal and interest, and the risk that our indebtedness may not be refinanced or that the terms
of any refinancing will not be as favorable as the terms of then-existing indebtedness. If we fail to make required payments of
principal and interest on our non-recourse property debt, our lenders could foreclose on the apartment communities and other
collateral securing such debt, which would result in the loss to us of income and asset value.
Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and
could adversely affect our liquidity.
Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit
markets. During periods of economic uncertainty, the United States credit markets may experience significant liquidity
disruptions, which may cause the spreads on debt financings to widen considerably and make obtaining financing, including,
but not limited to non-recourse property debt secured by stabilized properties, construction loans, and corporate borrowings
such as those under our credit facilities, more difficult. In particular, apartment borrowers have benefited from the historic
willingness of the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation
(“Freddie Mac”), to make substantial amounts of loans secured by multifamily properties, even in times of economic distress.
These two lenders are federally chartered and subject to federal regulation, which is subject to change, making uncertain their
prospects and ability to provide liquidity in a future downturn.
If our ability to obtain financing is adversely affected, we may be unable to satisfy scheduled maturities on existing
financings through other sources of liquidity, which could result in a lender foreclosure on the apartment communities securing
such debt and loss of income and asset value, both of which would adversely affect our liquidity.
Increases in interest rates would increase our interest expense and reduce our profitability and could adversely affect our
business, operating results, and financial condition.
Our revolving secured credit facility contains a variable interest rate, which may be based, in part, on the Secured Overnight
Financing Rate ("SOFR"). We also have certain non-recourse property debt and construction loans that are based on variable
interest rate indexes. An increase or decrease in these variable interest rate indexes would likely increase or decrease our
interest expense. An increase in interest expense may affect our profitability.
Covenant restrictions may limit our operations and impact our ability to make payments to our investors.
Some of our existing and/or future debt and other securities may contain covenants that restrict our activities. These may
include covenants that limit our operations or impact our ability to make distributions or other payments unless certain financial
tests or other criteria are satisfied, as well as certain other customary affirmative and negative covenants.
19
We may increase leverage in executing our development plan, which could further exacerbate the risks associated with our
indebtedness.
We may decide to increase our leverage to execute our development plan. We will consider a number of factors when
evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, including the
estimated market value of our assets and the ability of particular assets, and our company as a whole, to generate cash flow to
cover the expected debt service. Although our credit facility may limit our ability to incur additional indebtedness, our
governing documents do not limit the amount of debt we may incur, and we may change our target debt levels at any time
without the approval of our stockholders. In addition, we may incur additional indebtedness from time to time in the future to
finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we increase leverage, the
risk related to our indebtedness could also increase.
RISKS RELATED TO TAX LAWS AND REGULATIONS
Aimco may fail to qualify as a REIT.
If Aimco fails to qualify as a REIT, Aimco will not be allowed a deduction for dividends paid to its stockholders in
computing its taxable income and will be subject to United States federal income tax at regular corporate rates. This would
substantially reduce our funds available for general corporate usage or for distribution to our investors. Unless entitled to relief
under certain provisions of the Code, Aimco also would be disqualified from taxation as a REIT for the four taxable years
following the year during which it ceased to qualify as a REIT. In addition, Aimco's failure to qualify as a REIT may place us
in default under our credit facilities.
We believe Aimco operates, and has since its taxable year ended December 31, 1994, operated, in a manner that enables it
to meet the requirements for qualification and taxation as a REIT. However, qualification as a REIT involves the application of
highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Moreover,
even a technical or inadvertent mistake could jeopardize Aimco's REIT status. Aimco's continued qualification as a REIT will
depend on its satisfaction of certain asset, income, investment, organizational, distribution, stockholder ownership, and other
requirements on a continuing basis. Aimco's ability to satisfy the asset tests depends upon the fair market values of our assets,
some of which are not susceptible to a precise determination, and for which we do not obtain independent appraisals. Aimco's
compliance with the REIT annual income and quarterly asset requirements also depends upon our ability to successfully
manage the composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as
debt or equity for United States federal income tax purposes may be uncertain in some circumstances, which could affect the
application of the REIT qualification requirements. Accordingly, there can be no assurance that the Internal Revenue Service
(the “IRS”), will not contend that Aimco's interests in subsidiaries or other issuers constitute a violation of the REIT
requirements. Moreover, future economic, market, legal, tax, or other considerations may cause Aimco to fail to qualify as a
REIT, or the Board may determine to revoke its REIT status.
REIT distribution requirements limit our available cash.
As a REIT, Aimco is subject to annual distribution requirements. Aimco pays distributions, including taxable stock
dividends, intended to enable it to satisfy its distribution requirements. This limits the amount of cash available for other
business purposes, including amounts to fund our growth. Aimco generally must distribute annually at least 90% of its “real
estate investment trust taxable income,” which is generally equivalent to net taxable ordinary income, determined without
regard to the dividends paid deduction and excluding any net capital gain, in order to qualify as a REIT. To the extent that
Aimco does not distribute all of its net capital gain, or distributes at least 90% but less than 100%, of its "real estate investment
trust taxable income," it will be required to pay United States federal corporate income tax on the undistributed amount. We
intend to make distributions to Aimco's stockholders to comply with the requirements applicable to REITs under the Code
(which may be all cash or combination of cash and stock satisfying the requirements of applicable law). However, differences
in timing between the recognition of taxable income and the actual receipt of cash could require us to sell apartment
communities or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code.
20
Aimco may be subject to federal, state, and local income taxes in certain circumstances.
Even as a REIT, Aimco may be subject to United States federal income and excise taxes in various situations, such as on its
undistributed income, as described above. Aimco could also be required to pay a 100% tax on any net income on non-arm’s-
length transactions between us and a taxable REIT subsidiary (“TRS”) and on any net income from sales of apartment
communities or other property treated as held primarily for sale to customers in the ordinary course of its business. State and
local tax laws may not conform to the United States federal income tax treatment, and Aimco may be subject to state or local
taxation in various state or local jurisdictions in which Aimco transacts business. Any taxes imposed on Aimco would reduce
our operating cash flow and net income and could negatively impact our ability to pay dividends and distributions.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
REITs are entitled to a United States federal income tax deduction for dividends paid to their stockholders. Through this
dividends paid deduction, a REIT may reduce or eliminate its entity-level United States federal income tax liability, which
generally results in a lower combined tax liability of the REIT and its stockholders as compared to that of the combined tax
liability of other taxable C-corporations and their stockholders. Notwithstanding this combined benefit, as discussed below,
dividends payable by REITs may result in marginally higher taxes to the stockholder.
C-corporations are generally required to pay a corporate-level United States federal income tax on their income, which will
reduce the amount available for distribution to stockholders. Dividends paid by a C-corporation may constitute "qualified
dividends." The maximum United States federal tax rate applicable to income from “qualified dividends” payable to United
States stockholders that are individuals, trusts, and estates is currently 20%, plus the 3.8% investment tax surcharge. While
dividends payable by REITs are generally not eligible for the qualified dividend reduced rates, stockholders that are
individuals, trusts, or estates, and meet certain requirements, may generally deduct 20% of the aggregate amount of ordinary
dividends from REITs. This deduction is available for taxable years beginning after December 31, 2017, and before January 1,
2026, and will generally cause the maximum tax rate for ordinary dividends from REITs to be 29.6%, plus the 3.8% investment
tax surcharge. The more favorable tax rates applicable to regular corporate qualified dividends could cause investors who are
individuals, trusts, and estates to perceive investments in REITs to be relatively less attractive than investments in the shares of
non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including Aimco
Common Stock.
Complying with the REIT requirements may cause Aimco to forgo otherwise attractive business opportunities.
To qualify as a REIT, Aimco must continually satisfy tests concerning, among other things, the sources of its income, the
nature and diversification of its assets, the amounts distributed to its stockholders, and the ownership of its stock. As a result of
these tests, Aimco may be required to make distributions to stockholders at disadvantageous times or when Aimco does not
have funds readily available for distribution, forgo otherwise attractive investment opportunities, liquidate assets in adverse
market conditions, or contribute assets to a TRS that is subject to regular corporate federal income tax.
Changes to United States federal income tax laws could materially and adversely affect Aimco and Aimco’s stockholders.
The present United States federal income tax treatment of REITs may be modified, possibly with retroactive effect, by
legislative, judicial, or administrative action at any time, which could affect the United States federal income tax treatment of
an investment in Aimco's Common Stock. The United States federal income tax rules dealing with REITs are constantly under
review by persons involved in the legislative process, the IRS, and the United States Treasury Department, which results in
statutory changes as well as frequent revisions to regulations and interpretations. We cannot predict how changes in the tax
laws might affect Aimco or its stockholders. Revisions in federal tax laws and interpretations thereof could significantly and
negatively affect our ability to qualify as a REIT and the tax considerations relevant to an investment in Aimco's Common
Stock or could cause us to change our investments and commitments.
21
If the Aimco Operating Partnership were to fail to qualify as a partnership for federal income tax purposes, Aimco would
fail to qualify as a REIT and suffer other adverse consequences.
We believe that the Aimco Operating Partnership has been organized and operated in a manner that will allow it to be
treated as a partnership, and not an association or publicly traded partnership taxable as a corporation, for federal income tax
purposes. As a partnership, the Aimco Operating Partnership is not subject to federal income tax on its income. Instead, each of
its partners, including Aimco, is allocated, and may be required to pay tax with respect to, that partner’s share of the Aimco
Operating Partnership’s income. No assurance can be provided, however, that the IRS will not challenge the Aimco Operating
Partnership’s status as a partnership for federal income tax purposes or that a court would not sustain such a challenge. If the
IRS were successful in treating the Aimco Operating Partnership as an association or publicly traded partnership taxable as a
corporation for federal income tax purposes, Aimco would fail to meet the gross income tests and certain of the asset tests
applicable to REITs and, accordingly, would cease to qualify as a REIT. Such REIT qualification failure could impair our
ability to expand our business and raise capital, and could materially adversely affect the value of Aimco’s stock and the Aimco
Operating Partnership’s units. Also, the failure of the Aimco Operating Partnership to qualify as a partnership would cause it to
become subject to federal corporate income tax, which could reduce significantly the amount of its cash available for debt
service and for distribution to its partners, including Aimco.
RISKS RELATED TO AIMCO OPERATING PARTNERSHIP UNITS
There are restrictions on the ability to transfer and redeem Aimco Operating Partnership Units, there is no public market
for Aimco Operating Partnership Units and holders of Aimco Operating Partnership Units are subject to dilution.
The Aimco Operating Partnership agreement restricts the transferability of OP Units. Until the expiration of a one-year
holding period, subject to certain exceptions, investors may not transfer OP Units without the consent of Aimco Operating
Partnership’s general partner. Thereafter, investors may transfer such OP Units subject to the satisfaction of certain conditions,
including the general partner’s right of first refusal. In addition, after the expiration of the one-year holding period, investors
have the right, subject to the terms of Aimco Operating Partnership’s agreement, to require Aimco Operating Partnership to
redeem all or a portion of such investor’s OP Units (in exchange for shares of our Common Stock or cash, at the Aimco
Operating Partnership’s discretion) once per quarter on an exchange date set by Aimco Operating Partnership, provided such
investor provides notice at least 45 days prior to the quarterly exchange date. There is no public market for the OP Units.
Aimco Operating Partnership has no plans to list any OP Units on a securities exchange. It is unlikely that any person will make
a market in the OP Units, or that an active market for the OP Units will develop. If a market for the OP Units develops and the
OP Units are considered “readily tradable” on a “secondary market (or the substantial equivalent thereof),” Aimco Operating
Partnership would be classified as a publicly traded partnership for U.S. federal income tax purposes, which could have a
material adverse effect on Aimco Operating Partnership and its unitholders.
In addition, Aimco Operating Partnership may issue an unlimited number of additional OP Units or other securities for such
consideration and on such terms as it may establish, without the approval of the holders of OP Units. Such securities could have
priority over the OP Units as to cash flow, distributions, and liquidation proceeds. The effect of any such issuance may be to
dilute the interests of holders of OP Units.
Cash distributions by Aimco Operating Partnership are not guaranteed and may fluctuate with partnership performance.
Aimco Operating Partnership does not intend to make regular distributions to holders of OP Units (other than what is
required for Aimco to maintain its REIT status or return capital to stockholders). There can be no assurance regarding the
amounts of available cash that Aimco Operating Partnership will generate or the portion that its general partner will choose to
distribute. The actual amounts of available cash will depend upon numerous factors, including profitability of operations,
required principal and interest payments on its debt, the cost of acquisitions (including related debt service payments), its
issuance of debt and equity securities, fluctuations in working capital, capital expenditures, adjustments in reserves, prevailing
economic conditions, and financial, business, and other factors, some of which may be beyond Aimco Operating Partnership’s
control. Cash distributions depend primarily on cash flow, including from reserves, and not on profitability, which is affected
by non-cash items. Therefore, cash distributions may be made during periods when our operating partnership records losses and
may not be made during periods when it records profits. The Aimco Operating Partnership agreement gives the general partner
discretion in establishing reserves for the proper conduct of the partnership’s business that will affect the amount of available
cash. Aimco Operating Partnership may be required to make reserves for the future payment of principal and interest under its
credit facilities and other indebtedness. In addition, Aimco Operating Partnership’s credit facilities may limit its ability to
distribute cash to holders of OP Units. As a result of these and other factors, there can be no assurance regarding actual levels
of cash distributions on OP Units, and Aimco Operating Partnership’s ability to distribute cash may be limited during the
existence of any events of default under any of its debt instruments.
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Holders of OP Units have limited voting rights and are limited in their ability to effect a change of control.
Aimco Operating Partnership is managed and operated by its general partner, Aimco. Unlike the holders of common stock
in a corporation, holders of OP Units have only limited voting rights on matters affecting Aimco Operating Partnership’s
business. Such matters relate to certain amendments of the partnership agreement and certain transactions such as the institution
of bankruptcy proceedings, an assignment for the benefit of creditors and certain transfers by the general partner of its interest
in Aimco Operating Partnership or the admission of a successor general partner. Holders of OP Units have no right to elect the
general partner on an annual or other continuing basis, or to remove the general partner. As a result, holders of OP Units have
limited influence on matters affecting the operation of Aimco Operating Partnership, and third parties may find it difficult to
attempt to gain control over, or influence the activities of, Aimco Operating Partnership.
The limited partners of Aimco Operating Partnership are unable to remove the general partner or to vote in the election of
our directors unless they own shares of Aimco. In order to comply with specific REIT tax requirements, Aimco's charter has
restrictions on the ownership of its equity securities. As a result, Aimco Operating Partnership limited partners and Aimco's
stockholders are limited in their ability to effect a change of control of Aimco Operating Partnership and Aimco, respectively.
Holders of OP Units may not have limited liability in specific circumstances.
The limitations on the liability of limited partners for the obligations of a limited partnership have not been clearly
established in some states. If it were determined that Aimco Operating Partnership had been conducting business in any state
without compliance with the applicable limited partnership statute, or that the right or the exercise of the right by the holders of
OP Units as a group to make specific amendments to the agreement of limited partnership or to take other action under the
agreement of limited partnership constituted participation in the “control” of Aimco Operating Partnership’s business, then a
holder of OP Units could be held liable under specific circumstances for our operating partnership’s obligations to the same
extent as the general partner.
Aimco may have conflicts of interest with holders of OP Units.
Conflicts of interest could arise in the future as a result of the relationships between the general partner of Aimco Operating
Partnership and its affiliates (including Aimco), on the one hand, and Aimco Operating Partnership or any partner thereof, on
the other. The directors and officers of the general partner have fiduciary duties to manage the general partner in a manner
beneficial to us, as the sole stockholder of the general partner. At the same time, as the general partner of our operating
partnership, we have fiduciary duties to manage Aimco Operating Partnership in a manner beneficial to Aimco Operating
Partnership and its limited partners. The duties of the general partner of Aimco Operating Partnership to Aimco Operating
Partnership and its partners may therefore come into conflict with the duties of the directors and officers of the general partner
to its sole stockholder, Aimco. Such conflicts of interest might arise in the following situations, among others:
•
decisions of the general partner with respect to the amount and timing of cash expenditures, borrowings, issuances of
additional interests and reserves in any quarter, will affect whether or the extent to which there is available cash to
make distributions in a given quarter;
•
whenever possible, the general partner seeks to limit Aimco Operating Partnership’s liability under contractual
arrangements to all or particular assets of Aimco Operating Partnership, with the other party thereto having no
recourse against the general partner or its assets;
•
any agreements between Aimco Operating Partnership and the general partner and its affiliates will not grant to the
holders of OP Units, separate and distinct from Aimco Operating Partnership, the right to enforce the obligations of
the general partner and such affiliates in favor of our operating partnership. Therefore, the general partner, in its
capacity as the general partner of Aimco Operating Partnership, will be primarily responsible for enforcing such
obligations; and
•
under the terms of the Aimco Operating Partnership agreement, the general partner is not restricted from causing
Aimco Operating Partnership to pay the general partner or its affiliates for any services rendered on terms that are fair
and reasonable to Aimco Operating Partnership or entering into additional contractual arrangements with any of such
entities on behalf of our operating partnership. Neither the Aimco Operating Partnership agreement nor any of the
other agreements, contracts, and arrangements between Aimco Operating Partnership, on the one hand, and the general
partner of Aimco Operating Partnership and its affiliates, on the other, are or will be the result of arm’s-length
negotiations.
23
Provisions in the Aimco Operating Partnership agreement may limit the ability of a holder of OP Units to challenge actions
taken by the general partner.
Delaware law provides that, except as provided in a partnership agreement, a general partner owes the fiduciary duties of
loyalty and care to the partnership and its limited partners. The Aimco Operating Partnership agreement expressly authorizes
the general partner to enter into, on behalf of Aimco Operating Partnership, a right of first opportunity arrangement and other
conflict avoidance agreements with various affiliates of Aimco Operating Partnership and the general partner, on such terms as
the general partner, in its sole and absolute discretion, believes are advisable. The latitude given in the Aimco Operating
Partnership agreement to the general partner in resolving conflicts of interest may significantly limit the ability of a holder of
OP Units to challenge what might otherwise be a breach of fiduciary duty. The general partner believes, however, that such
latitude is necessary and appropriate to enable it to serve as the general partner of Aimco Operating Partnership without undue
risk of liability.
The Aimco Operating Partnership agreement limits the liability of the general partner for actions taken in good faith. Aimco
Operating Partnership’s partnership agreement expressly limits the liability of the general partner by providing that the general
partner, and its officers and directors, will not be liable or accountable in damages to Aimco Operating Partnership, the limited
partners, or assignees for errors in judgment or mistakes of fact or law or of any act or omission if the general partner or such
director or officer acted in good faith. In addition, Aimco Operating Partnership is required to indemnify the general partner, its
affiliates, and their respective officers, directors, employees, and agents to the fullest extent permitted by applicable law,
against any and all losses, claims, damages, liabilities, joint or several, expenses, judgments, fines, and other actions incurred
by the general partner or such other persons, provided that Aimco Operating Partnership will not indemnify for (i) willful
misconduct or a knowing violation of the law or (ii) for any transaction for which such person received an improper personal
benefit in violation or breach of any provision of the partnership agreement. The provisions of Delaware law that allow the
common law fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court
of law, and the general partner has not obtained an opinion of counsel covering the provisions set forth in the Aimco Operating
Partnership agreement that purport to waive or restrict the fiduciary duties of the general partner that would be in effect under
common law were it not for the partnership agreement.
RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
Aimco Operating Partnership and its subsidiaries may be prohibited from making distributions and other payments.
All of Aimco Operating Partnership’s real estate assets are owned by subsidiaries of our operating partnership. As a result,
Aimco Operating Partnership depends on distributions and payments from its subsidiaries in order to satisfy our financial
obligations and make payments to our equity holders, as applicable. The ability of Aimco Operating Partnership and its
subsidiaries to make such distributions and other payments depends on their earnings and cash flows and may be subject to
statutory or contractual limitations, including covenants in some of our existing and/or future debt agreements. As an equity
investor in our subsidiaries, our right to receive assets upon their liquidation or reorganization are effectively subordinated to
the claims of their creditors and any holders of preferred equity senior to our equity investments. To the extent that we are
recognized as a creditor of such subsidiaries, our claims may still be subordinate to any security interest in or other lien on their
assets and to any of their debt or other obligations that are senior to our claims.
Limits on ownership of shares specified in Aimco’s charter may result in the loss of economic and voting rights by
purchasers that violate those limits.
Aimco's charter limits ownership of Common Stock by any single stockholder (applying certain “beneficial ownership”
rules under the federal tax and securities laws) to 8.7% (or up to 12.0% upon a waiver from Aimco’s Board) of outstanding
shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies, and certain individuals
(or up to 20.0% for such pension trusts or registered investment companies upon a waiver from Aimco’s Board). Aimco's
charter also limits ownership of Aimco's Common Stock and preferred stock by any single stockholder to 8.7% of the value of
the outstanding Common Stock and preferred stock, or 15% in the case of certain pension trusts, registered investment
companies, and certain individuals. The charter also prohibits anyone from buying shares of Aimco's capital stock if the
purchase would result in Aimco losing its REIT status. This could happen if a transaction results in fewer than 100 persons
owning all of Aimco's shares of capital stock or results in five or fewer persons (applying certain attribution rules of the Code)
owning more than 50% of the value of all of Aimco's shares of capital stock. If anyone acquires shares in excess of the
ownership limit or in violation of the ownership requirements of the Code for REITs:
•
the transfer will be considered null and void;
•
we will not reflect the transaction on Aimco’s books;
•
we may institute legal action to enjoin the transaction;
24
•
we may demand repayment of any dividends received by the affected person on those shares;
•
we may redeem the shares;
•
the affected person will not have any voting rights for those shares; and
•
the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more
charitable organizations designated by Aimco.
Aimco may purchase the shares of capital stock held in trust at a price equal to the lesser of the price paid by the transferee
of the shares or the then current market price. If the trust transfers any of the shares of capital stock, the affected person will
receive the lesser of the price paid for the shares or the then current market price. An individual who acquires shares of capital
stock that violate the above rules bears the risk that the individual:
•
may lose control over the power to dispose of such shares;
•
may not recognize profit from the sale of such shares if the market price of the shares increases;
•
may be required to recognize a loss from the sale of such shares if the market price decreases; and
•
may be required to repay to us any dividends received from us as a result of his or her ownership of the shares.
Aimco’s charter may limit the ability of a third-party to acquire control of Aimco.
The 8.7% and other ownership limits discussed above may have the effect of delaying or precluding acquisition by a third-
party of control of Aimco without the consent of Aimco's Board. Aimco's charter authorizes its Board to issue up to
510,587,500 shares of capital stock, which consists entirely of Common Stock as of December 31, 2024. Under Aimco's
charter, Aimco's Board has the authority to classify and reclassify any of our unissued shares of capital stock into shares of
capital stock with such preferences, conversion or other rights, voting power restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemptions as the Board may determine. The authorization and issuance of a new
class of capital stock could have the effect of delaying or preventing someone from taking control of Aimco, where there is a
difference of opinion between Aimco's Board and others as to what is in Aimco's stockholders’ best interests.
The Maryland General Corporation Law may limit the ability of a third-party to acquire control of Aimco.
As a Maryland corporation, Aimco is subject to various Maryland laws that may have the effect of discouraging offers to
acquire us and increasing the difficulty of consummating any such offers, where there is a difference of opinion between our
Board and others as to what is in our stockholders’ best interests or where our Board does not approve an offer. The Maryland
General Corporation Law, specifically the Maryland Business Combination Act, restricts mergers and other business
combination transactions between us and any person who acquires, directly or indirectly, beneficial ownership of shares of our
stock representing 10% or more of the voting power without our Board's prior approval. Any such business combination
transaction could not be completed until five years after the person acquired such voting power, and generally only with the
approval of stockholders representing 80% of all votes entitled to be cast and 66-2/3% of the votes entitled to be cast, excluding
the interested stockholder, or upon payment of a fair price. The Maryland General Corporation Law, specifically the Maryland
Control Share Acquisition Act, provides generally that a person who acquires shares of our capital stock representing 10% or
more of the voting power in electing directors will have no voting rights unless approved by a vote of two-thirds of the shares
eligible to vote. Additionally, the Maryland General Corporation Law provides, among other things, that the Board has broad
discretion in adopting stockholders’ rights plans and has the sole power to fix the record date, time, and place for special
meetings of the stockholders. To date, we have not adopted a stockholders’ rights plan. In addition, the Maryland General
Corporation Law provides that a corporation that:
•
has at least three directors who are not officers or employees of the entity or related to an acquiring person; and
•
has a class of equity securities registered under the Securities Exchange Act of 1934, as amended, may elect in its
charter or bylaws or by resolution of the board of directors to be subject to all or part of a special subtitle (which we
refer to as the “Maryland Unsolicited Takeovers Act” or “MUTA”) that provides that:
o
the corporation will have a classified board of directors;
o
any director may be removed only for cause and by the vote of two-thirds of the votes entitled to be cast in
the election of directors generally, even if a lesser proportion is provided in the charter or bylaws;
o
the number of directors may only be set by the board of directors, even if the procedure is contrary to the
charter or bylaws;
25
o
vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or
bylaws; and
o
the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only
on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast
at the meeting, even if the procedure is contrary to the charter or bylaws.
In connection with the Separation, the board of directors of Aimco Predecessor elected for Aimco to be subject to all of the
provisions of MUTA until the 2024 annual meeting of stockholders. As of the 2023 annual meeting of stockholders, (i) Aimco
is no longer subject to any of the provisions of MUTA, and (ii) Aimco is prohibited from electing to be subject to MUTA
without the approval of its stockholders. Additionally, at the 2023 annual meeting of stockholders, Aimco’s Charter was
amended to (i) lower the threshold for stockholders to remove directors to a simple majority of shares outstanding, eliminate the
requirement that such removal be for “cause,” and enable stockholders to fill vacancies on the Board created by stockholder
action, and (ii) reduce to a simple majority the stockholder vote required to amend the Charter and Amended and Restated
Bylaws.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality,
integrity, and availability of our critical systems and information.
We use the NIST Cybersecurity Framework and CIS Critical Security Controls as a guide to help us identify, assess, and
manage cybersecurity risks relevant to our business. This does not imply that we meet any particular technical standards,
specifications, or requirements.
Our cybersecurity risk management program is integrated with our overall enterprise risk management program, and shares
common methodologies, reporting channels and governance processes that apply across the enterprise risk management
program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program includes the following key elements:
•
risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services,
and our broader enterprise IT environment;
•
a team comprised of IT personnel principally responsible for directing (1) our cybersecurity risk assessment
processes, (2) our security processes, and (3) our response to cybersecurity incidents;
•
the use of external cybersecurity service providers, where appropriate, to monitor, assess, test or otherwise assist
with aspects of our security processes;
•
cybersecurity awareness training of employees with access to our IT systems;
•
a cybersecurity incident response plan and Security Operations Center (SOC) to respond to cybersecurity incidents;
and
•
a third-party risk management process for service providers.
There can be no assurance that our cybersecurity risk management program, including our controls, procedures and
processes, will be fully complied with or that our program will be fully effective in protecting the confidentiality, integrity and
availability of our information systems, product and network.
26
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents,
that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We
face certain ongoing risks from cybersecurity threats that, if realized and material, are reasonably likely to materially affect us,
including our operations, business strategy, results of operations, or financial condition. These and other risks related to
cybersecurity matters are described in more detail in Item 1A. Risk Factors.
Cybersecurity Governance
Our Board considers cybersecurity risk as critical to the enterprise and delegates the cybersecurity risk oversight function to
the Audit Committee. The Audit Committee oversees management’s design, implementation, and enforcement of our
cybersecurity risk management program.
Our Chief Information Officer (CIO) reports to the Chief Administrative Officer & General Counsel and leads the
Company’s overall cybersecurity function. The Audit Committee receives regular reports from our CIO on our cybersecurity
risks, including briefings on our cyber risk management program and cybersecurity incidents. Audit Committee members also
receive periodic presentations on cybersecurity topics from our CIO, supported by our internal security staff, or external experts
as part of the Board’s continuing education on topics that impact public companies.
Our CIO supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various
means, which include briefings from internal security personnel; threat intelligence and other information obtained from
governmental, public or private sources, including external cybersecurity service providers; and alerts and reports produced by
security tools deployed in the IT environment.
Our CIO is responsible for assessing and managing our material risks from cybersecurity threats. Our CIO has primary
responsibility for leading our overall cybersecurity risk management program and supervises both our internal cybersecurity
personnel and our external cybersecurity service providers. Our CIO has been publicly recognized as a cybersecurity thought
leader by leading industry analysts. Our CIO has over 25 years of technical leadership and industry experience, which is
inclusive of global experience in managing and leading IT and cybersecurity teams. Our cybersecurity team holds industry
standard certifications and participates in routine training.
ITEM 2. PROPERTIES
We own a geographically diversified portfolio of operating properties that produce stable cash flow and serves to balance
the risk and highly variable cash flows associated with our portfolio of development and redevelopments and value-add
investments. Our entire portfolio of operating properties includes 24 apartment communities (20 consolidated properties and
four unconsolidated properties) located in eight major U.S. markets and with average rents in line with local market averages
(generally defined as B class). We also own an apartment building and its adjacent office building, Yacht Club Apartments and
1001 Brickell Bay Drive (together referred to as the "Brickell Assemblage"), in a land assemblage that is under contract to be
sold. Our current development and redevelopment portfolio consists of 9 properties, including developable land, located
primarily in Southeast Florida, the Washington, D.C. Metro Area and Colorado's Front Range.
Additional information about our consolidated real estate, including property debt, is contained in “Schedule III - Real
Estate and Accumulated Depreciation” in this Annual Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may be a party to certain legal proceedings, incidental to the normal course of business. While the
outcome of the legal proceedings cannot be predicted with certainty, we believe there are no legal proceedings pending that
would have a material effect upon our financial condition or result of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
27
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES
Aimco
Aimco's Common Stock is listed and traded on the NYSE under the symbol “AIV”.
On February 21, 2025, there were 141,967,654 shares of Common Stock outstanding, held by 898 stockholders of record.
The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record
by a broker or clearing agency but does include each such broker or clearing agency as one record holder.
Unregistered Sales of Equity Securities
From time to time, Aimco may issue shares of its Common Stock in exchange for OP Units, defined under the Aimco
Operating Partnership heading below. Such shares are issued based on an exchange ratio of one share for each OP Unit. Aimco
may also issue shares of its Common Stock in exchange for limited partnership interests in consolidated real estate partnerships.
During the year ended December 31, 2024, no shares of Common Stock were issued in exchange for OP Units in such
transactions. Had any such shares been issued, the issuances would have been effected in reliance on Section 4(a)(2) of the
Securities Act of 1933, as amended.
Repurchases of Equity Securities
The following table summarizes Aimco's share repurchases, all of which were part of publicly announced programs:
Fiscal Period
Total Number of Shares
Repurchased
Weighted Average Price
Paid per Share
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number of
Shares That May Yet Be
Purchased Under Plans
or Programs
October 1 - 31, 2024
185,305
$
8.61
185,305
16,642,618
November 1 - 30, 2024
154,516
8.55
154,516
16,488,102
December 1 - 31, 2024
222,600
8.40
222,600
16,265,502
Total
562,421
$
8.51
562,421
(1) On July 28, 2022, Aimco announced that the Board authorized Aimco to repurchase up to 15 million shares of its outstanding Common Stock. On
November 6, 2023, Aimco announced that the Board authorized Aimco to repurchase up to an additional 15 million shares of its outstanding Common Stock,
for a total of 30 million shares. Subject to certain blackout restrictions, these repurchases may be made from time to time in the open market or in privately
negotiated transactions. These share repurchase authorizations have no expiration date.
Aimco Operating Partnership
There is no public market for OP Units, and Aimco Operating Partnership has no intention of listing OP Units on any
securities exchange. In addition, Aimco Operating Partnership’s Partnership agreement restricts the transferability of OP Units.
On February 21, 2025, there were 153,654,197 OP Units and equivalents outstanding (of which 141,967,654 were held by
Aimco), that were held by 1,894 unitholders of record.
Unregistered Sales of Equity Securities
Aimco Operating Partnership did not issue any unregistered OP Units during the twelve months ended December 31, 2024.
Repurchases of Equity Securities
Aimco Operating Partnership’s Partnership agreement generally provides that after holding OP Units for one-year, limited
partners other than Aimco have the right to redeem their OP Units for cash or, at its election, shares of Aimco Common Stock
on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended December 31, 2024, no
OP Units were redeemed in exchange for shares of Common Stock and 34,001 OP Units were redeemed in exchange for cash at
an aggregate weighted average price per unit of $8.75.
(1)
28
The following table summarizes repurchases, or redemptions in exchange for cash, of the Aimco Operating Partnership's
equity securities for the three months ended December 31, 2024.
Fiscal Period
Total Number of Units
Repurchased
Weighted Average Price
Paid per Unit
Total Number of Units
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number of
Units That May Yet Be
Purchased Under Plans
or Programs
October 1 - 31, 2024
—
$
—
N/A
N/A
November 1 - 30, 2024
—
—
N/A
N/A
December 1 - 31, 2024
34,001
8.75
N/A
N/A
Total
34,001
$
8.75
(1) The terms of the Aimco Operating Partnership’s Partnership Agreement do not provide for a maximum number of units that may be repurchased, and
other than the express terms of its partnership agreement, the Aimco Operating Partnership has no publicly announced plans or programs of repurchase.
However, for Aimco to repurchase shares of its Common Stock, the Aimco Operating Partnership must make a concurrent repurchase of its OP Units held by
Aimco at a price per unit that is equal to the price per share Aimco pays for its Common Stock.
Dividend and Distribution Payments
As a REIT, Aimco is required to distribute annually to holders of its Common Stock at least 90.0% of its “real estate
investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is
generally equivalent to net taxable ordinary income. Aimco's Board determines and declares Aimco's dividends. In making a
dividend determination, Aimco's Board considers a variety of factors, including REIT distribution requirements; current market
conditions; liquidity needs; and other uses of cash, such as deleveraging and accretive investment activities.
Stockholders receiving any dividend, whether payable in cash or cash and shares of Aimco Common Stock, will be required
to include the full amount of such dividend as income to the extent of our current and accumulated earnings and profits, as
determined for United States federal income tax purposes for the year of such dividend and may be required to pay income
taxes with respect to such dividend in excess of the cash dividend received. With respect to certain non-United States
stockholders, Aimco may be required to withhold United States tax with respect to such dividend, including in respect of all or
a portion of such dividend that is payable in Common Stock.
The Board of Aimco Operating Partnership’s general partner determines and declares distributions on OP Units. Aimco,
through a wholly-owned subsidiary, is the sole general partner of Aimco Operating Partnership. As of December 31, 2024,
Aimco owned 92.3% of the legal interest in the OP Units of Aimco Operating Partnership and 94.8% of the economic interest
of Aimco Operating Partnership. Aimco Operating Partnership holds all of our assets and manages the daily operations of our
business. The distributions paid by Aimco Operating Partnership to Aimco are used to fund the dividends paid to Aimco's
stockholders. Accordingly, the per share dividends Aimco pays to its stockholders generally equal the per unit distributions
paid by Aimco Operating Partnership to holders of its OP Units.
Our revolving credit agreement includes customary covenants, including a restriction on dividends and other restricted
payments, but permits dividends and distributions as may be necessary to maintain Aimco's REIT status.
Performance Graph
The following graph compares cumulative total returns for Aimco's Common Stock, the FTSE Nareit Equity Apartments
Index, and the Russell 2000. The FTSE Nareit Equity Apartments Index is published by The National Association of Real
Estate Investment Trusts (“Nareit”), a representative of multifamily real estate investment trusts and publicly traded real estate
companies with interests in United States real estate and capital markets. The FTSE Nareit Equity Apartments Index serves as
our sector comparison and the Russell 2000 serves as our broad-based market index.
The indices are weighted for all companies that fit the definitional criteria of the particular index and are calculated to
exclude companies as they are acquired and to add companies to the index calculation as they become publicly traded
companies. All companies that fit the definitional criteria and existed at the point in time presented are included in the index
calculations. The graph assumes the investment of $100 in Aimco Common Stock and in each index on December 31, 2019,
and that all dividends paid have been reinvested. The historical information set forth on the following page is not necessarily
indicative of future performance.
(1)
29
For the years ended December 31,
Index
2019
2020
2021
2022
2023
2024
Apartment Investment and Management Company
100.00
87.92
128.55
118.81
130.64
151.65
FTSE Nareit Equity Apartment Index
100.00
84.66
138.51
94.25
99.78
120.22
Russell 2000
100.00
119.96
137.74
109.59
128.14
142.93
Source: Zacks Investment Research, Inc.
The Performance Graph will not be deemed to be incorporated by reference into any filing by us under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate the
same by reference.
Issuances Under Equity Compensation Plans
Our equity compensation plan information required by this item is incorporated by reference to the 2025 Proxy Statement to
be filed within 120 days after the end of the year ended December 31, 2024.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of financial condition and results of operations for the year ended December 31,
2024, compared to 2023, should be read in conjunction with the accompanying consolidated financial statements in Part II,
Item 8. For discussion of the year ended December 31, 2023, compared to 2022, please refer to Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form
10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024.
Executive Overview
Our mission is to make real estate investments, primarily focused on the multifamily sector within targeted U.S. markets,
where outcomes are enhanced through our human capital and substantial value is created for investors, teammates, and the
communities in which we operate.
Please refer to “Item 1. Business” for additional discussion of our business organization and strategy and “Item 2.
Properties” and “Schedule III – Real Estate and Accumulated Depreciation” for details regarding the size, location, and key
characteristics of our various properties.
30
Results for the Twelve Months Ended December 31, 2024
The results from the execution of our business plan during the twelve months ended December 31, 2024, are described
below.
Financial Results and 2024 Highlights
•
For the year ended December 31, 2024, net loss attributable to common stockholders per share, on a fully dilutive
basis, was a net loss per share of $0.75.
•
For the year ended December 31, 2024, NOI from our Operating segment was $99.0 million, up 4.5% year-over-
year, with average monthly revenue per apartment home increase by 3.8% to $2,290.
•
For the year ended December 31, 2024, we substantially completed construction at Upton Place in Washington,
D.C., Strathmore Square in Bethesda, Maryland, and Oak Shore in Corte Madera, California and advanced the
lease-up of our recently completed developments.
•
During the fourth quarter, we increased our ownership in Upton Place as our development partner exercised the
option to sell their 10% interest in the asset. Also, Aimco secured a bridge loan to replace the higher cost
construction loan, and partially paydown a project-level preferred equity investor.
•
During the third quarter, we began construction on an ultra-luxury residential tower located at 640 NE 34th Street
("34th Street") in the Edgewater neighborhood of Miami, Florida. Total direct project costs for the 34th Street
development are expected to be $240.0 million with initial occupancy scheduled in mid-2027.
•
During the fourth quarter, we sold, for a total price at Aimco's share of $203.8 million, our interests in two
investments in Miami, Florida: The Hamilton, a recently completed redevelopment of a 276-unit apartment
building, and a 2.8-acre development site at 3333 Biscayne Boulevard. On December 19, 2024, Aimco's Board of
Directors declared a $0.60 per share special cash dividend to distribute the net proceeds from these transactions to
stockholders of record on January 14, 2025.
•
During the fourth quarter, we reached an agreement to sell, in 2025, the Brickell Assemblage for $520.0 million,
and the buyer's deposit of $38.0 million is non-refundable.
Operating Property Results
We own a diversified portfolio of stabilized apartment communities located in eight major U.S. markets with average rents
in line with local market averages (generally defined as B class).
Highlights for the year ended December 31, 2024 include:
•
Revenue for our Operating segment was $140.1 million, up 4.5% year over year, resulting from an $85 increase
in average monthly revenue per apartment home to $2,290 and an increase in Average Daily Occupancy of 60-
basis points to 97.2%.
•
Expenses for our Operating segment were $41.1 million, up 4.4% year over year, due primarily to higher real
estate taxes and insurance costs.
•
Net operating income for our Operating segment was $99.0 million, up 4.5% year over year.
Value Add and Opportunistic Investments
Development and Redevelopment
We generally seek development and redevelopment opportunities where barriers to entry are high, target customers can be
clearly defined, and where we have a comparative advantage over others in the market. Our Value Add and Opportunistic
investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.
As of December 31, 2024, we had one multifamily development project under construction and three multifamily
communities that have been substantially completed and are now in lease-up. In addition to Aimco's core multifamily
developments, The Benson Hotel was completed in 2023 and remains in the stabilization process.
31
We have a pipeline of future value-add opportunities totaling approximately 7.7 million gross square feet of development in
our target markets of Southeast Florida, the Washington, D.C. Metro Area, and Colorado's Front Range. During the year ended
December 31, 2024, we invested $126.1 million in development and redevelopment activities compared to $274.9 million in
the year ended December 31, 2023.
Highlights for the year ended December 31, 2024, include:
•
In Upper Northwest Washington, D.C., construction at Upton Place is substantially complete with all 689
apartment homes delivered. As of December 31, 2024, 314 homes were leased or pre-leased at rental rates
greater than underwriting and 90% of the project's 105,000 square feet of retail space has been leased.
•
In Bethesda, Maryland, all 220 of the highly tailored apartment homes at the first phase of Strathmore Square
have been delivered. As of December 31, 2024, 84 homes were leased or preleased with rents in line with our
initial projections, and 75 homes were occupied.
•
In Corte Madera, CA, construction at Oak Shore is substantially complete with all 16 ultra-luxury single family
rental homes and eight accessory dwelling units delivered. As of December 31, 2024, 16 homes were leased or
pre-leased at rental rates greater than underwriting.
•
During the third quarter, construction began in Miami's Edgewater neighborhood on 34th Street, an ultra-luxury
waterfront residential tower that will include 7,000 square feet of retail and rental homes averaging more than
2,500 square feet, with oversized private terraces, top-of-the-line finishes, and unobstructed views of Biscayne
Bay. We expect to welcome the first residents at this $240.0 million project in 3Q 2027 and stabilize occupancy
in 4Q 2028.
•
We invested $3.9 million into programming, design, documentation, and entitlement efforts primarily at our 901
North project in Fort Lauderdale, Florida. Consistent with our capital allocation strategy, we may choose to
monetize certain pipeline assets prior to vertical construction in an effort to maximize value add and risk-
adjusted returns.
Investment and Disposition Activity
We are focused on prudently allocating capital and delivering strong investment returns. Consistent with our capital
allocation philosophy, we monetize the value within our assets when accretive uses of the proceeds are identified and invest
when the risk-adjusted returns are superior to other uses of capital.
Highlights for the year ended December 31, 2024 include:
•
In the fourth quarter, Aimco increased its ownership interest in its Upton Place property by $19.1 million, as its
development partner exercised the option to sell the entirety of their 10% interest in the asset.
•
In the fourth quarter, we sold, for $203.8 million, our interests in two real estate investments in the Edgewater
neighborhood of Miami, Florida, retired $110.1 million of associated liabilities, and, in December, declared a
divided to return approximately $90.0 million of capital to stockholders in January 2025.
o
The Hamilton, our recently completed major redevelopment was sold for $190.0 million.
o
Our interest in 3333 Biscayne Boulevard, a 2.8-acre development site, was purchased by our joint venture
partner at a gross valuation of $66.5 million or $13.8 million at our share of the venture.
•
In the fourth quarter, we entered into an agreement to sell the Brickell Assemblage for a gross price of $520.0
million.
o
The buyer’s initial deposit of $38.0 million is now non-refundable, and due diligence has been completed.
o
The buyer can exercise an option to finance up to $115.0 million of the purchase price with a transferable
seller financing note from Aimco for a period of 18 months at a rate of 12%. If exercised, the purchase price
increases by $20.0 million, to $540.0 million.
o
The sale, which is subject to certain closing conditions and extension options, is scheduled to occur as early
as March 2025 but may be extended at the buyer’s option to the fourth quarter of 2025, with such extensions
requiring the buyer to increase its non-refundable deposit.
32
o
Net proceeds from the transaction, accounting for the associated property-level debt and deferred tax liability,
are estimated to range from $300.0 to $320.0 million depending on the buyer’s election regarding seller
financing. We intend to return the majority of the net proceeds from the transaction upon receipt to
stockholders.
Balance Sheet and Financing Activities
We are highly focused on maintaining a strong balance sheet, including ample liquidity. As of December 31, 2024, we had
access to $321.0 million in liquidity, including $141.1 million of cash on hand, $31.4 million of restricted cash, and the
capacity to borrow up to $148.5 million on our revolving credit facility.
In the fourth quarter, we refinanced our Upton Place asset with a $215.0 million bridge loan. The three year loan, which has
a fixed interest rate of 6.39% and is prepayable at par after 18 months, replaced the construction loan and funded the partial
paydown of a project-level preferred equity investor, which together had a weighted average interest rate of 9.22% at the time
of payoff.
Refer to the Liquidity and Capital Resources section for additional information regarding our leverage.
Financial Results of Operations
We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.
Our Development and Redevelopment segment includes properties that are under construction or have not achieved and
maintained stabilization throughout the current year and comparable period, as well as land assemblages that are being held for
future development. Our Operating segment includes 20 residential apartment communities that have achieved stabilized levels
of operations as of January 1, 2023, and maintained it throughout the current year and comparable period. Our Other segment
consists of properties that are not included in our Development and Redevelopment or Operating segments.
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction
with the accompanying consolidated financial statements in Item 8.
Results of Operations for the Year Ended December 31, 2024, Compared to the same period in 2023
Net income attributable to Aimco common stockholders increased by $63.7 million for the year ended December 31, 2024
compared to the same period in 2023, as described more fully below.
Property Results
As of December 31, 2024, our Development and Redevelopment segment included 9 rental communities, including one
under construction and three substantially completed and in lease-up. Our Operating segment included 20 communities with
5,243 apartment homes, and our Other segment includes The Benson Hotel, our only hotel.
During the first quarter of 2024, we revised the information regularly reviewed by our President and Chief Executive
Officer, the chief operating decision maker ("CODM"), to assess our operating performance. As a result, we reclassified The
Benson Hotel from the Development and Redevelopment segment to the Other segment. In addition, during the year ended
December 31, 2024, we disposed of a majority of our partnership interest in St. George Villas, which was previously reported
within the Other segment, and The Hamilton, which was previously reported within the Development and Redevelopment
segment. We also reclassified as held for sale 1001 Brickell Bay Drive, which was previously reported within the Other
segment, and Yacht Club Apartments, which was previously reported in our Operating segment. Prior period segment
information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the
business.
We use property net operating income ("PNOI") to assess the operating performance of our segments. PNOI is defined as
rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, including utility
reimbursements, for the consolidated communities; but excluding
•
the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor
consolidate, our investment in IQHQ, the Mezzanine Investment, and investments in real estate technology funds;
and
•
property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of
segment performance.
33
Please refer to Note 14 to the consolidated financial statements in Item 8 for further discussion regarding our segments,
including a reconciliation of these amounts to consolidated rental and other property revenues and property operating expenses.
Property Net Operating Income
The results of our segments for the years ended December 31, 2024 and 2023, as presented below, are based on segment
classifications as of December 31, 2024.
Year Ended December 31,
(in thousands)
2024
2023
$ Change
% Change
Rental and other property revenues, before utility reimbursements:
Development and Redevelopment
$
9,852 $
109
$
9,743
nm
Operating
140,099
134,078
6,021
4.5 %
Other
6,690
2,691
3,999
100.0 %
Total
156,641
136,878
19,763
14.4 %
Property operating expenses, net of utility reimbursements:
Development and Redevelopment
9,468
927
8,541
nm
Operating
41,089
39,356
1,733
4.4 %
Other
7,712
4,710
3,002
63.7 %
Total
58,269
44,993
13,276
29.5 %
Property net operating income:
Development and Redevelopment
384
(818 )
1,202
nm
Operating
99,010
94,722
4,288
4.5 %
Other
(1,022 )
(2,019 )
997
49.4 %
Total
$
98,372 $
91,885
$
6,487
7.1 %
For the year ended December 31, 2024, compared to the same period in 2023:
•
Development and Redevelopment property net operating income increased by $1.2 million primarily due to the
lease up of apartment homes at Upton Place and Strathmore Square.
•
Operating property net operating income increased by $4.3 million, or 4.5%. The increase was attributable
primarily to a $6.0 million, or 4.5% increase in rental and other property revenues due to higher average revenues
of $85 per apartment home and 60-basis points increase in occupancy.
•
Other property net operating income increased by $1.0 million, or 49.4%, primarily due to a full year of The
Benson Hotel operations in 2024 whereas operations commenced in the second quarter of 2023.
The results of our segments for the years ended December 31, 2023 and 2022, as presented below, are based on segment
classifications as of December 31, 2024.
Year Ended December 31,
(in thousands)
2023
2022
$ Change
% Change
Rental and other property revenues, before utility reimbursements:
Development and Redevelopment
$
109 $
24
$
85
nm
Operating
134,078
124,443
9,635
7.7 %
Other
2,691
—
2,691
nm
Total
136,878
124,467
12,411
10.0 %
Property operating expenses, net of utility reimbursements:
Development and Redevelopment
927
191
736
nm
Operating
39,356
37,803
1,553
4.1 %
Other
4,710
457
4,253
nm
Total
44,993
38,451
6,542
17 %
Property net operating income:
Development and Redevelopment
(818 )
(167 )
(651 )
nm
Operating
94,722
86,640
8,082
9.3 %
Other
(2,019 )
(457 )
(1,562 )
nm
Total
$
91,885 $
86,016
$
5,869
6.8 %
34
For the year ended December 31, 2023, compared to the same period in 2022:
•
Development and redevelopment property net operating income decreased by $0.7 million due to increases in
property operating expenses due to the completion of Upton Place in the fourth quarter of 2023.
•
Operating property net operating income increased by $8.1 million, or 9.3% for the year ended December 31, 2023,
compared to 2022. The increase was attributable to a $9.6 million, or 7.7% increase in rental and other property
revenues, offset partially by a $1.6 million, or 4.1% increase in property operating expenses due primarily to higher
real estate taxes and insurance.
•
Other property net operating income decreased by $1.6 million for the year ended December 31, 2023, compared to
2022, due primarily to the commencement of The Benson Hotel operations in the second quarter of 2023.
Non-Segment Real Estate Operations
Operating income amounts not attributed to our segments include property management costs, casualty losses, and, if
applicable, the results of apartment communities sold or held for sale, reported in consolidated amounts, which we do not
allocate to our segments for purposes of evaluating segment performance.
Depreciation and Amortization
For the year ended December 31, 2024, compared to the same period in 2023, Depreciation and amortization expense
increased by $17.5 million, or 25.5%, due primarily to the substantial completion of Upton Place, Strathmore Square, and Oak
Shore in 2024.
General and Administrative Expenses
For the year ended December 31, 2024, compared to the same period in 2023, General and administrative expenses were
relatively flat.
Interest Income
For the year ended December 31, 2024, compared to the same period in 2023, Interest income decreased by $0.1 million, or
1%. The decrease is due primarily to higher rates of interest earned on excess cash invested in treasury bill investments and
money market funds in 2023, partially offset by interest earned on seller financing provided in connection with the sale of a
land parcel in December 2023.
Interest Expense
For the year ended December 31, 2024, compared to the same period in 2023, Interest expense increased by $32.3 million,
or 85.7% due primarily to increased non-recourse construction loan draws and reduced capitalization as development projects
are advanced and completed, partially offset by the repayment of certain nonrecourse property debt in 2023.
Mezzanine Investment Income (Loss), Net
For the years ended December 31, 2024, compared to the same period in 2023, Mezzanine Investment Income (Loss), Net
decreased $153.4 million due primarily to a non-cash impairment charge of $158.0 million in the year ended December 31,
2023, partially offset by the recognition in income of the $4.0 million non-refundable option payment upon expiration of the
option to acquire the remaining 80% in the Mezzanine Investment.
Realized and Unrealized Gains (Losses) on Interest Rate Contracts
We are required to adjust our interest rate contracts to fair value on a quarterly basis. As a result of the mark-to-market
adjustments, we recorded unrealized losses of $4.2 million and $3.8 million during the years ended December 31, 2024, and
2023, respectively. In addition, we realized gains of $6.0 million and $4.9 million during the years ended December 31, 2024,
and 2023, respectively.
35
Realized and Unrealized Gains (Losses) on Equity Investments
We measure our investments in stock based on its market price at period end and our investments in property technology
funds at NAV as a practical expedient. In addition, we measure our investment in IQHQ using the measurement alternative.
Under the measurement alternative, the investment is measured at cost less impairment if any needed, with subsequent
adjustments for observable price changes of identical or similar investments of the same issuer since it does not have a readily
determinable fair value. As a result of changes in the values of these investments, we recorded unrealized losses of $49.5
million during the year ended December 31, 2024, compared to unrealized gains of $0.7 million for the same period in 2023,
due primarily to a $48.6 million non-cash impairment recognized on our investment in IQHQ. There were no impairments or
observable price changes in 2023.
Gain on Dispositions of Real Estate
During the year ended December 31, 2024, we recognized gains on the disposition of real estate of $10.6 million due
primarily due to the sale of The Hamilton compared to gains of $8.0 million recognized for the same period in 2023 that
resulted from the sale of one land parcel and the contribution of real estate to an unconsolidated joint venture.
Other Income (Expense), Net
Other income (expense), net, includes costs associated with our risk management activities, partnership administration
expenses, fee income, certain non-recurring items, and activity related to our unconsolidated real estate partnerships. For the
year ended December 31, 2024, compared to the same period in 2023, Other income (expense), net decreased by $2.1 million,
or 27.1%, due primarily to the incremental expense associated with pre-existing long-term incentive partnership units recorded
upon the resignation of one of our board members in the prior period.
Income Tax Benefit (Expense)
Certain aspects of our operations, including our development and redevelopment activities, are conducted through taxable
REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold our investment in 1001 Brickell Bay Drive.
Our income tax benefit (expense) calculated in accordance with GAAP includes income taxes associated with the income or
loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in
conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in Income tax benefit
(expense) in our Consolidated Statements of Operations.
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and
gains retained by the REIT. For the year ended December 31, 2024, we had consolidated net losses subject to tax of $28.2
million, compared to consolidated net losses subject to tax of $15.2 million for the same period in 2023.
For the year ended December 31, 2024, we recognized income tax benefit of $11.1 million, compared to income tax benefit
of $12.8 million for the same period in 2023. The year-over-year decrease is due primarily to changes in 2023 to the effective
tax rate expected to apply to the reversal of our existing deferred items, partially offset by increased tax benefit from higher
losses in 2024 at our TRS entities.
36
Liquidity and Capital Resources
Liquidity
Liquidity is the ability to meet present and future financial obligations. Our primary sources of liquidity are cash flows from
operations and borrowing capacity under our loan agreements.
As of December 31, 2024, our available liquidity was $321.0 million, which consisted of:
•
$141.1 million in cash and cash equivalents;
•
$31.4 million of restricted cash, including amounts related to tenant security deposits and escrows held by lenders for
capital additions, property taxes, and insurance; and
•
$148.5 million of available capacity to borrow under our revolving secured credit facility.
As of December 31, 2024, we had sufficient capacity on our construction loans to cover our remaining commitments on
development and redevelopment projects of approximately $146.9 million. We also have unfunded commitments in the amount
of $1.4 million related to our investments in entities that develop technology related to the real estate industry. Our principal
uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital
expenditures, and future investments. Additionally, our third-party property managers may enter into commitments on our
behalf to purchase goods and services in connection with the operation of our apartment communities and our office building.
Those commitments generally have terms of one year or less and reflect expenditure levels comparable to historical levels.
We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional
sources of liquidity to meet our operational needs for the next twelve months.
In the event that our cash and cash equivalents, revolving secured credit facility, and cash provided by operating activities
are not sufficient to cover our liquidity needs, we have the means to generate additional liquidity, such as from additional
property financing activity and proceeds from apartment community sales. We expect to meet our long-term liquidity
requirements, including debt maturities, development and redevelopment spending, and future investment activity, primarily
through property financing activity, cash generated from operations, and the recycling of our equity. Our revolving secured
credit facility matures in December 2025.
Leverage and Capital Resources
The availability and cost of credit and its related effect on the overall economy may affect our liquidity and future financing
activities, both through changes in interest rates and access to financing. Any adverse changes in the lending environment could
negatively affect our liquidity. We have taken steps to mitigate a portion of our short-term refunding risk. However, if property
or development financing options become unavailable, we may consider alternative sources of liquidity, such as reductions in
capital spending or apartment community dispositions.
As of December 31, 2024, all of our outstanding non-recourse property debt had a fixed interest rate. In addition, the
weighted-average contractual rate on our non-recourse debt was 4.4%, and the average remaining term to maturity was 6.8
years. Our use of interest rate caps may vary from quarter to quarter depending on lender requirements, recycling of interest
rate caps between projects, and our view on forecasted interest rates.
Our primary sources of leverage are property-level debt and non-recourse construction loans. We also have a secured
$150.0 million credit facility with a syndicate of financial institutions with $148.5 million of available capacity at December
31, 2024. Our revolving secured credit facility requires that we maintain a fixed charge coverage ratio of 1.25x, minimum
tangible net worth of $625.0 million, and maximum leverage of 60% as defined in the credit agreement. We are currently in
compliance and expect to remain in compliance with these covenants during the next twelve months.
Changes in Cash, Cash Equivalents, and Restricted Cash
The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating,
investing, and financing activities, which are presented in our Consolidated Statements of Cash Flows in Item 8 of this report.
37
Operating Activities
For the year ended December 31, 2024, net cash provided by operating activities was $47.0 million. Our operating cash
flow is primarily affected by rental rates, occupancy levels, operating expenses related to our portfolio of apartment
communities and general and administrative costs. Cash provided by operating activities for the year ended December 31, 2024,
decreased by $3.5 million compared to the same period in 2023, due primarily to the timing of balance sheet position changes,
increased interest expense primarily driven by the substantial completion of Upton Place, Strathmore Square, and Oak Shore in
2024, offset by increased net operating income driven by higher rents and occupancy.
Investing Activities
For the year ended December 31, 2024, net cash provided by investing activities of $30.6 million consisted primarily of
$186.2 million of proceeds from dispositions of real estate and $5.8 million of proceeds from dispositions of unconsolidated
real estate partnerships, offset by capital expenditures of $160.0 million. Net cash provided by investing activities for the year
ended December 31, 2024, increased by $291.0 million compared to the same period in 2023, due primarily to greater proceeds
from dispositions of real estate and unconsolidated real estate partnerships and decreased capital expenditures.
Financing Activities
For the year ended December 31, 2024, net cash used in financing activities of $43.9 million consisted primarily of
principal repayments of non-recourse construction loans, the redemption and purchase of noncontrolling interests, and common
stock repurchases, offset by proceeds from non-recourse construction loans and proceeds from interest rate contracts. Net cash
used in financing activities for the year ended December 31, 2024, changed by $163.3 million compared to the same period
ended in 2023, due primarily to current year repayments of non-recourse construction loans, the redemption and purchase of
noncontrolling interests, and decreased proceeds from interest rate contracts, partially offset by increased proceeds from non-
recourse construction loans and contributions from noncontrolling interests.
Non-GAAP Measures
We use EBITDAre and Adjusted EBITDAre in managing our business and in evaluating our financial condition and
operating performance. These key financial indicators are non-GAAP measures and are defined and described below. We
provide reconciliations of the non-GAAP financial measures to the most comparable financial measure computed in accordance
with GAAP.
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”)
EBITDAre and Adjusted EBITDAre are non-GAAP measures, which we believe are useful to investors, creditors, and
rating agencies as a supplemental measure of our ability to incur and service debt because they are recognized measures of
performance by the real estate industry and allow for comparison of our credit strength to different companies. EBITDAre and
Adjusted EBITDAre should not be considered alternatives to net income (loss) as determined in accordance with GAAP as
indicators of liquidity. There can be no assurance that our method of calculating EBITDAre and Adjusted EBITDAre is
comparable with that of other real estate investment trusts. 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 the dispositions of depreciated property;
•
impairment write-downs of depreciated property;
•
impairment write-downs of investments in unconsolidated partnerships caused by a decrease in the value of the
depreciated property in such partnerships; and
•
adjustments to reflect our share of EBITDAre of investments in unconsolidated entities.
38
EBITDAre is defined by Nareit and provides for an additional performance measure independent of capital structure for
greater comparability between real estate investment trusts. We define Adjusted EBITDAre as EBITDAre adjusted to exclude
the effect of the following items:
•
net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships and EBITDAre
adjustments attributable to noncontrolling interests;
•
realized and unrealized (gains) losses on interest rate contracts, which we believe allow investors to compare a measure
of our earnings before the effects of our capital structure and indebtedness with that of other companies in the real estate
industry;
•
the non-cash (income) loss recognized on our Mezzanine Investment; and
•
the non-cash (income) loss recognized on a passive equity investment.
The reconciliation of net income (loss) to EBITDAre and Adjusted EBITDAre for the years ended December 31, 2024 and
2023 is as follows (in thousands):
Year Ended December 31,
2024
2023
Net income (loss)
$
(96,000 )
$
(157,319 )
Adjustments:
Interest expense
70,057
37,718
Income tax (benefit) expense
(11,071 )
(12,752 )
Gain on dispositions of real estate
(10,600 )
(7,984 )
Unrealized (gains) losses from investment in unconsolidated partnerships
2,597
—
Depreciation and amortization
86,359
68,834
Adjustment related to EBITDAre of unconsolidated partnerships
872
806
EBITDAre
$
42,214
$
(70,697 )
Net (income) loss attributable to redeemable noncontrolling
interests in consolidated real estate partnerships
(13,958 )
(13,924 )
Net (income) loss attributable to noncontrolling interests
in consolidated real estate partnerships
1,849
(3,991 )
EBITDAre adjustments attributable to noncontrolling interests
(4,254 )
(272 )
Mezzanine investment (income) loss, net
2,432
155,814
Realized and unrealized (gains) losses on interest rate contracts
(1,752 )
(1,119 )
Unrealized (gains) losses on a passive equity investment
48,615
—
Adjusted EBITDAre
$
75,146
$
65,811
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and
assumptions. We believe that the following critical accounting policies involve our more significant judgments and estimates
used in the preparation of our consolidated financial statements for the year ended December 31, 2024. Refer to Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations, of Aimco's and Aimco Operating
Partnership's combined Annual Report on Form 10-K for the years ended December 31, 2023 and 2022 for significant
judgments and estimates related to comparative reporting period.
Impairment of investment in IQHQ
On a periodic basis, we perform a qualitative impairment assessment on our investment in IQHQ in accordance with GAAP.
We determined during the year ended December 31, 2024 that our investment in IQHQ was impaired after consideration of
factors, including adverse capital market conditions, increased real estate development costs, and IQHQ's financial condition.
As a result, we recognized a $48.6 million non-cash impairment to reduce the carrying value of the investment in IQHQ to
$11.1 million as of December 31, 2024.
39
The measurement of the impairment loss is based on the fair value of our investment in IQHQ. Fair value determinations
require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.
Estimating the fair value of our investment in IQHQ incorporates various estimates, assumptions, and market data, the most
significant being projected operational cash flow, capitalization rates, and discount rates. We determine capitalization rates and
discount rates using third-party market research analytics. Property operational cash flows are based on historical, current and
expected future operating results and take into consideration stated operational strategies. These projections are adjusted to
reflect current economic conditions and require considerable management judgment.
Impairment of Real Estate and Other Long-Lived Assets
Quarterly, or when changes in circumstances warrant, we will assess our real estate properties and other long-lived assets
for indicators of impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such
factors include, among other things, operational performance, market conditions, our intent and ability to hold the related asset,
as well as any significant cost overruns on development projects.
If a real estate property or other long-lived asset has an indicator of impairment, we assess its recoverability by comparing
the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the asset. If the
carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent
the carrying amount exceeds the estimated fair value of the asset. There were no such impairments for the years ended
December 31, 2024, 2023, and 2022.
40
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our chief market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing
property debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We primarily
use long-dated, fixed-rate, non-recourse property debt on stabilized properties in order to manage the refunding and repricing
risks of short-term borrowings.
We use working capital primarily to fund short-term uses. We use derivative financial instruments as a risk management
tool and do not use them for trading or other speculative purposes.
Market Risk
As of December 31, 2024, on a consolidated basis, we had no variable-rate property-level debt and $132.0 million of
variable-rate construction loans outstanding. The impact of rising interest rates is mitigated by our use of interest rate caps,
which as of December 31, 2024, provided protection for our variable interest rate debt. Our use of interest rate caps may vary
from quarter to quarter depending on lender requirements, recycling of interest rate caps between projects, and our view on
forecasted interest rates. We estimate that an increase or decrease in our variable rate indices of 100 basis points with constant
credit risk spreads, would have no material impact on interest expense on an annual basis.
As of December 31, 2024, we held interest rate caps with a maximum notional value of $370.3 million. These instruments
were acquired for $3.5 million and at December 31, 2024, were valued at $0.9 million.
As of December 31, 2024, we had $172.4 million in cash and cash equivalents and restricted cash, a portion of which earns
interest at variable rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The independent registered public accounting firms' reports, consolidated financial statements and schedule listed in the
“Index to Financial Statements” on page F-1 of this Annual Report are filed as part of this report and incorporated herein by
this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Aimco
Disclosure Controls and Procedures
Aimco's management, with the participation of Aimco's Chief Executive Officer and Chief Financial Officer, has evaluated
the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act), as of the end of the period covered by this report. Based on such evaluation, Aimco's Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, Aimco's disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or
under the supervision of, Aimco's principal executive and principal financial officers and effected by Aimco's Board,
management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
41
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Aimco's internal control over financial reporting as of December 31, 2024. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework (2013 Framework).
Based on their assessment, management concluded that, as of December 31, 2024, Aimco's internal control over financial
reporting is effective.
Aimco's independent registered public accounting firm has issued an attestation report on Aimco's internal control over
financial reporting.
Changes in Internal Control Over Financial Reporting
There were no changes in the internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2024, that have materially affected, or are
reasonably likely to materially affect, the internal control over financial reporting of Aimco.
42
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Apartment Investment and Management Company
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Apartment Investment and Management Company (a Maryland
corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our
report dated February 24, 2025 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Denver, Colorado
February 24, 2025
43
Aimco Operating Partnership
Disclosure Controls and Procedures
Aimco Operating Partnership’s management, with the participation of Aimco Operating Partnership’s Chief Executive
Officer and Chief Financial Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such
evaluation, Aimco Operating Partnership’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the
end of such period, Aimco Operating Partnership’s disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting
Aimco Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act
as a process designed by, or under the supervision of, Aimco Operating Partnership's principal executive and principal financial
officers and effected by Aimco Operating Partnership's Board, management and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Aimco Operating Partnership’s internal control over financial reporting as of
December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 Framework).
Based on their assessment, management concluded that, as of December 31, 2024, Aimco Operating Partnership’s internal
control over financial reporting is effective.
Aimco Operating Partnership’s independent registered public accounting firm has issued an attestation report on Aimco
Operating Partnership’s internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There were no changes in the internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2024, that have materially affected, or are
reasonably likely to materially affect, the internal control over financial reporting of Aimco Operating Partnership.
44
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Partners
Aimco OP L.P.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Aimco OP L.P. (a Maryland corporation) and subsidiaries (the
“Partnership”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Partnership
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on
criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2024, and our
report dated February 24, 2025 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Denver, Colorado
February 24, 2025
45
ITEM 9B. OTHER INFORMATION
During the three months ended December 31, 2024, no director or officer of Aimco or Aimco Operating Partnership
adopted or terminated a "Rule 10b5-1 trading agreement" or "non-Rule 10b5-1 trading agreement" each term as defined in Item
408(a) of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
46
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Each member of the Board of Directors of Aimco is also a director of the general partner of the Aimco Operating
Partnership. The officers of Aimco are also the officers of the general partner of the Aimco Operating Partnership and hold the
same titles. The information required by this item for both Aimco and the Aimco Operating Partnership is incorporated herein
by reference to the 2025 Proxy Statement to be filed within 120 days after the year ended December 31, 2024.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item, for both Aimco and the Aimco Operating Partnership, and is incorporated herein by
reference to the 2025 Proxy Statement to be filed within 120 days after the year ended December 31, 2024.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item, for both Aimco and the Aimco Operating Partnership, is incorporated herein by
reference to the 2025 Proxy Statement to be filed within 120 days after the year ended December 31, 2024.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item, for both Aimco and the Aimco Operating Partnership, is incorporated herein by
reference to the 2025 Proxy Statement to be filed within 120 days after the year ended December 31, 2024.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item, for both Aimco and the Aimco Operating Partnership, is incorporated herein by
reference to the 2025 Proxy Statement to be filed within 120 days after the year ended December 31, 2024.
47
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1)
The financial statements listed in the Index to Financial Statements on Page F-1 of this report are filed as part of
this report and incorporated herein by reference.
(a)(2)
The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this report is filed as
part of this report and incorporated herein by reference.
(a)(3)
Exhibits.
48
INDEX TO EXHIBITS (1) (2)
EXHIBIT
NO.
DESCRIPTION
2.1
Separation and Distribution Agreement, effective as of December 15, 2020, by and among Apartment
Investment Management Company, Aimco OP L.P., Apartment Income REIT Corp. and Apartment Income
REIT, L.P. (f/k/a AIMCO Properties, L.P.) (Exhibit 2.1 to Aimco’s Current Report on Form 8-K, filed
December 15, 2020, is incorporated herein by this reference)
3.1
Articles of Amendment and Restatement of Apartment Investment and Management Company (Exhibit 3.1 to
Aimco’s Annual Report on Form 8-K dated October 3, 2023, is incorporated herein by this reference)
3.2
Articles Supplementary of Apartment Investment Management Company (Exhibit 3.1 to Aimco’s Current
Report on Form 8-K, dated December 15, 2020, is incorporated herein by this reference)
3.3
Amended and Restated Bylaws (Exhibit 3.1 to Aimco’s Current Report on Form 8-K, dated April 28, 2023, is
incorporated herein by this reference)
4.1
Description of Aimco’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(Exhibit 4.1 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2020, filed March 12,
2021, is incorporated herein by this reference)
10.1
Amended and Restated Agreement of Limited Partnership of Aimco OP L.P., effective as of December 14,
2020 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 15, 2020, is incorporated herein
by this reference)
10.2
Credit Agreement, dated as of December 16, 2020, by and among Apartment Investment and Management
Company, AIMCO OP L.P., certain subsidiary loan parties party thereto, the lenders party thereto and PNC
Bank, National Association, as administrative agent, swingline loan lender and letter of credit issuing lender.
(Exhibit 10.1 to Aimco’s Current Report on Form 8-K, filed December 16, 2020, is incorporated herein by
reference)
10.3
Amended Aimco Severance Policy, effective as of October 27, 2021 (Exhibit 10.3 to Aimco's Annual Form on
10-K for the year ended December 31, 2023, is incorporated herein by this reference)*
10.4
Powell Employment Agreement (Exhibit 10.4 to Aimco's Annual Form on 10-K for the year ended December
31, 2023, is incorporated herein by this reference)*
10.5
2007 Stock Award and Incentive Plan (Exhibit A to Aimco’s Proxy Statement on Schedule 14A, filed March
20, 2007, is incorporated herein by this reference)*
10.6
Form of Non-Qualified Stock Option Agreement (2007 Stock Award and Incentive Plan) (Exhibit 10.3 to
Aimco’s Current Report on Form 8-K, filed April 30, 2007, is incorporated herein by this reference)*
10.7
Aimco 2015 Stock Award and Incentive Plan (as amended and restated January 31, 2017) (Exhibit 10.2 to
Aimco’s Current Report on Form 8-K, filed January 31, 2017, is incorporated herein by this reference)*
10.8
Form of Performance Non-Qualified Stock Option Agreement (2015 Stock Award and Incentive Plan) (Exhibit
10.26 to Aimco's Annual Report on Form 10-K for the year ended December 31, 2015, is incorporated herein
by this reference)*
10.9
Form of Performance Vesting LTIP II Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.15
to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, filed May 8, 2018,
is incorporated herein by this reference)*
10.10
Aimco Second Amended and Restated 2015 Stock Award and Incentive Plan (as amended and restated effective
February 22, 2018) (Exhibit A to Aimco’s Proxy Statement on Schedule 14A, filed March 8, 2018, is
incorporated herein by reference)*
10.11
Form of Restricted Stock Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.25 to Aimco's Annual
Form on 10-K for the year ended December 31, 2015, is incorporated herein by this reference)*
10.12
Form of Performance Restricted Stock Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.24 to
Aimco's Annual Form on 10-K for the year ended December 31, 2015, is incorporated herein by this
reference)*
49
10.13
Form of LTIP Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.3 to Aimco's Current Report
on Form 8-K, filed January 31, 2017, is incorporated herein by this reference)*
10.14
Form of Performance Vesting LTIP Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.4 to
Aimco's Current Report on Form 8-K, filed January 31, 2017, is incorporated herein by this reference)*
10.15
Form of Performance Vesting LTIP II Unit Agreement (2015 Stock Award and Incentive Plan) (Exhibit 10.15
to Aimco's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, is incorporated
herein by this reference)*
10.16
Form of Performance Non-Qualified Stock Option Agreement (2015 Stock Award and Incentive Plan) (Exhibit
10.26 to Aimco's Annual Form on 10-K for the year ended December 31, 2016, is incorporated herein by this
reference)*
10.17
Form of Restricted Stock Agreement (Second Amended & Restated 2015 Stock Award and Incentive Plan)
(Exhibit 10.17 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is incorporated herein
by this reference)*
10.18
Form of Performance Restricted Stock Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.18 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.19
Form of Performance Non-Qualified Stock Option Agreement (Second Amended & Restated 2015 Stock
Award and Incentive Plan) (Exhibit 10.19 to Aimco's Annual Form on 10-K for the year ended December 31,
2023, is incorporated herein by this reference)*
10.20
Form of Performance Vesting LTIP II Unit Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.20 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.21
Form of Restricted Stock Agreement (Second Amended & Restated 2015 Stock Award and Incentive Plan)
(Exhibit 10.21 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is incorporated herein
by this reference)*
10.22
Form of Performance Restricted Stock Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.22 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.23
Form of Performance Vesting LTIP II Unit Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.23 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.24
Form of Non-Qualified Stock Option Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.24 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.25
Form of Non-Qualified Stock Option Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.25 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.26
Form of LTIP II Unit Agreement (Second Amended & Restated 2015 Stock Award and Incentive Plan) (Exhibit
10.26 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is incorporated herein by this
reference)*
10.27
Form of LTIP II Unit Agreement (Second Amended & Restated 2015 Stock Award and Incentive Plan) (Exhibit
10.27 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is incorporated herein by this
reference)*
10.28
Form of Performance Restricted Stock Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (Exhibit 10.28 to Aimco's Annual Form on 10-K for the year ended December 31, 2023, is
incorporated herein by this reference)*
10.29
Form of Performance Restricted Stock Agreement (Second Amended & Restated 2015 Stock Award and
Incentive Plan) (filed herewith)*
50
10.30
Employee Matters Agreement, effective as of December 15, 2020, by and among Apartment Investment
Management Company, Aimco OP L.P., Apartment Income REIT Corp. and Apartment Income REIT, L.P.
(f/k/a AIMCO Properties, L.P.) (Exhibit 10.3 to Aimco’s Current Report on Form 8-K, filed December 15,
2020, is incorporated herein by this reference)
10.31+
Interests Purchase and Sale Agreement, effective as of December 30, 2024, by and among AHOTB Holding,
LLC, Aimco OP L.P., and Brickell Bay Property Owner LLC (filed herewith)
19.1
Policy on Insider Information and Insider Trading
21.1
List of Subsidiaries
23.1
Consent of Independent Registered Public Accounting Firms - Aimco
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)/15d-15(e), and
Securities Exchange Act Rules 13a-15(f)/15d-15(f), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 - Aimco
31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)/15d-15(e), and
Securities Exchange Act Rules 13a-15(f)/15d-15(f), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 - Aimco
31.3
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)/15d-15(e), and
Securities Exchange Act Rules 13a-15(f)/15d-15(f), as Adopted Pursuant to section 302 of the Sarbanes-Oxley
Act of 2002 - Aimco Operating Partnership
31.4
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)/15d-15(e), and
securities Exchange Act Rules 13a-15(f)/15d-15(f), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 - Aimco Operating Partnership
32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 – Aimco
32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 – Aimco
32.3
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 - Aimco Operating Partnership
32.4
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 - Aimco Operating Partnership
97.1
Amended Aimco Clawback Policy, effective as of July 26, 2023 (Exhibit 97.1 to Aimco's Annual Form on 10-K
for the year ended December 31, 2023, is incorporated herein by this reference)*
101
The following materials from Aimco’s and Aimco Operating Partnership’s consolidated Annual Report on
Form 10-K for the year ended December 31, 2024, formatted in iXBRL (Inline Extensible Business Reporting
Language): (i) consolidated balance sheets; (ii) consolidated statements of operations; (iii) consolidated
statements of comprehensive income; (iv) consolidated statements of equity and consolidated statements of
partners’ capital; (v) consolidated statements of cash flows; (vi) notes to the consolidated financial statements;
and (vii) financial statement schedule (3)
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
(1) Schedule and similar exhibits to the exhibits have been omitted but will be provided to the Securities and Exchange
Commission or its staff upon request.
(2) The Commission file numbers for exhibits is 001-13232 (Aimco) and 0-24497 (Aimco Operating Partnership).
* Management contract or compensatory plan or arrangement
+ Exhibits marked with a (+) exclude certain portions of the exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K. A copy
of the omitted portions will be furnished to the SEC upon request.
ITEM 16. FORM 10-K SUMMARY
None.
F-1
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
INDEX TO FINANCIAL STATEMENTS
Page
Financial Statements:
Apartment Investment and Management Company:
Report of Registered Independent Public Accounting Firm (PCAOB ID: 248)
F-4
Report of Registered Independent Public Accounting Firm (PCAOB ID: 42)
F-6
Consolidated Balance Sheets
F-7
Consolidated Statements of Operations
F-8
Consolidated Statements of Equity
F-9
Consolidated Statements of Cash Flows
F-10
Aimco OP L.P.
Report of Registered Independent Public Accounting Firm (PCAOB ID: 248)
F-11
Report of Registered Independent Public Accounting Firm (PCAOB ID: 42)
F-13
Consolidated Balance Sheets
F-14
Consolidated Statements of Operations
F-15
Consolidated Statements of Partners’ Capital
F-16
Consolidated Statements of Cash Flows
F-17
Notes to Consolidated Financial Statements of Apartment Investment and Management Company and Aimco OP
L.P.
F-18
Note 1 — Organization
F-18
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
F-18
Note 3 — Significant Transactions
F-28
Note 4 — Lease Arrangements
F-29
Note 5 — Variable Interest Entities
F-31
Note 6 — Debt
F-32
Note 7 — Income Taxes
F-34
Note 8 — Aimco Equity
F-36
Note 9 — Partners' capital
F-36
Note 10 — Earnings per Share and per Unit
F-37
Note 11 — Share-Based Compensation
F-38
Note 12 — Fair Value Measurements
F-40
Note 13 — Commitments and Contingencies
F-42
Note 14 — Business Segments
F-42
Financial Statement Schedule:
Schedule III – Real Estate and Accumulated Depreciation
F-46
F-2
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 INVESTMENT AND
MANAGEMENT COMPANY
By:
/s/ Wes Powell
Wes Powell
Director, President and Chief Executive Officer
Date: February 24, 2025
AIMCO OP L.P.
By:
Aimco OP GP, LLC, its General Partner
/s/ Wes Powell
Wes Powell
Director, President and Chief Executive Officer
Date: February 24, 2025
F-3
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of each registrant and in the capacities and on the dates indicated.
Signature
Title
Date
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
By: Aimco OP GP, LLC, its General
Partner
/s/ WES POWELL
Director, President and
Chief Executive Officer
February 24, 2025
Wes Powell
(principal executive officer)
/s/ H. LYNN C. STANFIELD
Executive Vice President and
February 24, 2025
H. Lynn C. Stanfield
Chief Financial Officer
(principal financial officer)
/s/ KELLIE E. DREYER
Senior Vice President and Chief
February 24, 2025
Kellie E. Dreyer
Accounting Officer (principal
accounting officer)
/s/ R. DARY STONE
Chairman of the Board of Directors
February 24, 2025
R. Dary Stone
/s/ QUINCY L. ALLEN
Director
February 24, 2025
Quincy L. Allen
/s/ PATRICIA L. GIBSON
Director
February 24, 2025
Patricia L. Gibson
/s/ JAY PAUL LEUPP
Director
February 24, 2025
Jay Paul Leupp
/s/ SHERRY L. REXROAD
Director
February 24, 2025
Sherry L. Rexroad
/s/ DEBORAH SMITH
Director
February 24, 2025
Deborah Smith
/s/ JAMES P. SULLIVAN
Director
February 24, 2025
James P. Sullivan
/s/ KIRK A. SYKES
Director
February 24, 2025
Kirk A. Sykes
F-4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Apartment Investment and Management Company
Opinion on the financial statements
We have audited the accompanying consolidated balance sheet of Apartment Investment and Management Company (a
Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of
operations, equity, and cash flows for the year ended December 31, 2024, and the related notes and financial statement schedule
included under Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and
the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles
generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in
the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 24, 2025 expressed an unqualified opinion.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Impairment of investment in IQHQ
As described further in Note 2 to the financial statements, the Company accounts for their investment in IQHQ, a privately held
life sciences real estate development company, using the measurement alternative. During the year ended December 31, 2024,
the Company recorded a non-cash impairment charge of $48.6 million, reducing the carrying value of the investment in IQHQ
to $11.1 million as a result of the identification of a triggering event. The fair value of IQHQ was determined using various
estimates, assumptions, and market data, the most significant being projected operational cash flows, capitalization rates, and
discount rates. We identified the fair value measurements utilized in valuing IQHQ’s underlying investment properties as a
critical audit matter.
The principal considerations for our determination that the fair value measurements utilized in valuing IQHQ’s underlying
investment properties are a critical audit matter are the projected operational cash flows, capitalization rates, and discount rates
used in determining the fair value, which involved a higher degree of judgment due to the subjective nature of these inputs.
Our audit procedures related to the fair value measurements utilized in valuing IQHQ’s underlying investment properties
included the following, among others:
F-5
I.
We tested the design and operating effectiveness of relevant controls over management’s evaluation of the
reasonableness of the significant inputs and assumptions used to estimate the fair value of IQHQ’s underlying
investment properties.
II.
For certain underlying investment properties valued under the income approach, with the assistance of those with
specialized skill and knowledge, we evaluated the reasonableness of the fair value measurements by comparing the
land and real property market values to independently developed ranges using relevant market data derived from
industry transaction databases and published industry reports.
/s/ GRANT THORNTON LLP
We have served as the Company's auditor since 2024.
Denver, Colorado
February 24, 2025
F-6
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Apartment Investment and Management Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Apartment Investment and Management Company (the
Company) as of December 31, 2023, the related consolidated statements of operations, equity and cash flows for each of the
two years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at
Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results
of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.
generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We served as the Company's auditor from 2020 to 2024.
Denver, Colorado
February 26, 2024,
except for Note 14, as to which the date is
February 24, 2025
F-7
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 2024 December 31, 2023
ASSETS
Buildings and improvements
$
1,348,925 $
1,593,802
Land
398,182
620,821
Total real estate
1,747,107
2,214,623
Accumulated depreciation
(499,274 )
(580,802 )
Net real estate
1,247,833
1,633,821
Cash and cash equivalents
141,072
122,601
Restricted cash
31,367
16,666
Notes receivable
58,794
57,554
Right-of-use lease assets - finance leases
107,714
108,992
Other assets, net
94,051
149,841
Assets held for sale, net
276,079
—
Total assets
$
1,956,910 $
2,089,475
LIABILITIES AND EQUITY
Non-recourse property debt, net
$
685,420 $
846,298
Non-recourse construction loans, net
385,240
301,443
Total indebtedness
1,070,660
1,147,741
Deferred tax liabilities
101,457
110,284
Lease liabilities - finance leases
121,845
118,697
Dividends payable
89,182
—
Accrued liabilities and other
100,849
121,143
Liabilities related to assets held for sale, net
160,620
—
Total liabilities
1,644,613
1,497,865
Redeemable noncontrolling interests in consolidated real estate partnerships
142,931
171,632
Commitments and contingencies (Note 13)
Equity (510,587,500 shares authorized at December 31, 2024 and December
31, 2023):
Common Stock, $0.01 par value, 136,351,966 and 140,576,102 shares
issued and outstanding at December 31, 2024 and December 31, 2023,
respectively
1,364
1,406
Additional paid-in capital
425,002
464,538
Retained earnings
(303,409 )
(116,292 )
Total Aimco equity
122,957
349,652
Noncontrolling interests in consolidated real estate partnerships
39,560
51,265
Common noncontrolling interests in Aimco Operating Partnership
6,849
19,061
Total equity
169,366
419,978
Total liabilities and equity
$
1,956,910 $
2,089,475
See accompanying notes to the consolidated financial statements.
F-8
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended December 31,
2024
2023
2022
REVENUES
Rental and other property revenues
$
208,679 $
186,995 $
190,344
OPERATING EXPENSES
Property operating expenses
90,984
73,712
71,792
Depreciation and amortization
86,359
68,834
158,967
General and administrative expenses
32,837
32,865
39,673
Total operating expenses
210,180
175,411
270,432
Interest income
9,652
9,731
4,052
Interest expense
(70,057 )
(37,718 )
(73,842 )
Mezzanine investment income (loss), net
(2,432 )
(155,814 )
(179,239 )
Realized and unrealized gains (losses) on interest rate contracts
1,752
1,119
48,205
Realized and unrealized gains (losses) on equity investments
(49,504 )
700
20,302
Gain on dispositions of real estate
10,600
7,984
175,863
Lease modification income
—
—
206,963
Other income (expense), net
(5,581 )
(7,657 )
(12,794 )
Income (loss) before income tax
(107,071 )
(170,071 )
109,422
Income tax benefit (expense)
11,071
12,752
(17,264 )
Net income (loss)
(96,000 )
(157,319 )
92,158
Net (income) loss attributable to redeemable noncontrolling
interests in consolidated real estate partnerships
(13,958 )
(13,924 )
(8,829 )
Net (income) loss attributable to noncontrolling interests
in consolidated real estate partnerships
1,849
(3,991 )
(3,672 )
Net (income) loss attributable to common noncontrolling
interests in Aimco Operating Partnership
5,641
9,038
(3,931 )
Net income (loss) attributable to Aimco
$
(102,468 ) $
(166,196 ) $
75,726
Net income (loss) attributable to Aimco per common
share – basic (Note 10)
$
(0.75 ) $
(1.16 ) $
0.50
Net income (loss) attributable to Aimco per common
share – diluted (Note 10)
$
(0.75 ) $
(1.16 ) $
0.49
Weighted-average common shares outstanding – basic
138,496
143,618
149,395
Weighted-average common shares outstanding – diluted
138,496
143,618
150,834
See accompanying notes to the consolidated financial statements.
F-9
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
Common Stock
Noncontrolling
Interests in
Common
Noncontrolling
Interests in
Shares
Issued
Amount
Additional
Paid-
in Capital
Retained
Earnings
(Accumulated
Deficit)
Total Aimco
Equity
Consolidated
Real Estate
Partnerships
Aimco
Operating
Partnership
Total
Equity
Balances at December 31, 2021
149,818
$1,498
$521,842
$(22,775)
$500,565
$35,213
$26,455
$562,233
Net income (loss)
—
—
—
75,726
75,726
3,672
3,931
83,329
Redemption of OP Units held by third parties
and reallocation of noncontrolling interests in
Aimco Operating Partnership
108
1
2,653
—
2,654
—
(2,888)
(234)
Share-based compensation expense
—
—
5,687
—
5,687
—
1,770
7,457
Contributions from noncontrolling interests in
consolidated real estate partnerships
—
—
—
—
—
10,616
—
10,616
Distributions to noncontrolling interests in
consolidated real estate partnerships
—
—
—
—
—
(1,202)
(160)
(1,362)
Redemption of redeemable noncontrolling
interests in consolidated real estate
partnerships
—
—
(183)
—
(183)
—
—
(183)
Purchase of noncontrolling interests in
consolidated real estate partnerships
—
—
(7,088)
—
(7,088)
—
—
(7,088)
Common stock repurchased
(3,459)
(35)
(24,957)
—
(24,992)
—
—
(24,992)
Other common stock issuances
106
1
851
—
852
—
109
961
Cash dividends
—
—
—
(3,043)
(3,043)
—
—
(3,043)
Other, net
(48)
1
(2,323)
(4)
(2,326)
(5)
(5)
(2,336)
Balances at December 31, 2022
146,525
1,466
496,482
49,904
547,852
48,294
29,212
625,358
Net income (loss)
—
—
—
(166,196)
(166,196)
3,991
(9,038)
(171,243)
Redemption of OP Units held by third parties
and reallocation of noncontrolling interests in
Aimco Operating Partnership
—
—
4,501
—
4,501
—
(5,582)
(1,081)
Share-based compensation expense
—
—
7,299
—
7,299
—
3,196
10,495
Contributions from noncontrolling interests in
consolidated real estate partnerships
—
—
—
—
—
272
—
272
Distributions to noncontrolling interests in
consolidated real estate partnerships
—
—
—
—
—
(1,291)
—
(1,291)
Common stock repurchased
(6,166)
(61)
(45,277)
—
(45,338)
—
—
(45,338)
Other common stock issuances
252
2
1,538
—
1,540
—
1,272
2,812
Other, net
(35)
(1)
(5)
—
(6)
(1)
1
(6)
Balances at December 31, 2023
140,576
1,406
464,538
(116,292)
349,652
51,265
19,061
419,978
Net income (loss)
—
—
—
(102,468)
(102,468)
(1,849)
(5,641)
(109,958)
Redemption of OP Units held by third parties
and reallocation of noncontrolling interests in
Aimco Operating Partnership
—
—
1,078
—
1,078
—
(2,061)
(983)
Share-based compensation expense
—
—
7,490
—
7,490
—
23
7,513
Contributions from noncontrolling interests in
consolidated real estate partnerships
—
—
—
—
—
1,056
—
1,056
Distributions to noncontrolling interests in
consolidated real estate partnerships
—
—
—
—
—
(1,614)
—
(1,614)
Purchase of noncontrolling interests in
consolidated real estate partnerships
—
—
(9,913)
—
(9,913)
(9,268)
—
(19,181)
Common stock repurchased
(4,852)
(49)
(38,896)
—
(38,945)
—
—
(38,945)
Other common stock issuances, net of
withholding taxes
628
6
640
—
646
—
—
646
Dividends declared
—
—
—
(84,649)
(84,649)
—
(4,533)
(89,182)
Other, net
—
1
65
—
66
(30)
—
36
Balances at December 31, 2024
136,352
$1,364
$425,002
$(303,409)
$122,957
$39,560
$6,849
$169,366
See accompanying notes to the consolidated financial statements.
F-10
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
2024
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(96,000 )
$
(157,319 )
$
92,158
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
86,359
68,834
158,967
Mezzanine investment (income) loss, net
2,432
155,814
179,239
Realized and unrealized (gains) losses on interest rate contracts
(1,752 )
(1,119 )
(48,205 )
Realized and unrealized (gains) losses on equity investments
49,504
(700 )
(20,302 )
Income tax expense (benefit)
(11,071 )
(12,752 )
17,264
Share-based compensation
6,494
9,221
7,471
Loss on extinguishment of debt, net
947
938
28,986
Lease modification income
—
—
(206,963 )
Gain on dispositions of real estate
(10,600 )
(7,984 )
(175,863 )
Loss (income) from unconsolidated real estate partnerships
1,358
(875 )
(579 )
Other, including amortization of debt issuance costs
20,186
2,563
2,787
Changes in operating assets and operating liabilities:
Operating assets, net
(13,355 )
335
1,039
Net cash received from lease incentive
—
—
195,789
Operating liabilities, net
12,482
(6,489 )
(27,556 )
Total adjustments
142,984
207,786
112,074
Net cash provided by operating activities
46,984
50,467
204,232
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate
—
(4,108 )
(129,245 )
Capital expenditures
(160,027 )
(272,497 )
(237,523 )
Proceeds from dispositions of real estate
186,203
9,254
259,983
Investment in IQHQ
—
—
(14,227 )
Redemption of IQHQ investment
—
—
16,473
Distributions received from unconsolidated real estate partnerships
—
4,209
—
Investment in unconsolidated real estate partnerships
(383 )
(3,786 )
(15,668 )
Proceeds from dispositions of unconsolidated real estate partnerships
5,766
—
—
Purchase of treasury bill
—
(53,773 )
—
Proceeds from treasury bill
—
54,727
—
Other investing activities
(958 )
5,578
(547 )
Net cash provided by (used in) investing activities
30,601
(260,396 )
(120,754 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse property debt
—
—
756,220
Proceeds from non-recourse construction loans
330,542
174,445
93,206
Proceeds from sale of participation in Mezzanine Investment
—
37,500
—
Payments of deferred loan costs
(6,340 )
(229 )
(15,266 )
Principal repayments on non-recourse property debt
(3,166 )
(85,974 )
(302,428 )
Principal repayments on non-recourse construction loans
(267,032 )
—
(138,404 )
Principal repayments on Notes Payable to AIR
—
—
(534,127 )
Purchase of interest rate contracts
(710 )
(712 )
(5,620 )
Proceeds from interest rate contracts
6,526
58,906
16,818
Payments on finance leases
(514 )
(2,694 )
(26,213 )
Payments of prepayment premiums
—
—
(25,801 )
Common stock repurchased
(38,945 )
(46,843 )
(23,492 )
Dividends paid on common stock
—
—
(3,043 )
Redemption of redeemable noncontrolling interests
(38,473 )
—
(5,094 )
Distributions to redeemable noncontrolling interests
(8,318 )
(9,243 )
(9,365 )
Contributions from noncontrolling interests
1,056
272
10,616
Distributions to noncontrolling interests
(1,614 )
(1,291 )
(1,362 )
Contributions from redeemable noncontrolling interests
6,409
125
122,571
Redemption of OP Units held by third parties
(983 )
(1,081 )
(225 )
Redemption of noncontrolling interest in real estate partnership
—
—
(7,088 )
Purchase of noncontrolling interests in consolidated real estate partnerships
(19,181 )
—
—
Other financing activities
(3,153 )
(3,751 )
(197 )
Net cash provided by (used in) financing activities
(43,896 )
119,430
(98,294 )
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
33,689
(90,499 )
(14,816 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT
BEGINNING OF YEAR
139,267
229,766
244,582
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT
END OF YEAR
$
172,956
$
139,267
$
229,766
See accompanying notes to the consolidated financial statements
F-11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Partners
Aimco OP L.P.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheet of Aimco OP L.P. (a Maryland corporation) and subsidiaries
(the “Partnership”) as of December 31, 2024, the related consolidated statements of operations, partners’ capital, and cash flows
for the year ended December 31, 2024, and the related notes and financial statement schedule included under Item 15(a)
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Partnership as of December 31, 2024, and the results of its
operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally
accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2024, based on criteria established
in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 24, 2025 expressed an unqualified opinion.
Basis for opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express
an opinion on the Partnership’s consolidated financial statements based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Impairment of investment in IQHQ
As described further in Note 2 to the financial statements, the Partnership accounts for their investment in IQHQ, a privately
held life sciences real estate development company, using the measurement alternative. During the year ended December 31,
2024, the Partnership recorded a non-cash impairment charge of $48.6 million, reducing the carrying value of the investment in
IQHQ to $11.1 million as a result of the identification of a triggering event. The fair value of IQHQ was determined using
various estimates, assumptions, and market data, the most significant being projected operational cash flows, capitalization
rates, and discount rates. We identified the fair value measurements utilized in valuing IQHQ’s underlying investment
properties as a critical audit matter.
The principal considerations for our determination that the fair value measurements utilized in valuing IQHQ’s underlying
investment properties are a critical audit matter are the projected operational cash flows, capitalization rates, and discount rates
used in determining the fair value, which involved a higher degree of judgment due to the subjective nature of these inputs.
Our audit procedures related to the fair value measurements utilized in valuing IQHQ’s underlying investment properties
included the following, among others:
F-12
I.
We tested the design and operating effectiveness of relevant controls over management’s evaluation of the
reasonableness of the significant inputs and assumptions used to estimate the fair value of IQHQ’s underlying
investment properties.
II.
For certain underlying investment properties valued under the income approach, with the assistance of those with
specialized skill and knowledge, we evaluated the reasonableness of the fair value measurements by comparing the
land and real property market values to independently developed ranges using relevant market data derived from
industry transaction databases and published industry reports.
/s/ GRANT THORNTON LLP
We have served as the Partnership's auditor since 2024.
Denver, Colorado
February 24, 2025
F-13
Report of Independent Registered Public Accounting Firm
To the Partners and the Board of Directors of
Aimco OP L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Aimco OP L.P. (the Partnership) as of December 31, 2023,
the related consolidated statements of operations, partners’ capital, and cash flows for each of the two years in the period ended
December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Partnership at December 31, 2023, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting
principles.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on
the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We served as the Partnership's auditor from 2020 to 2024.
Denver, Colorado
February 26, 2024,
except for Note 14, as to which the date is
February 24, 2025
F-14
AIMCO OP L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 2024 December 31, 2023
ASSETS
Buildings and improvements
$
1,348,925 $
1,593,802
Land
398,182
620,821
Total real estate
1,747,107
2,214,623
Accumulated depreciation
(499,274 )
(580,802 )
Net real estate
1,247,833
1,633,821
Cash and cash equivalents
141,072
122,601
Restricted cash
31,367
16,666
Notes receivable
58,794
57,554
Right-of-use lease assets - finance leases
107,714
108,992
Other assets, net
94,051
149,841
Assets held for sale, net
276,079
—
Total assets
$
1,956,910 $
2,089,475
LIABILITIES AND EQUITY
Non-recourse property debt, net
$
685,420 $
846,298
Non-recourse construction loans, net
385,240
301,443
Total indebtedness
1,070,660
1,147,741
Deferred tax liabilities
101,457
110,284
Lease liabilities - finance leases
121,845
118,697
Dividends payable
89,182
—
Accrued liabilities and other
100,849
121,143
Liabilities related to assets held for sale, net
160,620
—
Total liabilities
1,644,613
1,497,865
Redeemable noncontrolling interests in consolidated real estate partnerships
142,931
171,632
Commitments and contingencies (Note 13)
Partners’ capital:
General Partner and Special Limited Partner (136,351,966 and
140,576,102 OP Units issued and outstanding at December 31, 2024 and
December 31, 2023, respectively)
122,957
349,652
Limited Partners (7,555,109 and 7,663,618 OP Units issued and
outstanding at December 31, 2024 and December 31, 2023, respectively)
6,849
19,061
Partners’ capital attributable to Aimco Operating Partnership
129,806
368,713
Noncontrolling interests in consolidated real estate partnerships
39,560
51,265
Total partners’ capital
169,366
419,978
Total liabilities and partners’ capital
$
1,956,910 $
2,089,475
See accompanying notes to the consolidated financial statements.
F-15
AIMCO OP L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per common unit data)
Year Ended December 31,
2024
2023
2022
REVENUES
Rental and other property revenues
$
208,679 $
186,995 $
190,344
OPERATING EXPENSES
Property operating expenses
90,984
73,712
71,792
Depreciation and amortization
86,359
68,834
158,967
General and administrative expenses
32,837
32,865
39,673
Total operating expenses
210,180
175,411
270,432
Interest income
9,652
9,731
4,052
Interest expense
(70,057 )
(37,718 )
(73,842 )
Mezzanine investment income (loss), net
(2,432 )
(155,814 )
(179,239 )
Realized and unrealized gains (losses) on interest rate contracts
1,752
1,119
48,205
Realized and unrealized gains (losses) on equity investments
(49,504 )
700
20,302
Gain on dispositions of real estate
10,600
7,984
175,863
Lease modification income
—
—
206,963
Other income (expense), net
(5,581 )
(7,657 )
(12,794 )
Income (loss) before income tax
(107,071 )
(170,071 )
109,422
Income tax benefit (expense)
11,071
12,752
(17,264 )
Net income (loss)
(96,000 )
(157,319 )
92,158
Net (income) loss attributable to redeemable noncontrolling
interests in consolidated real estate partnerships
(13,958 )
(13,924 )
(8,829 )
Net (income) loss attributable to noncontrolling interests
in consolidated real estate partnerships
1,849
(3,991 )
(3,672 )
Net income (loss) attributable to Aimco Operating
Partnership
$
(108,109 ) $
(175,234 ) $
79,657
Net income (loss) attributable to Aimco Operating
Partnership per common unit – basic (Note 10)
$
(0.75 ) $
(1.16 ) $
0.50
Net income (loss) attributable to Aimco Operating
Partnership per common unit – diluted (Note 10)
$
(0.75 ) $
(1.16 ) $
0.49
Weighted-average common units outstanding – basic
146,120
151,371
157,317
Weighted-average common units outstanding – diluted
146,120
151,371
158,774
See accompanying notes to the consolidated financial statements.
F-16
AIMCO OP L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In thousands)
General Partner
and Special
Limited Partner
Limited
Partners
Partners’ Capital
Attributable to
Aimco Operating
Partnership
Noncontrolling
Interests
in Consolidated
Real
Estate
Partnerships
Total
Partners’
Capital
Balances at December 31, 2021
$500,565
$26,455
$527,020
$35,213
$562,233
Net income (loss)
75,726
3,931
79,657
3,672
83,329
Redemption of OP Units held by third parties and
reallocation of noncontrolling interests in Aimco
Operating Partnership
2,654
(2,888)
(234)
—
(234)
Share-based compensation expense
5,687
1,770
7,457
—
7,457
Contributions from noncontrolling interests in
consolidated real estate partnerships
—
—
—
10,616
10,616
Distributions to noncontrolling interests in
consolidated real estate partnerships
—
(160)
(160)
(1,202)
(1,362)
Redemption of redeemable noncontrolling interests in
consolidated real estate partnerships
(183)
—
(183)
—
(183)
Purchase of noncontrolling interests in consolidated
real estate partnerships
(7,088)
—
(7,088)
—
(7,088)
Common stock repurchased
(24,992)
—
(24,992)
—
(24,992)
Other common stock issuances
852
109
961
—
961
Cash dividends
(3,043)
—
(3,043)
—
(3,043)
Other, net
(2,326)
(5)
(2,331)
(5)
(2,336)
Balances at December 31, 2022
547,852
29,212
577,064
48,294
625,358
Net income (loss)
(166,196)
(9,038)
(175,234)
3,991
(171,243)
Redemption of OP Units held by third parties and
reallocation of noncontrolling interests in Aimco
Operating Partnership
4,501
(5,582)
(1,081)
—
(1,081)
Share-based compensation expense
7,299
3,196
10,495
—
10,495
Contributions from noncontrolling interests in
consolidated real estate partnerships
—
—
—
272
272
Distributions to noncontrolling interests in
consolidated real estate partnerships
—
—
—
(1,291)
(1,291)
Common stock repurchased
(45,338)
—
(45,338)
—
(45,338)
Other common stock issuances
1,540
1,272
2,812
—
2,812
Other, net
(6)
1
(5)
(1)
(6)
Balances at December 31, 2023
349,652
19,061
368,713
51,265
419,978
Net income (loss)
(102,468)
(5,641)
(108,109)
(1,849)
(109,958)
Redemption of OP Units held by third parties and
reallocation of noncontrolling interests in Aimco
Operating Partnership
1,078
(2,061)
(983)
—
(983)
Share-based compensation expense
7,490
23
7,513
—
7,513
Contributions from noncontrolling interests in
consolidated real estate partnerships
—
—
—
1,056
1,056
Distributions to noncontrolling interests in
consolidated real estate partnerships
—
—
—
(1,614)
(1,614)
Purchase of noncontrolling interests in consolidated
real estate partnerships
(9,913)
—
(9,913)
(9,268)
(19,181)
Common stock repurchased
(38,945)
—
(38,945)
—
(38,945)
Other common stock issuances, net of withholding
taxes
646
—
646
—
646
Dividends declared
(84,649)
(4,533)
(89,182)
—
(89,182)
Other, net
66
—
66
(30)
36
Balances at December 31, 2024
$122,957
$6,849
$129,806
$39,560
$169,366
See accompanying notes to the consolidated financial statements
F-17
AIMCO OP L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
2024
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(96,000 )
$
(157,319 )
$
92,158
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
86,359
68,834
158,967
Mezzanine investment (income) loss, net
2,432
155,814
179,239
Realized and unrealized (gains) losses on interest rate contracts
(1,752 )
(1,119 )
(48,205 )
Realized and unrealized (gains) losses on equity investments
49,504
(700 )
(20,302 )
Income tax expense (benefit)
(11,071 )
(12,752 )
17,264
Share-based compensation
6,494
9,221
7,471
Loss on extinguishment of debt, net
947
938
28,986
Lease modification income
—
—
(206,963 )
Gain on dispositions of real estate
(10,600 )
(7,984 )
(175,863 )
Loss (income) from unconsolidated real estate partnerships
1,358
(875 )
(579 )
Other, including amortization of debt issuance costs
20,186
2,563
2,787
Changes in operating assets and operating liabilities:
Operating assets, net
(13,355 )
335
1,039
Net cash received from lease incentive
—
—
195,789
Operating liabilities, net
12,482
(6,489 )
(27,556 )
Total adjustments
142,984
207,786
112,074
Net cash provided by operating activities
46,984
50,467
204,232
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate
—
(4,108 )
(129,245 )
Capital expenditures
(160,027 )
(272,497 )
(237,523 )
Proceeds from dispositions of real estate
186,203
9,254
259,983
Investment in IQHQ
—
—
(14,227 )
Redemption of IQHQ investment
—
—
16,473
Distributions received from unconsolidated real estate partnerships
—
4,209
—
Investment in unconsolidated real estate partnerships
(383 )
(3,786 )
(15,668 )
Proceeds from dispositions of unconsolidated real estate partnerships
5,766
—
—
Purchase of treasury bill
—
(53,773 )
—
Proceeds from treasury bill
—
54,727
—
Other investing activities
(958 )
5,578
(547 )
Net cash provided by (used in) investing activities
30,601
(260,396 )
(120,754 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from non-recourse property debt
—
—
756,220
Proceeds from non-recourse construction loans
330,542
174,445
93,206
Proceeds from sale of participation in Mezzanine Investment
—
37,500
—
Payments of deferred loan costs
(6,340 )
(229 )
(15,266 )
Principal repayments on non-recourse property debt
(3,166 )
(85,974 )
(302,428 )
Principal repayments on non-recourse construction loans
(267,032 )
—
(138,404 )
Principal repayments on Notes Payable to AIR
—
—
(534,127 )
Purchase of interest rate contracts
(710 )
(712 )
(5,620 )
Proceeds from interest rate contracts
6,526
58,906
16,818
Payments on finance leases
(514 )
(2,694 )
(26,213 )
Payments of prepayment premiums
—
—
(25,801 )
Common stock repurchased
(38,945 )
(46,843 )
(23,492 )
Dividends paid on common stock
—
—
(3,043 )
Redemption of redeemable noncontrolling interests
(38,473 )
—
(5,094 )
Distributions to redeemable noncontrolling interests
(8,318 )
(9,243 )
(9,365 )
Contributions from noncontrolling interests
1,056
272
10,616
Distributions to noncontrolling interests
(1,614 )
(1,291 )
(1,362 )
Contributions from redeemable noncontrolling interests
6,409
125
122,571
Redemption of OP Units held by third parties
(983 )
(1,081 )
(225 )
Redemption of noncontrolling interest in real estate partnership
—
—
(7,088 )
Purchase of noncontrolling interests in consolidated real estate partnerships
(19,181 )
—
—
Other financing activities
(3,153 )
(3,751 )
(197 )
Net cash provided by (used in) financing activities
(43,896 )
119,430
(98,294 )
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
33,689
(90,499 )
(14,816 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT
BEGINNING OF YEAR
139,267
229,766
244,582
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT
END OF YEAR
$
172,956
$
139,267
$
229,766
See accompanying notes to the consolidated financial statements
F-18
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
Note 1 — Organization
Apartment Investment and Management Company (“Aimco” or "the Company"), a Maryland corporation, is a self-
administered and self-managed real estate investment trust (“REIT”). On December 15, 2020, Aimco completed the separation
of its businesses (the “Separation”), creating two, separate and distinct, publicly traded companies, Aimco and Apartment
Income REIT Corp. (“AIR”) (Aimco and AIR together, as they existed prior to the Separation, “Aimco Predecessor”). Events
noted in this filing as occurring before December 15, 2020, were those entered into by Aimco Predecessor.
Aimco, through a wholly-owned subsidiary, is the general partner and is, directly, the special limited partner of Aimco OP
L.P. ("Aimco Operating Partnership"). As of December 31, 2024, Aimco owned 92.3% of the legal interest in the common
partnership units of Aimco Operating Partnership and 94.8% of the economic interest in Aimco Operating Partnership. The
remaining 7.7% legal interest is owned by limited partners. The common partnership units of Aimco Operating Partnership are
referred to as "OP Units". As the sole general partner of Aimco Operating Partnership, Aimco has exclusive control of Aimco
Operating Partnership’s day-to-day management.
This filing combines the Annual Reports on Form 10-K for the fiscal year ended December 31, 2024, of Aimco and Aimco
Operating Partnership. Where it is important to distinguish between the two entities, each is referred to specifically. Otherwise,
references to “we,” “us,” or “our” mean, collectively, Aimco, Aimco Operating Partnership, and their consolidated entities.
We own or lease a portfolio of real estate investments focused primarily on the U.S. multifamily sector. At December 31,
2024, our entire portfolio of operating residential apartment communities includes 5,243 apartment homes within 20
consolidated stabilized operating properties, a substantially complete 689-unit community with 105,000 square feet of retail
space, a substantially complete 220-unit community, and four unconsolidated properties. Additionally, we have a substantially
complete single family rental community with 16 homes and eight accessory dwelling units, a waterfront ground-up
development under construction with 114 planned units, a 106-key luxury hotel with event space, one commercial office
building that is part of an assemblage with an adjacent apartment building that is currently held for sale, and land parcels held
for development. We also hold other alternative investments, including our Mezzanine Investment (see Note 2 for further
information); our investment in IQHQ Holdings, LP ("IQHQ"); and our investment in real estate technology funds.
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Aimco, Aimco Operating Partnership, and
their consolidated entities. Aimco Operating Partnership’s consolidated financial statements include the accounts of Aimco
Operating Partnership and its consolidated entities. All significant intercompany balances have been eliminated in
consolidation.
As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited
liability company and “partner” refers to a partner in a limited partnership or a member of a limited liability company.
Certain reclassifications have been made to prior period amounts to conform to the current period consolidated financial
statement presentation with no effect on the Company’s previously reported results of operations, financial position, or cash
flows.
Principles of Consolidation
We account for joint ventures and other similar entities in which we hold an ownership interest in accordance with the
consolidation guidance. We first evaluate whether each entity is a variable interest entity ("VIE"). Under the VIE model, we
consolidate an entity in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the
power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb
losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. In addition, when an entity is
not a VIE, we consolidate an entity under the voting model when we control the entity through ownership of a majority voting
interest. Refer to Note 5 for further information.
F-19
Common noncontrolling interests in Aimco Operating Partnership
Common noncontrolling interests in Aimco Operating Partnership consist of OP Units held by third parties, and are
reflected in Aimco’s accompanying Consolidated Balance Sheets as Common noncontrolling interests in Aimco Operating
Partnership. Aimco Operating Partnership’s income or loss is allocated to the holders of OP Units, other than Aimco, based on
the weighted-average number of OP Units (including Aimco) outstanding during the period. For the years ended December 31,
2024, 2023, and 2022, the holders of OP Units had a weighted-average economic ownership interest in Aimco Operating
Partnership of approximately 5.2%, 5.1%, and 5.1%, respectively. Substantially all of the assets and liabilities of Aimco are
held by Aimco Operating Partnership.
Redeemable noncontrolling interests in consolidated real estate partnerships
Redeemable noncontrolling interests consist of equity interests held by a limited partner in a consolidated real estate
partnership that has the right to require such partnership to redeem all or a portion of the noncontrolling interest in accordance
with the partnership agreement, generally after a specified hold period. If a consolidated real estate partnership includes
redemption rights that are not within our control, the noncontrolling interest is included as temporary equity.
Redeemable noncontrolling interests in consolidated real estate partnerships as of December 31, 2024, consists of the
following: (i) a preferred equity interest that receives 8.0% preferred return per annum in an entity that owns a portfolio of
operating apartment communities, (ii) equity interest in two separate consolidated joint ventures with residential apartment
communities in lease-up, including a preferred equity interest in one of the joint ventures accruing 9.7% preferred return per
annum, and (iii) a preferred equity interest accruing 14.5% preferred return per annum in an entity that owns a waterfront
ground-up development. Capital contributions, distributions, and net income attributable to redeemable noncontrolling interests
in consolidated real estate partnerships are determined in accordance with the relevant partnership agreements. These interests
are presented as Redeemable noncontrolling interests in consolidated real estate partnerships in our Consolidated Balance
Sheets as of December 31, 2024.
The assets of our consolidated real estate partnerships must first be used to settle the liabilities of the consolidated real estate
partnerships. The consolidated real estate partnership’s creditors do not have recourse to the general credit of Aimco Operating
Partnership.
The following table shows changes in our redeemable noncontrolling interests in consolidated real estate partnerships
during the years ended December 31, 2024 , 2023, and 2022 (in thousands):
2024
2023
2022
Balance at Beginning of Period
$
171,632
$
166,826
$
33,794
Capital contributions
6,409
125
138,479
Distributions
(8,318)
(9,243)
(9,365)
Redemptions
(38,473)
—
(4,911)
Net income
13,958
13,924
8,829
Other
(2,277)
—
—
Balance at December 31,
$
142,931
$
171,632
$
166,826
(1) In September 2024, we secured a $55.5 million preferred equity commitment from a third-party for the development of a luxury water-front rental
development in Miami, Florida, as further discussed in Note 5. Costs incurred were treated as a discount to Redeemable noncontrolling interests in
consolidated real estate partnerships in accordance with GAAP.
(1)
F-20
Mezzanine Investment
In November 2019, Aimco Predecessor made a five-year, $275.0 million mezzanine loan to the partnership owning the
“Parkmerced Apartments” located in southwest San Francisco (the “Mezzanine Investment”). The loan bears interest at a 10%
annual rate, accruing if not paid from property operations. While legal ownership of the subsidiaries that originated and hold
the Mezzanine Investment was retained by AIR following the Separation, AIR is obligated to pass payments received on the
Mezzanine Investment to us, and we are obligated to indemnify AIR against any costs and expenses related thereto. We have
the risks and rewards of ownership of the Mezzanine Investment.
Throughout the term of the Mezzanine Investment, we have performed an assessment to determine whether the fair value of
the Mezzanine Investment is less than its net carrying value on an other-than-temporary basis. In 2022, we determined our
Mezzanine Investment was impaired on an other-than-temporary basis after considering various factors, including a sustained
decrease in rents at the Parkmerced Apartments due to changes in the macroeconomic environment and a decline in value of the
real estate collateral. As a result, we recognized a non-cash impairment charge of $212.6 million.
Prior to the non-cash impairment in 2022, we recognized as income the net amounts earned on the Mezzanine Investment
by AIR on its equity investment that were due to be paid to us when collected to the extent the income was supported by the
change in the counterparty’s claim to the net assets of the underlying borrower. The income recognized primarily represented
the interest accrued under the terms of the underlying Mezzanine Investment.
In 2023, we determined our Mezzanine Investment was incrementally impaired after considering additional factors,
including the mezzanine loan’s nearing maturity date and further decline in value of the real estate collateral. As a result, we
recognized a non-cash impairment charge of $158.0 million.
In June 2023, we closed on the sale of a 20% non-controlling participation in the Mezzanine Investment for $33.5 million.
The partial sale and transfer of the financial interest did not qualify for sale accounting and therefore, we recorded the cash
received from the purchaser as a liability, which is included in Accrued liabilities and other in our Consolidated Balance
Sheets. Although the cash received is accounted for as a liability, no amount is due to the purchaser until after we receive
$134.0 million plus an annualized return. While the Mezzanine Investment had not been repaid and was in maturity default as
of December 31, 2024, we are precluded from derecognizing the liability until it has been extinguished.
In connection with the participation sold, the purchaser also made a $4.0 million non-refundable payment for the option to
acquire the remaining 80% in the Mezzanine Investment. The option expired unexercised in the quarter ended December 31,
2023. As a result, we recognized the non-refundable payment in Mezzanine investment income (loss), net in our Consolidated
Statements of Operations.
Real Estate
Acquisitions
Upon the acquisition of real estate, we determine whether the purchase qualifies as an asset acquisition or, less frequently,
meets the definition of an acquisition of a business. We generally recognize the acquisition of real estate or interests in
partnerships that own real estate at our cost, including the related transaction costs, as asset acquisitions.
We allocate the cost of real estate acquired based on the relative fair value of the assets acquired and liabilities assumed.
The fair value of these assets and liabilities is determined using valuation techniques that rely on Level 2 and Level 3 inputs
within the fair value framework. We determine the fair value of tangible assets, such as land, buildings, furniture, fixtures, and
equipment using valuation techniques that consider comparable market transactions, replacement costs, and other available
information. We determine the fair value of identified intangible assets or liabilities, which typically relate to in-place leases,
using valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and our
experience in leasing similar real estate.
The intangible assets or liabilities related to in-place leases are comprised of: (a) the value of the above- and below-market
leases in-place, measured over the period, including probable lease renewals for below-market leases, for which the leases are
expected to remain in effect; (b) the estimated unamortized portion of avoided leasing commissions and other costs that
ordinarily would be incurred to originate the in-place leases; (c) the value associated with in-place leases during an estimated
absorption period, which estimates rental revenue that would not have been earned had the leased space been vacant at the time
of acquisition, assuming lease-up periods based on market demand and stabilized occupancy levels; and (d) tax abatement
contract related intangibles, to the extent the property has them in place. The above and below-market lease intangibles are
amortized to rental revenue over the expected remaining terms of the associated leases, which include reasonably certain
renewal periods. Other intangible assets related to in-place leases are amortized to depreciation and amortization over the
expected remaining terms of the associated leases.
F-21
Capital additions
We capitalize costs, including certain indirect costs, incurred in connection with our capital additions activities, including
redevelopments, other tangible apartment community improvements, and replacements of existing community components.
Included in these capitalized costs are payroll costs associated with time spent by employees in connection with the planning,
execution, and control of all capital addition activities at our communities. We characterize as “indirect costs” an allocation of
certain department costs, including payroll, at the area operations and corporate levels that clearly relate to capital addition
activities. We also capitalize interest, property taxes, and insurance during periods in which construction projects are in
progress. We commence capitalization of costs, including certain indirect costs, incurred in connection with our capital addition
activities, at the point in time when activities necessary to get communities, apartment homes, or leased spaces ready for their
intended use begin. These activities include when communities, apartment homes or leased spaces are undergoing physical
construction, as well as when homes or leased spaces are held vacant in advance of planned construction, provided that other
activities such as permitting, planning, and design are in progress. We cease the capitalization of costs when the communities or
components thereof are substantially complete and ready for their intended use, which is typically when construction has been
completed and homes or leased spaces are available for occupancy. We charge costs including ordinary repairs, maintenance,
and resident turnover costs to property operating expense, as incurred.
For the years ended December 31, 2024, 2023, and 2022, we capitalized to buildings and improvements $21.5 million,
$39.7 million, and $30.6 million of interest costs, respectively. For the years ended December 31, 2024, 2023, and 2022, we
capitalized to buildings and improvements $8.0 million, $14.3 million, and $16.9 million of indirect costs, respectively.
Impairment of real estate and other long-lived assets
Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and
amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying
amount of an asset may not be recoverable, we assess its recoverability by comparing the carrying amount to our estimate of the
undiscounted future cash flows, excluding interest charges, of the community. If the carrying amount exceeds the aggregate
undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair
value of the community. There were no such impairments for the years ended December 31, 2024, 2023, and 2022.
Assets held for sale, net
We classify properties as held for sale when they meet the GAAP criteria, which include (among others): (a) management
commits to and initiates a plan to sell the asset; (b) the sale is probable and expected to be completed within one year under
terms that are usual and customary for sales of such assets; and (c) actions required to complete the plan indicate that it is
unlikely that significant changes to the plan will be made or that the plan will be withdrawn, which is typically indicated by
receipt of a significant, non-refundable deposit from the buyer pursuant to a sales contract. We present the assets and liabilities
of any real estate properties held for sale separately in the Consolidated Balance Sheets. Real estate assets held for sale are
measured at the lower of the carrying amount or the fair value less the cost to sell. Both the real estate assets and corresponding
liabilities are presented separately in the accompanying Consolidated Balance Sheets. Upon the classification of an asset as held
for sale, no further depreciation is recorded. Disposals representing a strategic shift in operations (e.g., a disposal of a major
geographic area, a major line of business or a major equity method investment) will be presented as discontinued operations.
On December 30, 2024, Aimco entered into an agreement to sell the Brickell Assemblage. The transaction is scheduled to
occur as early as March 2025 but may be extended at the buyer's option to the fourth quarter of 2025. We determined the
Brickell Assemblage was a disposal group that met the criteria to be classified as held for sale as of December 31, 2024. The
transaction does not meet the criteria for discontinued operations classification. The following summary presents the major
components of assets and liabilities related to the real estate properties held for sale as of December 31, 2024 (in thousands):
F-22
As of December 31, 2024
Buildings and improvements
$
218,388
Land
181,381
Total real estate
399,769
Accumulated depreciation
(126,840)
Net real estate
272,929
Restricted cash
517
Other assets, net
2,633
Assets held for sale, net
$
276,079
Non-recourse property debt, net
$
158,888
Accrued liabilities and other
1,732
Liabilities related to assets held for sale, net
$
160,620
Restricted cash
Restricted cash consists of tenant security deposits, cash restricted as required by our debt agreements, and cash restricted in
association with legal, municipal, federal, or tax requirements. The reconciliation of cash flow information is as follows (in
thousands):
Year Ended December 31,
2024
2023
2022
Cash and cash equivalents
$
141,072 $
122,601 $
206,460
Restricted cash
31,367
16,666
23,306
Restricted cash held for sale
517
—
—
Cash, cash equivalents, and restricted cash, including restricted
cash held for sale
$
172,956
$
139,267
$
229,766
Cash equivalents
We classify highly liquid investments with an original maturity of three months or less as cash equivalents. We maintain
cash and cash equivalents in financial institutions in excess of insured limits. We have not experienced any losses in these
accounts in the past and believe that we are not exposed to significant credit risk because our accounts are deposited with major
financial institutions.
Supplemental cash flow information for the years ended December 31, 2024, 2023, and 2022 is as follows (in thousands):
Year Ended December 31,
2024
2023
2022
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized
$
47,554 $
32,795 $
45,171
Cash paid for income taxes
931
1,711
22,930
Non-cash transactions associated with acquisitions:
Buildings and improvements
—
—
11,109
Intangible assets, net
—
—
13,377
Mark to market adjustment on an assumed construction loan
—
—
363
Right-of-use lease assets - finance leases
—
—
15,036
Other assets, net
—
—
5,629
Accrued liabilities and other
—
—
(1,854)
Lease liabilities - finance leases
—
—
15,151
Contributions from redeemable noncontrolling interests in
consolidated real estate partnerships
—
—
13,756
Other non-cash investing and financing transactions:
Right-of-use lease assets - operating leases
—
718
2,336
Lease liabilities - operating leases
—
718
1,587
Issuance of seller financing in connection with disposition of real
estate
—
17,432
—
Contribution of real estate to unconsolidated real estate partnerships
—
5,700
—
Accrued capital expenditures (at end of year)
11,962
40,340
41,435
F-23
Notes receivable
We carry notes receivable at cost, net of any unamortized discounts or premiums and adjusted for the estimated provision
for expected credit losses. Interest income on notes receivable is recognized using the effective interest method and is classified
within Interest income in our Consolidated Statements of Operations. Direct costs incurred in originating notes, along with any
premium or discount, are deferred and amortized as an adjustment to interest income over the note’s term using the effective
interest method, or on a straight-line basis, which approximates the effective interest method when used.
We have a seller financing note with a principal balance of $43.2 million and an effective interest rate of 6.0%. As of
December 31, 2024 and 2023, the remaining unamortized discount was $2.7 million and $3.8 million, respectively. For the
years ended December 31, 2024, 2023, and 2022, the amortization of the discount was $1.1 million, $1.1 million, and $1.0
million, respectively, which was recorded as a component of Interest Income in our Consolidated Statements of Operations.
Other assets, net
Other assets, net were comprised of the following amounts as of December 31, 2024 and 2023 (in thousands):
As of December 31,
2024
2023
Other investments
$
16,115 $
65,066
Deferred costs, deposits, and other
11,227
9,374
Prepaid expenses and real estate taxes
14,208
14,855
Interest rate contracts
891
5,255
Unconsolidated real estate partnerships
15,155
23,125
Intangible assets, net
13,154
13,494
Corporate fixed assets, net of accumulated depreciation of $9,591 and
$6,903 as of December 31, 2024 and December 31, 2023, respectively
9,844
10,669
Accounts receivable, net of allowances of $352 and $373 as of December
31, 2024 and December 31, 2023, respectively
8,276
5,178
Deferred tax assets
5,175
2,391
Due from affiliates
6
434
Total other assets, net
$
94,051 $
149,841
(1) We account for our interest rate contracts as non-designated hedges. See Note 12 for discussion of our fair value measurements for these instruments.
Other investments
Other investments consist of passive equity investments in stock, property technology funds, and IQHQ, a privately held life
sciences real estate development company. We measure our investment in stock at fair value. We also measure our investments
in property technology funds using the NAV practical expedient since they do not have readily determinable fair values. During
the year ended December 31, 2024, we recognized unrealized losses on our investment in stock of $1.3 million, compared to
unrealized gains of $0.7 million in 2023 and unrealized losses of $6.1 million in 2022. During the years ended December 31,
2024, 2023 and 2022, we recognized unrealized gains on our investments in property technology funds of $0.4 million, $0.0
million, and $0.3 million, respectively. See Note 12 for discussion of our fair value measurements for these investments.
Investment in IQHQ
In 2020, Aimco Predecessor made a $50.0 million commitment to IQHQ, a privately held life sciences real estate
development company. In 2022, after fully funding our commitment, 22% of our original investment in IQHQ was redeemed
for $16.5 million. Our remaining investment in IQHQ, with a cost basis of $39.2 million, was adjusted upward to $59.7 million
at the same per share value as the cash redemption per share.
We account for our investment in IQHQ using the measurement alternative. Under the measurement alternative, the
investment is measured at cost less impairment if any needed, with subsequent adjustments for observable price changes of
identical or similar investments of the same issuer since it does not have a readily determinable fair value.
(1)
F-24
On a periodic basis, we perform a qualitative impairment assessment on our investment in IQHQ in accordance with GAAP.
During the year ended December 31, 2024, we determined that our investment in IQHQ was impaired after consideration of
factors, including adverse capital market conditions, increased real estate development costs, and IQHQ's financial condition.
As a result, we recorded a non-cash impairment charge of $48.6 million to reduce the carrying value of the investment in IQHQ
to $11.1 million as of December 31, 2024. The non-cash impairment is reflected in Realized and unrealized gains (losses) on
equity investments in our Consolidated Statements of Operations for the year ended December 31, 2024, and as a reduction in
the carrying value of Other investments included in Other assets, net in our Consolidated Balance Sheets as of December 31,
2024. No realized or unrealized gains or losses were recognized during the year ended December 31, 2023. During the year
ended December 31, 2022, we recognized realized and unrealized gains on our investment in IQHQ totaling $5.7 million and
$20.5 million resulting from the partial redemption of our investment.
As of December 31,
2024
2023
Equity ownership in IQHQ under measurement alternative:
Initial cost of remaining balance
$
39,185 $
39,185
Cumulative upward adjustments
20,501
20,501
Cumulative impairment
(48,615 )
—
Total carrying value
$
11,071 $
59,686
Deferred costs, deposits, and other
We defer leasing costs incremental to a lease that we would not have incurred if the contract had not been obtained.
Amortization of these costs over the lease term on the same basis as lease income, is included in Depreciation and amortization
in our Consolidated Statements of Operations.
We also defer, debt issuance costs, lender fees and other direct costs incurred in obtaining new financing and amortize the
amounts over the terms of the related loan agreements. In connection with the modification of existing financing arrangements,
we defer lender fees and amortize these costs and any unamortized debt issuance costs over the term of the modified loan
agreement. Debt issuance costs associated with non-recourse property debt are presented as a direct deduction from the related
liabilities in our Consolidated Balance Sheets. We record debt issuance costs associated with our revolving credit facilities and
construction loans that have not been drawn in Other assets, net in our Consolidated Balance Sheets. We amortize the costs
associated with our revolving credit facilities to Interest expense on a straight-line basis over the term of the arrangement. Debt
issuance costs associated with construction loans are reclassified as a direct deduction to the construction loan liability in
proportion to any draws on the loans in our Consolidated Balance Sheets and subsequently amortized to Interest expense under
either the effective interest method or on a straight-line basis, which approximates the effective interest method when used,
over the remaining term of the arrangement in our Consolidated Statements of Operations.
When financing arrangements are repaid or otherwise extinguished prior to maturity, unamortized debt issuance costs are
written off. Any lender fees or other costs incurred in connection with an extinguishment are recognized as expense.
Amortization and write-off of debt issuance costs and other extinguishment costs are included in Interest expense in our
Consolidated Statements of Operations.
Unconsolidated real estate partnerships
We own general and limited partner interests in partnerships that either directly, or through interests in other real estate
partnerships, own apartment communities. We generally account for investments in real estate partnerships that we do not
consolidate using the equity method. Accordingly, we recognize our share of the earnings or losses of the entity for the periods
presented, inclusive of our share of any impairments and disposition gains or losses recognized by and related to such entities,
and we present such amounts within Other income (expense), net in our Consolidated Statements of Operations.
The excess of our cost of the acquired partnership interests over our share of the partners’ equity or deficit is generally
ascribed to the fair values of land and buildings owned by the partnerships. We amortize the excess cost ascribed to the
buildings over the related estimated useful lives. Such amortization is recorded as an adjustment of the amounts of earnings or
losses we recognize from such unconsolidated real estate partnerships.
On a periodic basis, we assess our investments in unconsolidated real estate partnerships for impairment. An investment is
considered impaired if we determine that its fair value is less than the net carrying value of the investment on an other-than-
temporary basis.
F-25
In March 2022, we acquired an ownership interest in an unconsolidated investment in land held for development in the
Edgewater neighborhood of Miami, Florida, in exchange for land that we had purchased for $1.8 million in January 2022 and
cash of $0.3 million. Subsequently, we had additional non-cash contributions of $5.7 million for unused transferable density
rights and cash contributions of $0.9 million. During the year ended December 31, 2024, we exercised our rights under the
existing joint venture agreement, whereby our joint venture partner agreed to purchase our ownership interest in this
unconsolidated investment. As a result of the transaction, we recognized a non-cash other-than-temporary-impairment ("OTTI")
of $2.6 million, within Other income (expense), net in our Condensed Consolidated Statements of Operations. We did not
recognize any such impairments of our investments in unconsolidated real estate partnerships during the years ended December
31, 2023, and 2022.
Intangible assets, net
Intangible assets are included in Other assets, net and intangible liabilities are included in Accrued liabilities and other in
our Consolidated Balance Sheets. The following table details intangible assets and liabilities, net of accumulated amortization,
for the years ended December 31, 2024 and 2023 (in thousands):
As of December 31,
2024
2023
Intangible assets
$
25,950 $
25,950
Less: accumulated amortization
(12,796 )
(12,456 )
Intangible assets, net
$
13,154 $
13,494
Below-market leases
$
4,175 $
4,175
Less: accumulated amortization
(4,175 )
(4,146 )
Intangible liabilities, net
$
— $
29
Based on the balance of intangible assets and liabilities as of December 31, 2024, the net aggregate amortization for the
next five years and thereafter is expected to be as follows (in thousands):
Intangible assets
2025
$
892
2026
892
2027
892
2028
892
2029
892
Thereafter
8,694
Total future amortization
$
13,154
Corporate fixed assets, net
We capitalize qualified implementation costs incurred in a hosting arrangement that is a service contract for which we are
the customer in accordance with the requirements for capitalizing costs incurred to develop internal-use software. These
capitalized implementation costs are amortized on a straight-line basis. As of December 31, 2024 and 2023, net capitalized
implementation costs of $5.8 million and $4.7 million, respectively, net of $0.8 million and $0.1 million of accumulated
depreciation, respectively are included in Other assets, net in our Consolidated Balance Sheets.
Accounts receivable, net
We present our accounts receivable net of allowances for amounts that may not be collected. The allowance is determined
based on an assessment of whether substantially all of the amounts due from the resident or tenant is probable of collection.
This includes a specific tenant analysis and aging analysis.
F-26
Revenue from leases
We are a lessor for residential and commercial leases. Our operating leases with residents may provide that the resident
reimburse us for certain costs, primarily the resident’s share of utilities expenses, incurred by the apartment community. Our
operating leases with commercial tenants may provide that the tenant reimburse us for common area maintenance, real estate
taxes, and other recoverable costs incurred by the commercial property. Residential and commercial reimbursements represent
revenue attributable to non-lease components for which the timing and pattern of recognition is the same as the revenue for the
lease components. We have elected the practical expedient in accordance with ASC 842, Leases, to not separate non-lease
components from associated lease components for all classes of underlying assets. Reimbursements and the related expenses
are presented on a gross basis in our Consolidated Statements of Operations, with the reimbursements included in Rental and
other property revenues in the period the recoverable costs are incurred. We recognize rental revenue attributed to lease
components, net of any concessions, on a straight-line basis over the term of the lease.
Revenue from contracts with customers
We apply ASC 606, Revenue from Contracts with Customers, in recognizing revenue from our operations at The Benson
Hotel. The Benson Hotel revenues consist of amounts derived from hotel operations, including room sales, food and beverage
sales, and other ancillary hotel service revenues. We recognize revenue from the rental of the hotel rooms and guest services
when we satisfy performance obligations as evidenced by the transfer of control when rooms are occupied, and services have
been provided. Food and beverage sales are recognized when the customer has been serviced or at the time the transaction
occurs. The transaction prices for hotel room sales and other goods and services are generally fixed and based on the respective
room reservation or other agreement. Payment terms generally align with when the goods and services are provided. Our
contracts generally have a single performance obligation, recognized at a point in time.
During the years ended December 31, 2024, 2023, and 2022, the Benson Hotel generated revenues of $6.7 million, $2.7
million, and $0.0 million, respectively.
Advertising costs
Advertising costs are expensed as incurred and are included within Property operating expenses in our Consolidated
Statements of Operations. For the years ended December 31, 2024, 2023, and 2022, we recognized total advertising costs of
$2.3 million, $1.3 million, and $1.7 million, respectively.
Gain or (loss) on dispositions of real estate
Gains or losses on dispositions are recognized when the criteria for the derecognition of a nonfinancial asset are met,
including when control of the real estate has transferred. Upon disposition, the related assets and liabilities are derecognized,
and the gain or loss on disposition is recognized as the difference between the carrying amount of those assets and liabilities
and the value of consideration received. For the years ended December 31, 2024, 2023, and 2022, we recognized total Gain on
dispositions of real estate of $10.6 million, $8.0 million, and $175.9 million, respectively.
Depreciation and amortization
Depreciation for all tangible assets is calculated using the straight-line method over their estimated useful lives. Acquired
buildings and improvements are depreciated over a useful life based on the age, condition, and other physical characteristics of
the asset. Furniture, fixtures, and equipment are generally depreciated over five years.
We depreciate capitalized costs using the straight-line method over the estimated useful life of the related improvement,
which is generally 5, 15, or 30 years. We also capitalize payroll and other indirect costs incurred in connection with preparing
an asset for its intended use. These costs include corporate-level costs that clearly relate to the capital addition activities, which
we allocate to the applicable assets. All capitalized payroll costs and indirect costs are allocated to capital additions
proportionately based on direct costs and depreciated over the estimated useful lives of such capital additions.
Purchased equipment is recognized at cost and depreciated using the straight-line method over the estimated useful life of
the asset, which is generally five years. Leasehold improvements are also recorded at cost and depreciated on a straight-line
basis over the shorter of the asset’s estimated useful life or the term of the related lease.
Certain homogeneous items that are purchased in bulk on a recurring basis, such as appliances, are depreciated using group
methods that reflect the average estimated useful life of the items in each group. Except in the case of casualties, where the net
book value of the lost asset is written off in the determination of casualty gains or losses, we generally do not recognize any
loss in connection with the replacement of an existing community component because normal replacements are considered in
determining the estimated useful lives used in connection with our composite and group depreciation methods.
F-27
Income tax benefit (expense)
Aimco
Certain aspects of our operations, including our development and redevelopment activities, are conducted through taxable
REIT subsidiaries, or TRS entities. Additionally, our TRS entities hold our investment in 1001 Brickell Bay Drive.
Our income tax benefit (expense) calculated in accordance with GAAP includes income taxes associated with the income or
loss of our TRS entities. Income taxes, as well as changes in valuation allowance and incremental deferred tax items in
conjunction with intercompany asset transfers and internal restructurings (if applicable), are included in Income tax benefit
(expense) in our Consolidated Statements of Operations.
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and
gains retained by the REIT. For the year ended December 31, 2024, we had consolidated net losses subject to tax of $28.2
million, compared to consolidated net losses subject to tax of $15.2 million for the same period in 2023, and consolidated net
income subject to tax of $88.8 million for the same period in 2022.
For the year ended December 31, 2024, we recognized income tax benefit of $11.1 million, compared to income tax benefit
of $12.8 million for same period in 2023. The year-over-year decrease is due primarily to changes in 2023 to the effective tax
rate expected to apply to the reversal of our existing deferred items, partially offset by increased tax benefit from higher losses
in 2024 at our TRS entities.
We recognized income tax expense of $17.3 million for the year ended December 31, 2022. The prior year-over-year
decrease is due primarily to GAAP income taxes associated with the net lease modification income recognized in 2022.
Aimco has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing
with its taxable year ended December 31, 1994, and Aimco intends to continue to operate in such a manner. Aimco's current
and continuing qualification as a REIT depends on its ability to meet the various requirements imposed by the Code, which are
related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned
assets and categories of income. If Aimco qualifies for taxation as a REIT, it will generally not be subject to United States
federal corporate income tax on its taxable income that is currently distributed to stockholders. This treatment substantially
eliminates the “double taxation” (at the corporate and stockholder levels) that generally results from an investment in a
corporation.
Even if Aimco qualifies as a REIT, Aimco may be subject to United States federal income and excise taxes in various
situations, such as on undistributed income. Aimco also will be required to pay a 100% tax on any net income on non-arm’s
length transactions between Aimco and a TRS and on any net income from sales of apartment communities that were held for
sale in the ordinary course. The state and local tax laws may not conform to the United States federal income tax treatment, and
Aimco may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact
business. Any taxes imposed on us reduce our operating cash flow and net income.
Aimco Operating Partnership
Aimco Operating Partnership is treated as a “pass-through” entity for United States federal income tax purposes and is not
subject to United States federal income taxation. Partners in Aimco Operating Partnership, however, are subject to tax on their
allocable share of partnership income, gains, losses, deductions, and credits, regardless of whether the partners receive any
actual distributions of cash or other property from Aimco Operating Partnership during the taxable year. Generally, the
characterization of any particular item is determined by Aimco Operating Partnership rather than at the partner level, and the
amount of a partner’s allocable share of such item is governed by the terms of Aimco Operating Partnership’s Partnership
agreement. Aimco Operating Partnership is subject to tax in certain states.
Earnings per share and per unit
Aimco and Aimco Operating Partnership calculate earnings per share and unit based on the weighted-average number of
shares of Common Stock or OP Units, participating securities, common stock or common unit equivalents and dilutive
convertible securities outstanding during the period. Aimco Operating Partnership considers both OP Units and equivalents,
which have identical rights to distributions and undistributed earnings, to be common units for purposes of the earnings per unit
computations. Please refer to Note 10 for further information regarding earnings per share and unit computations.
F-28
Share-based compensation
We measure the cost of employee services received in exchange for an award of an equity instrument based on the award’s
fair value on the grant date and recognize the cost as share-based compensation expense over the period during which the
employee is required to provide service in exchange for the award, which is generally the vesting period. Share-based
compensation expense associated with awards is updated for actual forfeitures. For further discussion, see Note 11.
Use of estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts included in the consolidated financial statements and accompanying notes
thereto. Actual results could differ from those estimates.
Accounting pronouncements adopted in the current year
We adopted Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures", which requires disclosure of incremental segment information, including segment expense
categories, on an annual and interim basis. The segment expense categories and amounts disclosed in prior periods within Note
14 are based on the significant expense categories identified and disclosed in the period of adoption. The adoption of this
standard did not have a material impact on our consolidated financial statements.
Recent accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures”, which is intended to enhance the transparency and decision usefulness of income tax disclosures. This
amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate
reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income
taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in
which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds. (3) the income or loss
from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income
tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). The guidance is effective for
annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not
yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, while retrospective
application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated
financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses", which requires
disaggregated disclosure of income statement expenses. The ASU does not change the expense captions an entity presents on
the face of the income statement. Rather, it requires disclosure in a tabular format of the disaggregation of any relevant expense
caption presented on the face of the income statement within continuing operations into the following required natural expense
categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset
amortization, and (5) depletion. The guidance is effective for annual periods beginning after December 15, 2026, and interim
periods beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 should be applied on a prospective
basis, while retrospective application is permitted. We are currently evaluating the potential impact of adopting this new
guidance on our consolidated financial statements and related disclosures.
Note 3 — Significant Transactions
Real estate dispositions
During the years ended December 31, 2024, 2023, and 2022, we sold properties as summarized below (dollars in
thousands):
Year ended December 31,
2024
2023
2022
Number of properties sold
2
1
4
Gain on sale of real estate
$
10,600 $
6,138 $
175,863
During the year ended December 31, 2024, we sold a fully renovated waterfront property with 276 units in the Edgewater
neighborhood of Miami, Florida, for a gross sales price of $190.0 million and recognized a gain from the sale of $10.6 million.
The property was acquired in August 2020. We also sold a majority of our partnership interest in St. George Villas, a small, 40-
unit, income-restricted property in South Carolina. As a result, we derecognized the assets and liabilities associated with the
property in February 2024.
F-29
During the year ended December 31, 2023, we sold a land parcel in downtown Fort Lauderdale, for a gross sales price of
$31.2 million and recognized a gain from the sale of $6.1 million. The land parcel was purchased in January 2022. In
conjunction with this sale, we provided seller financing with a stated value of $21.2 million that was recorded net of $3.8
million of variable consideration. The financing matures at 18 months, with an option to extend for an additional six months. In
addition, we recognized a $1.9 million gain from the contribution of real estate to an unconsolidated joint venture.
During the year ended December 31, 2022, we sold three operating properties and one land parcel for an aggregate gross
sales price of $267.3 million and recognized an aggregate gain from the sales of $175.9 million.
Redemptions and purchases of noncontrolling interests
In December 2024, we purchased all of the outstanding common noncontrolling interest and redeemed the promoted interest
from our development partner in the Upton Place property for a cash purchase price of $20.9 million. We also partially
redeemed a preferred equity interest in the Upton Place property for a cash redemption amount of $38.5 million. Aimco
continues to consolidate the Upton Place property as of December 31, 2024; therefore, the changes in ownership interest were
accounted for as equity transactions. The transactions resulted in reductions of Noncontrolling interests in consolidated real
estate partnerships of $9.2 million, Redeemable noncontrolling interests in consolidated real estate partnerships of $38.5
million, Accrued liabilities and other of $1.8 million, and Additional paid-in capital of $9.9 million.
Note 4 — Lease Arrangements
Aimco as Lessor
Our apartment homes and commercial spaces are leased to tenants under operating leases. As of December 31, 2024, our
apartment home leases generally have initial terms of 24 months or less. As of December 31, 2024, our commercial space
leases have initial terms between 5 and 15 years and represent approximately 7% to 8% of our total revenue. Our apartment
home leases are generally renewable at the end of the lease term, subject to potential changes in rental rates, and our
commercial space leases generally have renewal options, subject to associated increases in rental rates due to market based or
fixed price renewal options and other certain conditions.
Our apartment home and commercial lease agreements do not contain residual value guarantees. As we are the lessor of real
estate assets which tend to either hold their value or appreciate, residual value risk is not deemed to be substantial. Furthermore,
we are insured for a portion of our real estate assets’ exposure to casualty losses resulting from fire, earthquake, hurricane,
tornado, flood, and other perils.
We have a sublease arrangement providing space within our corporate office for fixed rents, commencing on January 1,
2021, and expiring on May 31, 2029. For the years ended December 31, 2024, 2023, and 2022, we recognized sublease income
of $1.4 million, $1.4 million, and $1.4 million, respectively.
The majority of lease payments we receive from our residents and tenants are fixed. We receive variable payments from our
residents and commercial tenants primarily for utility reimbursements and other services. We have elected the practical
expedient to not separate non-lease components from associated lease components in accordance with ASC 842. For the years
ended December 31, 2024, 2023, and 2022, our total lease income was comprised of the following amounts for all residential
and commercial property leases (in thousands):
Year ended December 31,
2024
2023
2022
Fixed lease income
$
186,869 $
172,580 $
176,080
Variable lease income
15,121
13,892
13,654
Total lease income
$
201,990 $
186,472 $
189,734
Future minimum lease payments that are contractually due to us from our office space sublease and commercial space
leases, excluding extension options, as of December 31, 2024, are as follows (in thousands):
Corporate Office Sublease
Commercial Leases
2025
$
1,423 $
2,435
2026
1,433
2,298
2027
1,443
2,112
2028
1,453
2,023
2029
630
2,074
Thereafter
—
15,898
Total
$
6,382 $
26,840
F-30
Aimco as Lessee
Lease Arrangements
We are lessee to finance leases for the land underlying our development sites at Upton Place, Strathmore Square, and Oak
Shore. We have operating leases primarily for corporate office space. Substantially all of our office lease payments are fixed.
See the table below for lease costs, net of capitalized finance lease costs, for the years ended December 31, 2024, 2023, and
2022.
Year ended December 31,
2024
2023
2022
Operating lease costs
$
1,504 $
1,514 $
1,084
Finance lease costs:
Amortization of right-of-use assets, net of capitalized
amounts
1,092
—
6,731
Interest on lease liabilities, net of capitalized amounts
6,300
282
7,465
Total lease costs, net of capitalized amounts
$
8,896 $
1,796 $
15,280
Our finance lease for the land at Oak Shore provides Aimco with the option to terminate the lease after the property reaches
stabilization, subject to certain conditions. The lease term includes the periods covered by this option. The weighted-average
remaining terms and discount rates for our operating and finance leases are summarized in the table below as of December 31,
2024 and 2023.
2024
2023
Weighted average remaining lease term (years):
Operating leases
4.3
5.2
Finance leases
92.5
93.4
Weighted-average discount rate:
Operating leases
3.5 %
3.3 %
Finance leases
6.1 %
6.1 %
As of December 31, 2024 and 2023, operating lease right-of-use lease assets of $4.7 million and $6.2 million, respectively,
are included in Other assets, net in our Consolidated Balance Sheets. As of December 31, 2024 and 2023, operating lease
liabilities of $9.2 million and $11.5 million, respectively, are included in Accrued liabilities and other in our Consolidated
Balance Sheets.
For finance and operating leases, when the rate implicit in the lease cannot be determined, we estimate the value of our
lease liabilities using discount rates equivalent to the rates we would pay on a secured borrowing with terms similar to the
leases. We determine if an arrangement is or contains a lease at inception. We have lease agreements with lease and non-lease
components, and have elected to not separate these components for all classes of underlying assets. Leases with an initial term
of 12 months or less are not recorded in our Consolidated Balance Sheets. Leases with an initial term greater than 12 months
are recorded as operating or finance leases in our Consolidated Balance Sheets.
We have provided a lessor with a residual value guarantee of $6.1 million, which provides that if the residual value of the
leased asset is less than the specified residual value guarantee at the earlier of lease expiration or termination, we are required to
pay the difference.
F-31
Lease Termination Agreement
In June 2022, we, as lessee, and AIR, as lessor, entered into a lease termination agreement with respect to four leases
entered into on January 1, 2021 that pertained to our North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism
properties. This agreement terminated these four finance leases on September 1, 2022. Upon termination, both parties were
released of any and all liabilities and obligations under each respective lease other than those liabilities and obligations, if any,
that expressly survived termination. On September 1, 2022, we relinquished control of the leasehold improvements on these
four properties as well as the underlying land. In exchange, AIR remitted a total of $200.0 million in consideration to us as
termination payments.
Because the termination agreement modified the expiration date of each lease to September 1, 2022, we accelerated
depreciation on the associated leasehold improvements using lease terms that ended September 1, 2022. We recorded $85.7
million of total depreciation expense for the year ended December 31, 2022. In addition, we recognized Lease modification
income of $207.0 million, which is included in our Consolidated Statements of Operations for the year ended December 31,
2022.
Annual Future Minimum Lease Payments
Combined minimum annual lease payments under operating and finance leases are as follows as of December 31, 2024 (in
thousands):
Operating Leases
Finance Leases
2025
$
2,195
$
4,146
2026
2,341
4,954
2027
2,380
5,483
2028
2,181
5,596
2029
800
5,708
Thereafter
—
1,421,989
Total
9,897
1,447,876
Less: Discount
(719 )
(1,326,031 )
Total lease liabilities
$
9,178
$
121,845
Note 5 — Variable Interest Entities
We evaluate our investments in limited partnerships and similar entities in accordance with applicable consolidation
guidance to determine whether each such entity is a VIE. The accounting standards for the consolidation of VIEs require
qualitative assessments to determine whether we are the primary beneficiary. The primary beneficiary analysis is based on
power and economics. We conclude that we are the primary beneficiary and consolidate the VIE if we have both: (i) the power
to direct the activities of the VIE that most significantly influence the VIE's economic performance, and (ii) the obligation to
absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE. Significant
judgments and assumptions related to these determinations include, but are not limited to, estimates about the current and future
fair values and performance of real estate held by these VIEs and general market conditions.
We consolidate Aimco Operating Partnership, a VIE of which we are the primary beneficiary. Through Aimco Operating
Partnership, we consolidate all VIEs for which we are the primary beneficiary. Substantially all of our assets and liabilities are
those of Aimco Operating Partnership.
Aimco Operating Partnership is the primary beneficiary of, and therefore consolidates, six VIEs that own interests in real
estate. Assets of our consolidated VIEs must first be used to settle the liabilities of those VIEs. The consolidated VIEs' creditors
do not have recourse to the general credit of Aimco Operating Partnership.
In addition, we have seven unconsolidated VIEs for which we are not the primary beneficiary because we are not their
primary decision maker. The seven unconsolidated VIEs include four unconsolidated real estate partnerships that hold four
apartment communities in San Diego, California, the Mezzanine Investment, our passive equity investment in IQHQ, and an
unconsolidated investment in land held for development in Bethesda, Maryland. Our maximum exposure to loss, because of our
involvement with the unconsolidated VIEs, is limited to the carrying value of their assets.
F-32
The details of our consolidated and unconsolidated VIEs, excluding those of Aimco Operating Partnership, are summarized
in the table below as of December 31, 2024 and 2023 (in thousands, except for Count of VIEs):
As of December 31, 2024
As of December 31, 2023
Consolidated
Unconsolidated
Consolidated
Unconsolidated
Count of VIEs
6
7
5
8
Assets
Net real estate
$
593,837 $
— $
466,719 $
—
Cash and cash equivalents
4,625
—
3,940
—
Restricted cash
14,913
—
—
—
Notes receivable
18,571
—
17,432
—
Right-of-use lease assets - finance leases
107,714
—
108,992
—
Other assets, net
26,028
26,226
19,393
82,948
Liabilities
Non-recourse construction loans, net
385,240
—
201,103
—
Lease liabilities - finance leases
121,845
—
118,697
—
Accrued liabilities and other
14,518
33,500
35,881
31,018
In September 2024, we secured a $55.5 million preferred equity commitment from a third-party for the development of a
luxury water-front rental development, located at 640 NE 34th Street in Miami, Florida. In addition, we secured a non-recourse
construction loan commitment for up to $172.0 million that has a maturity date of October 1, 2028, prior to the consideration of
a one year extension option. As a result, we performed a reassessment of the entity that owns the property located at 640 NE
34th Street, concluding that it became a VIE and that we are the primary beneficiary. While the consolidation status did not
change as it was already consolidated prior to the VIE assessment, its assets and liabilities as of December 31, 2024 are
incorporated in the table above.
In December 2024, we closed on the sale of our ownership interest in an unconsolidated investment in land held for
development in the Edgewater neighborhood of Miami, Florida. Refer to Note 2 for additional discussion of the OTTI
recognized in connection with this transaction.
Note 6 —Debt
Non-recourse property debt
We finance apartment communities in our portfolio primarily using property-level, non-recourse, long-dated, fixed-rate
debt. The following table summarizes non-recourse property debt as of December 31, 2024 and 2023 (in thousands):
As of December 31,
Maturity Date
Contractual
Interest Rate
Range
Weighted-
Average
Interest Rate
2024
2023
Fixed-rate property debt
June 1, 2029 to
June 1, 2033
2.78% to 4.68%
4.39%
$
689,885 $
771,202
Variable-rate property debt
—
81,300
Total non-recourse property debt
$
689,885 $
852,502
Assumed debt fair value adjustment,
net of accumulated amortization
—
871
Debt issuance costs, net of
accumulated amortization
(4,465 )
(7,075 )
Total non-recourse property debt,
net
$
685,420 $
846,298
Principal and interest on our non-recourse property debt are generally payable monthly or in monthly interest-only
payments with balloon payments due at maturity. As of December 31, 2024, our property debt was secured by 16 properties
with an aggregate net book value of $329.3 million. These non-recourse property debt instruments contain financial covenants
common to the type of borrowing, and as of December 31, 2024, we were in compliance with all such covenants.
F-33
As of December 31, 2024, the scheduled principal amortization and maturity payments for the non-recourse property debt
were as follows (in thousands):
Amortization
Maturities
Total
2025
$
1,472 $
— $
1,472
2026
1,522
—
1,522
2027
1,573
—
1,573
2028
1,627
—
1,627
2029
1,682
179,646
181,328
Thereafter
2,781
499,582
502,363
Total
$
10,657 $
679,228 $
689,885
Non-recourse construction loans
Our construction loans, which are primarily non-recourse loans except for customary construction loan guarantees, are
summarized in the following table as of December 31, 2024 and 2023 (in thousands):
As of December 31,
Maturity Date
Contractual
Interest Rate
Range
Weighted-
Average
Interest Rate
2024
2023
Fixed-rate construction loans
December 23, 2025 to
December 23, 2052
3.25% to
13.00%
7.34%
$
261,792 $
41,829
Variable-rate construction loans
June 3, 2025 to October 1,
2028
7.09% to 8.86%
7.56%
131,958
267,692
Total non-recourse construction
loans
$
393,750 $
309,521
Assumed debt fair value
adjustment, net of accumulated
amortization
(339 )
(351 )
Debt issuance costs, net of
accumulated amortization
(8,171 )
(7,727 )
Total non-recourse construction
loans, net
$
385,240 $
301,443
Interest-only payments on our construction loans are generally payable monthly with balloon payments due at maturity. As
of December 31, 2024, our construction debt was secured by 4 properties with an aggregate net book value of $554.6 million.
As of December 31, 2024, the scheduled principal maturity payments, prior to the consideration of extension options, for
the non-recourse construction loans were as follows (in thousands):
Principal Maturity Payments
2025
$
153,843
2026
—
2027
—
2028
233,407
2029
—
Thereafter
6,500
Total
$
393,750
F-34
Revolving Credit Facility
In December 2020, we entered into a credit agreement that provides for a $150.0 million secured credit facility, with a
$20.0 million swingline loan sub-facility and a $30.0 million letter of credit sub-facility. We can request incremental
commitments under the credit agreement up to an aggregate principal amount of $300.0 million. Our revolving secured credit
facility matures in December 2025. The revolving loans (other than the swingline) will bear interest, at our option, at a per
annum rate equal to (a) SOFR plus a margin of 2.11448% or (b) a base rate plus a margin of 1.00%. Swingline loans made
under the revolving credit facility will bear interest at a per annum rate equal to the base rate plus a margin of 1.00%. The base
rate is defined as a fluctuating per annum rate of interest equal to the highest of (x) the overnight bank funding rate as reported
by the Federal Reserve Bank of New York, plus 0.5%, (y) PNC Bank, National Association’s prime rate and (z) the daily
SOFR Rate plus 1.00%. If the SOFR Rate determined under any referenced method would be less than 0.25%, such rate shall
be deemed 0.25%. We may terminate or, from time to time, reduce the aggregate amount of commitments.
As of December 31, 2024, we had capacity to borrow $148.5 million on our secured revolving credit facility. Under our
secured revolving credit facility, we have agreed to maintain a fixed charge coverage ratio of 1.25x, minimum adjusted tangible
net worth of $625.0 million, and maximum leverage of 60.0% as defined in the credit agreement, among other customary
covenants. We are in compliance with these covenants as of December 31, 2024.
Notes Payable to AIR
In July 2022, we completed the prepayment of $534.1 million of Notes Payable to AIR, which was entered into on
December 14, 2020. As a result, we incurred $17.4 million of spread maintenance costs, which are included in Interest expense
in our Consolidated Statements of Operations. For the year ended December 31, 2022, we recognized interest expense of $13.7
million associated with the Notes Payable to AIR, which is included in Interest expense in our Consolidated Statements of
Operations.
Note 7 — Income Taxes
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities
of our taxable entities for financial reporting purposes and the amounts used for income tax purposes. Significant components
of our deferred tax liabilities and assets as of December 31, 2024 and 2023 are as follows (in thousands):
As of December 31,
2024
2023
Deferred tax liabilities:
Real estate and real estate partnership basis differences
$
101,833 $
110,379
Lease liability - finance lease
331
307
Other
—
245
Deferred tax assets:
Right-of-use lease asset - finance lease
338
386
Other
3,059
3,363
Net operating, capital, and other loss carryforwards
10,251
3,953
Valuation allowance for deferred tax assets
(7,766 )
(4,664 )
Net deferred tax liability
$
96,282 $
107,893
Our policy is to include any interest and penalties related to income taxes within Income tax benefit (expense) in our
Consolidated Statements of Operations.
F-35
Significant components of the income tax benefit (expense) including any interest and penalties related to income taxes are
as follows and are classified within Income tax benefit (expense) in our Consolidated Statements of Operations for the years
ended December 31, 2024, 2023, and 2022 (in thousands):
2024
2023
2022
Current:
Federal
$
314 $
463 $
12,499
State
226
(3,813 )
5,840
Total current
540
(3,350 )
18,339
Deferred:
Federal
(9,845 )
(7,182 )
(934 )
State
(1,766 )
(2,220 )
(141 )
Total deferred
(11,611 )
(9,402 )
(1,075 )
Total income tax (benefit) expense
$
(11,071 ) $
(12,752 ) $
17,264
Consolidated GAAP income or loss subject to tax consists of pretax income or loss of our taxable entities and income and
gains retained by the REIT. For the year ended December 31, 2024, we had consolidated net losses subject to tax of $28.2
million, compared to consolidated net losses subject to tax of $15.2 million for the year ended December 31, 2023 and
consolidated net income subject to tax of $88.8 million for the year ended December 31, 2022.
The reconciliation of income tax attributable to operations computed at the United States statutory rate to income tax benefit
recognized for the years ended December 31, 2024, 2023, and 2022, is shown below (in thousands):
2024
2023
2022
Amount Percent
Amount Percent
Amount Percent
Tax (benefit) expense at United States statutory
rates on consolidated income or loss subject to
tax
$ (5,929 )
21.0 % $ (3,189 )
21.0 % $ 18,641
21.0 %
US branch profits tax on earnings of foreign
subsidiary
(4,171 )
14.8 %
(3,101 )
20.4 %
(1,965 )
(2.2 %)
State income tax, net of federal (benefit)
expense
(1,580 )
5.6 %
(8,320 )
54.8 %
4,590
5.2 %
Effects of permanent differences
(2,781 )
9.9 %
96
(0.6 %)
209
0.2 %
Uncertain tax positions
—
0 %
—
0 %
(4,945 )
(5.6 %)
Valuation allowance
3,472
(12.3 %)
2,270
(14.9 %)
1,109
1.2 %
Other
(82 )
0.2 %
(508 )
3.3 %
(375 )
(0.4 %)
Change in Tax Rate
—
0 %
—
0 %
—
0 %
Total income tax (benefit) expense
$ (11,071 )
39.2 % $ (12,752 )
84.0 % $ 17,264
19.4 %
Income taxes paid totaled approximately $0.9 million, $1.7 million, and $22.9 million for the years ended December 31,
2024, 2023, and 2022, respectively.
At December 31, 2024, we had federal and state net operating loss carryforwards ("NOLs"), for which the deferred tax asset
was approximately $10.3 million, before a valuation allowance of $6.9 million. The NOLs expire in the years ended 2033 to
2043. Subject to certain separate return limitations, we may use these NOLs to offset a portion of taxable income generated by
our TRS entities.
For income tax purposes, dividends paid to holders of Common Stock primarily consist of ordinary income, capital gains,
qualified dividends, unrecaptured Section 1250 gains, or a combination thereof. For the years ended December 31, 2024, 2023,
and 2022, tax attributes of dividends per share held for the entire year were estimated to be as follows (unaudited):
2024
2023
2022
Amount Percent Amount Percent Amount Percent
Ordinary income
$
—
0.0 % $
—
0.0 % $
0.01
53.5 %
Capital gains
—
0.0 %
—
0.0 %
0.01
46.5 %
Qualified dividends
—
0.0 %
—
0.0 %
—
0.0 %
Unrecaptured § 1250 gain
—
0.0 %
—
0.0 %
—
0.0 %
Return of capital
—
0.0 %
—
0.0 %
—
0.0 %
Balance at December 31,
$
—
0.0 % $
—
0.0 % $
0.02
100.0 %
F-36
A reconciliation of the beginning and ending balance of our unrecognized tax benefits is presented below and is included in
Accrued liabilities and other in our Consolidated Balance Sheets (in thousands):
Because the statute of limitations has not yet elapsed, our United States federal income tax returns for the year ended
December 31, 2021, and subsequent years and certain of our state income tax returns for the year ended December 31, 2021,
and subsequent years are currently subject to examination by the IRS or other taxing authorities. If recognized, the
unrecognized tax benefits would affect our effective tax rate.
2024
2023
Balance at January 1,
$
2,092 $
2,135
Additions based on tax positions in prior years
47
52
Lapse of applicable statute of limitations
(165 )
(95 )
Balance at December 31,
$
1,974 $
2,092
In accordance with the accounting requirements for stock-based compensation, we may recognize tax benefits in connection
with the exercise of stock options by employees of our TRS entities and the vesting of restricted stock awards. We recognize
the tax effects related to stock-based compensation through earnings in the period the compensation is recognized.
Note 8 — Aimco Equity
Common Stock
Aimco's Board is authorized to issue up to 510,587,500 shares of capital stock, which consists entirely of Common Stock as
of December 31, 2024. Aimco had 136,351,966 and 140,576,102 shares of Common Stock issued and outstanding at December
31, 2024 and 2023, respectively.
Stock Repurchases
Aimco's Board has, from time to time, authorized Aimco to repurchase shares of its outstanding Common Stock. The total
remaining authorization for future share repurchases is 16.3 million shares of its outstanding Common Stock, subject to certain
customary limitations, which may be made from time to time in the open market or in privately negotiated transactions. This
remaining authorization has no expiration date. During the years ended December 31, 2024, 2023, and 2022, Aimco
repurchased approximately 4.9 million, 6.2 million, and 3.5 million shares of its Common Stock at weighted-average prices of
$8.01, $7.33, and $7.21 per share, respectively.
Cash Dividends
As a REIT, Aimco is required to distribute annually to holders of shares of its Common Stock at least 90.0% of its “real
estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations,
is generally equivalent to net taxable ordinary income. Aimco's Board determines and declares Aimco's dividends. In making a
dividend determination, Aimco's Board considers a variety of factors, including REIT distribution requirements, current market
conditions, liquidity needs, and other uses of cash, such as deleveraging and accretive investment activities.
A special cash dividend of $0.60 per share was declared on December 19, 2024, to stockholders of record on January 14,
2025. The cash dividend was paid on January 31, 2025. The declared dividends are classified within Dividends payable in
Aimco's Consolidated Balance Sheets as of December 31, 2024. No dividends were declared or paid during the year ended
December 31, 2023. On September 30, 2022, Aimco paid a special cash dividend of $0.02 per share to stockholders of record
on September 14, 2022.
Note 9 — Partners’ Capital
In Aimco Operating Partnership’s Consolidated Balance Sheets, the OP Units held by Aimco are classified within Partners’
capital as General Partner and Special Limited Partner capital and the OP Units held by entities other than Aimco are
classified within Limited Partners capital. In Aimco's Consolidated Balance Sheets, the OP Units held by entities other than
Aimco are classified within permanent equity as Common noncontrolling interests in Aimco Operating Partnership.
F-37
OP Units held by Aimco are not redeemable whereas OP Units held by interests in Aimco Operating Partnership other than
Aimco are redeemable at the holders’ option, subject to certain restrictions, on the basis of one OP Unit for either one share of
Common Stock or cash equal to the fair value of a share of Common Stock at the time of redemption. Aimco has the option to
deliver shares of Common Stock in exchange for all or any portion of such OP Units tendered for redemption. When a limited
partner redeems an OP Unit for Common Stock, Limited Partners' capital is reduced, and the General Partner and Special
Limited Partners’ capital is increased.
Entities other than Aimco that hold OP Units receive distributions in an amount equivalent to the dividends paid to holders
of Common Stock. During the years ended December 31, 2024 and 2022, the Aimco Operating Partnership declared
distributions per common unit of $0.60 and $0.02, respectively. There were no dividends declared or paid during the year ended
December 31, 2023.
During the years ended December 31, 2024 and 2023, there were no OP Units redeemed in exchange for shares of Common
Stock. During the year ended December 31, 2022, approximately 108,000 OP Units were redeemed in exchange for shares of
Common Stock. During the years ended December 31, 2024, 2023, and 2022, approximately 119,000, 149,000, and 33,000 OP
Units were redeemed in exchange for cash at aggregate weighted average prices per unit of $8.28, $7.24, and $7.07,
respectively.
Note 10 — Earnings per Share and per Unit
Aimco and Aimco Operating Partnership calculate basic earnings per share and basic earnings per unit based on the
weighted-average number of shares of Common Stock and OP Units outstanding. We calculate diluted earnings per share and
diluted earnings per unit taking into consideration dilutive shares of Common Stock and OP Unit equivalents and dilutive
convertible securities outstanding during the period.
Aimco's Common Stock and OP Unit equivalents include options to purchase shares of Common Stock, which, if exercised,
would result in Aimco's issuance of additional shares of Common Stock and Aimco Operating Partnership’s issuance to Aimco
of additional OP Units equal to the number of shares of Common Stock purchased under the options. These equivalents also
include unvested market-based restricted stock awards that do not meet the definition of participating securities, which would
result in an increase in the number of shares of Common Stock and OP Units outstanding equal to the number of the shares that
vest. OP Unit equivalents also include unvested long-term incentive partnership units. The Common Stock and OP Unit
equivalents were not included in the computation of diluted earnings per share and unit for the years ended December 31, 2024,
and December 31, 2023, because the effect of their inclusion would be antidilutive. The Common Stock and OP Unit
equivalents were included in the computation of diluted earnings per share and unit for the year ended December 31, 2022,
because the effect of their inclusion was dilutive. As of December 31, 2024, the Common Stock and OP Unit equivalents that
could potentially dilute basic earnings per share or unit in future periods totaled 3.9 million and 8.2 million, respectively.
Aimco's time-based restricted stock awards receive non-forfeitable dividends similar to shares of Common Stock and OP
Units prior to vesting, and our market-based long-term incentive partnership units ("LTIP Units") receive non-forfeitable
distributions based on specified percentages of the distributions paid to OP Units prior to vesting and conversion. The unvested
restricted shares and units related to these awards are participating securities. We include the effect of participating securities in
basic and diluted earnings per share and unit computations using the two-class method of allocating distributed and
undistributed earnings when the two-class method is more dilutive than the treasury stock method. Participating securities were
not included in the computation of diluted earnings per share and unit for the years ended December 31, 2024 and December
31, 2023, because the effect of their inclusion would be antidilutive. Participating securities were included in the computation
of diluted earnings per share and unit for the year ended December 31, 2022, because the effect of their inclusion was dilutive.
As of December 31, 2024, participating securities that could potentially dilute basic earnings per share or unit in future periods
totaled 2.5 million.
F-38
Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit for
the years ended December 31, 2024, 2023 and 2022, are as follows (in thousands, except per share and per unit data):
Year ended December 31,
2024
2023
2022
Earnings per share
Numerator:
Net income (loss) attributable to Aimco
$
(102,468 ) $
(166,196 ) $
75,726
Net income (loss) allocated to Aimco participating securities
(1,520 )
—
(1,087 )
Net income (loss) attributable to Aimco common stockholders
$
(103,988 ) $
(166,196 ) $
74,639
Denominator - shares:
Basic weighted-average common stock outstanding
138,496
143,618
149,395
Diluted share equivalents outstanding
—
—
1,439
Diluted weighted-average common stock outstanding
138,496
143,618
150,834
Earnings (loss) per share - basic
$
(0.75 ) $
(1.16 ) $
0.50
Earnings (loss) per share - diluted
$
(0.75 ) $
(1.16 ) $
0.49
Earnings per unit
Numerator:
Net income (loss) attributable to Aimco Operating Partnership
$
(108,109 ) $
(175,234 ) $
79,657
Net income (loss) allocated to Aimco Operating Partnership participating securities
(1,520 )
—
(1,131 )
Net income (loss) attributable to Aimco Operating Partnership's common unit
holders
$
(109,629 ) $
(175,234 ) $
78,526
Denominator - units
Basic weighted-average OP Units outstanding
146,120
151,371
157,317
Diluted OP Unit equivalents outstanding
—
-
1,457
Diluted weighted-average OP Units outstanding
146,120
151,371
158,774
Earnings (loss) per unit - basic
$
(0.75 ) $
(1.16 ) $
0.50
Earnings (loss) per unit - diluted
$
(0.75 ) $
(1.16 ) $
0.49
Note 11 — Share-Based Compensation
We have a stock award and incentive program to attract and retain employees and independent directors. As of December
31, 2024, approximately 18.2 million shares were available for issuance under the Second Amended and Restated 2015 Stock
Award and Incentive Plan (the “2015 Plan”). The total number of shares available for issuance under this plan may increase due
to any forfeiture, cancellation, exchange, surrender, termination or expiration of an award outstanding under the 2015 Plan.
Awards under the 2015 Plan may be in the form of stock options, stock, and LTIP Units as authorized under the 2015 Plan. Our
plans are administered by the Compensation and Human Resources Committee of the Board.
In connection with the Separation, we entered into an agreement to modify all outstanding awards granted to the holders of
such awards. Each outstanding time or performance based Aimco award was converted into one share of Aimco Common
Stock and one share of AIR common stock. Generally, all such Aimco equity awards retained the same terms and vesting
conditions as the original Aimco equity awards immediately before the Separation.
Following the Separation, compensation expense related to these modified awards for the employees retained by us was
incurred by Aimco. The compensation expense related to these modified awards for employees of AIR was incurred by AIR.
For the years ended December 31, 2024, 2023, and 2022, total compensation cost recognized for share-based awards was (in
thousands):
2024
2023
2022
Share-based compensation expense (1)
$
6,494
$
9,221
$
6,441
Capitalized share-based compensation (2)
1,019
1,274
1,016
Total share-based compensation (3)
$
7,513
$
10,495
$
7,457
(1)
Amounts are recorded in General and administrative expenses in our Consolidated Statements of Operations.
(2)
Amounts are recorded in Buildings and improvements in our Consolidated Balance Sheets.
(3)
Amounts are recorded in Additional paid-in capital and Common noncontrolling interests in Aimco Operating Partnership in our Consolidated Balance
Sheets, and in General Partner and Special Limited Partner and Limited Partners in Aimco Operating Partnership's Consolidated Balance Sheets.
F-39
As of December 31, 2024, our share of total unvested compensation cost not yet recognized was $8.0 million. We expect to
recognize this compensation cost over a weighted-average period of approximately 1.4 years. The aggregate fair value of the
vested Restricted Stock Awards and LTIP I Units during each of the years ended December 31, 2024, 2023, and 2022 was $2.1
million, $0.9 million, and $0.6 million, respectively.
For our employees, we grant restricted stock awards and two forms of LTIP Units that are subject to time-based vesting and
require continuous employment, typically over a period of three to five years from the grant date, and we refer to these awards
as Time-Based Restricted Stock, Time-Based LTIP I Units, and Time-Based LTIP II Units. We also grant stock options,
restricted stock awards, and two forms of LTIP Units, that vest conditioned on our total shareholder return (“TSR”), relative to
identified indices over a forward-looking performance period of three years. We refer to these awards as TSR Stock Options,
TSR Restricted Stock, and TSR LTIP II Units. Earned TSR-based awards, if any, will generally vest over a period of three to
four years from the grant date, based on continued employment. Vested LTIP II Units may be converted at the holders’ option
to LTIP Units for a conversion metric over a term of 10 years. Our TSR Stock Options generally expire 10 years from the date
of grant.
We recognize compensation cost associated with time-based awards ratably over the requisite service periods. We recognize
compensation cost related to the TSR-based awards, over the requisite service period, commencing on the grant date. The value
of the TSR-based awards takes into consideration the probability that the market condition will be achieved; therefore,
previously recorded compensation cost is not adjusted in the event that the market condition is not achieved, and awards do not
vest.
We had Time-Based Restricted Stock, Time-Based LTIP I Units, Time-Based LTIP II Units, TSR Stock Options, TSR
Restricted Stock, and TSR LTIP II Units outstanding as of December 31, 2024. The following two tables summarize activity
for equity compensation for the year ended December 31, 2024.
Unvested TSR Stock Options
Time-Based Restricted Stock Awards
TSR Restricted Stock Awards
Number of
Options
Weighted-
Average
Exercise Price
Number of
Shares
Weighted-
Average
Fair Value
Number of
Shares
Weighted-Average
Fair Value
Outstanding at beginning of year
529,967 $
6.78
2,475,180 $
6.87
981,454 $
7.71
Granted
317,200
6.66
103,442
7.62
595,999
8.52
Exercised
—
—
N/A
N/A
N/A
N/A
Vested
(317,200 )
6.66
(271,158 )
7.15
(254,037 )
8.54
Forfeited
—
—
(24,784 )
7.36
—
—
Outstanding at end of year
529,967 $
6.78
2,282,680 $
6.87
1,323,416 $
7.92
(1) Weighted-average grant date fair value is based off pre-Separation values when the awards were granted.
Unvested LTIP I Units
Unvested TSR LTIP II Units Unvested Time LTIP II Units
Convertible LTIP II Units
Number of
Units
Weighted-
Average
Fair Value (1)
Number of
Units
Weighted-
Average
Conversion
Metric
Number of
Units
Weighted-
Average
Conversion
Metric
Number of
Units
Weighted-
Average
Conversion
Metric
Outstanding at beginning of
year
2,294 $
53.39
900,535 $
5.51
— $
—
1,310,624 $
7.23
Granted
—
—
555,556
4.62
—
—
—
—
Exercised
N/A
N/A
—
—
—
—
—
—
Vested
(2,294 )
53.39
(558,985 )
4.63
—
—
558,985
4.63
Forfeited
—
—
—
—
—
—
—
—
Outstanding at end of year
— $
—
897,106 $
5.51
— $
—
1,869,609 $
6.45
(1) Weighted-average grant date fair value is based off pre-Separation values when the awards were granted.
The aggregate intrinsic values are calculated as the difference between the closing price of Aimco common stock on
the last trading day of the year and the exercise price multiplied by the number of in-the-money TSR Stock Options and LTIP II
Units had they all been exercised and converted, respectively, on December 31, 2024. The aggregate intrinsic values for those
that were exercisable or convertible and unvested were $5.7 million and $5.1 million, respectively.
(1)
(1)
F-40
The following table summarizes the unvested equity, exercisable stock options and convertible LTIP II units that are
potentially dilutive to Aimco and Aimco Operating Partnership as of December 31, 2024 (in thousands, except shares):
Awards
Aimco
Unvested
Compensation Not Yet
Recognized (1)
TSR Stock Options
529,967 $
—
Time-Based Restricted Stock Awards
2,282,680
4,324
TSR Restricted Stock Awards
1,323,416
3,687
TSR LTIP II Units
897,106
—
Total awards
5,033,169 $
8,011
(1) Unvested compensation not yet recognized represents our compensation cost for our employees. Compensation costs related to shares issued to AIR employees are
recognized by AIR.
In addition to the potentially dilutive awards held by Aimco employees, AIR employees and former AIR employees hold 0.8 million stock
options and 1.0 million TSR LTIP II Units. The weighted average exercise price of stock-based options held by AIR and former AIR
employees is $4.61 per share; the weighted average exercise price of LTIP II Units held by AIR and former AIR employees is $5.62 per unit.
Determination of Grant-Date Fair Value Awards
We estimated the fair value of TSR-based awards granted in 2024, 2023, and 2022 using a Monte Carlo simulation
valuation method. Under this method, the prices of the indices and shares of our Common Stock were simulated through the
end of the performance period. The correlation matrix between shares of our Common Stock and the indices, as well as the
corresponding return volatilities, were developed based upon an analysis of historical data.
The following table includes the assumptions used for the valuation of TSR-based awards that were granted in 2024, 2023,
and 2022.
TSR Award Assumptions
2024
2023
2022
Grant date market value of a common share
$7.43
$7.59
$6.96
Risk-free interest rate
4.11%-5.20%
3.89%-4.73%
0.19%-1.38%
Dividend yield
0%
0%
0%
Expected volatility
31.28%-33.16% 34.08%-36.19% 32.09%-33.04%
Derived vesting period of TSR Restricted Stock
3
3
3
Weighted average expected term of TSR Stock Options, TSR LTIP I Units, and
TSR LTIP II Units
N/A
N/A
4.9
Note 12 — Fair Value Measurements and Disclosures
Recurring Fair Value Measurements
In determining the fair value of our financial instruments, we apply Accounting Standards Codification ("ASC") 820, “Fair
Value Measurement and Disclosures”. Fair value hierarchy under ASC 820 distinguishes between market participant
assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting
entity’s own assumptions about market participant data (Level 3). Fair value estimates may differ from the amounts that may
ultimately be realized upon sale or disposition of the assets and liabilities.
From time to time, we purchase interest rate swaps, caps, and other instruments to provide protection against increases in
interest rates on our variable rate debt. These instruments are presented as Interest rate contracts in our Consolidated Balance
Sheets. As of December 31, 2024, we held interest rate caps with a maximum notional value of $370.3 million. These
instruments were acquired for $3.5 million, and the fair value of these instruments is $0.9 million as noted in the table below.
During the year ended December 31, 2023, we monetized the $1.5 billion notional amount interest rate swaption, purchased
in conjunction with the Mezzanine Investment to protect against future interest rate increases, for gross proceeds of $54.2
million.
On a recurring basis, we measure at fair value our interest rate contracts. Our interest rate contracts are classified within
Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market
information, including contractual terms, market prices, and interest rate yield curves. The fair value adjustment is included in
earnings in Realized and unrealized gains (losses) on interest rate contracts in our Consolidated Statements of Operations.
Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, any upfront
premium is reflected in Purchase of interest rate contracts, and any proceeds are reflected in Proceeds from interest rate
contracts in our Consolidated Statements of Cash Flows.
F-41
As of December 31, 2024 and 2023, we had investments in stock of $1.6 million and $2.9 million, respectively, classified
within Level 1 of the GAAP fair value hierarchy. In addition, as of December 31, 2024 and 2023, we had investments in
property technology funds of $3.5 million and $2.5 million, respectively, in entities that develop technology related to the real
estate industry. These investments are measured at net asset value (“NAV”) as a practical expedient. The period of time over
which the underlying assets in these investments are expected to be liquidated is unknown. See Note 13 for further information
regarding unfunded commitments related to these investments.
The following table summarizes the fair value of our interest rate contracts, investments in stock, and our investments in real
estate technology funds as of December 31, 2024 and 2023 (in thousands):
As of December 31, 2024
As of December 31, 2023
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Interest rate contracts
$
862 $
— $
862 $
— $
5,237 $
— $
5,237 $
—
Investments in stock
1,573
1,573
—
—
2,868
2,868
—
—
Investments in real estate
technology funds
3,468
—
—
—
2,508
—
—
—
Total assets
$
5,903 $
1,573 $
862 $
— $
10,613 $
2,868 $
5,237 $
—
(1) Investments measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
Fair Value Disclosures
We believe that the carrying value of the consolidated amounts of cash and cash equivalents and restricted cash
approximated their fair value as of December 31, 2024 and 2023, and are categorized within Level 1 of the GAAP fair value
hierarchy. We estimate the fair value of our debt using an income and market approach, including comparison of the
contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates,
remaining periods to maturity, debt service coverage ratios, and loan to value ratios. We classify the fair value of our non-
recourse property debt and non-recourse construction loans within Level 2 of the GAAP fair value hierarchy based on the
significance of certain of the observable inputs used to estimate their fair value.
The following table summarizes carrying value and fair value of our non-recourse property debt and non-recourse
construction loans as of December 31, 2024 and 2023 (in thousands):
As of December 31, 2024
As of December 31, 2023
Carrying Value
Fair Value
Carrying Value
Fair Value
Non-recourse property debt
$
689,885
$
641,563 $
852,502
$
807,240
Non-recourse construction loans
393,750
393,756
309,521
309,170
Total
$
1,083,635
$
1,035,319
$
1,162,023
$
1,116,410
Nonrecurring Fair Value Measurements
Mezzanine Investment
During the years ended December 31, 2023 and 2022, we tested the Mezzanine Investment for impairment given
triggering events that occurred and we recorded non-cash impairment charges to reduce the carrying value of the Mezzanine
Investment to zero and $158.6 million, respectively. We used internally developed models to determine the fair value of the
Mezzanine Investment. This incorporated the fair value of the underlying real estate collateral that incorporates various
estimates and assumptions, the most significant being the capitalization rate of 5.25% compared to 3.75% as of December 31,
2023 and 2022, respectively. These assumptions are based on Level 3 inputs. See Note 2 for further details.
Investment in IQHQ
During the year ended December 31, 2024, we recorded a non-cash impairment charge of $48.6 million related to our
passive equity investment in IQHQ. This impairment charge was derived using a third-party valuation of IQHQ, which
incorporated fair value estimates of properties owned by IQHQ. The fair value estimates of the properties owned by IQHQ
were determined by discounted cash flow analyses and references to market comparable data.
The cash flows utilized in such discounted cash flow analyses are comprised of projected operating results, which are based
upon market conditions and future expectations. The most significant unobservable inputs utilized in determining the fair value
of these assets are capitalization rates and discount rates, which ranged from 6.00% to 7.00% and 7.25% to 10.25%,
respectively. Because of these inputs, we have determined that the fair value of these properties are classified within Level 3 of
the fair value hierarchy.
(1)
F-42
Market comparable data utilizes comparable sales, which are subject to judgment as to comparability to the valued
properties. Because these inputs are derived from observable market data, we have determined that the fair values of these
properties are classified within Level 2 of the fair value hierarchy.
Note 13 — Commitments and Contingencies
Commitments
In connection with our development, redevelopment, and other capital additions activities, we have entered into various
construction-related contracts, and have made commitments to complete development and redevelopment of certain real estate,
pursuant to financing or other arrangements. As of December 31, 2024, we had remaining commitments for non-recourse
construction-related contracts of $146.9 million, with $157.0 million undrawn on our construction loans.
As of December 31, 2024, we have remaining unfunded commitments of $1.4 million related to our investments in property
technology funds invested in entities that develop technology related to the real estate industry. The timing of the remaining
funding of these commitments is uncertain.
We also enter into certain commitments for future purchases of goods and services in connection with the operations of our
apartment communities. Those commitments generally have terms of one year or less and reflect expenditure levels comparable
to our historical expenditures.
Legal Matters
From time to time, we may be a party to certain legal proceedings, incidental to the normal course of business. While the
outcome of the legal proceedings cannot be predicted with certainty, we believe there are no legal proceedings pending that
would have a material effect upon our financial condition or result of operations.
Note 14 — Business Segments
We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.
Our Development and Redevelopment segment consists of properties that are under construction or have not achieved
stabilization, as well as land held for development. As of December 31, 2024, our Development and Redevelopment segment
consists of 9 properties, including one under construction and three substantially completed and in lease-up.
Our Operating segment includes 20 residential apartment communities with 5,243 apartment homes that have achieved a
stabilized level of operations as of January 1, 2023 and maintained it throughout the current year and comparable period. We
aggregate all our apartment communities that have reached stabilization into our Operating segment.
Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or
Operating segments. Our Other segment includes The Benson Hotel, our only hotel.
During the first quarter of 2024, we revised the information regularly reviewed by our President and Chief Executive
Officer, the chief operating decision maker ("CODM"), to assess our operating performance. As a result, we reclassified The
Benson Hotel from the Development and Redevelopment segment to the Other segment. In addition, during the year ended
December 31, 2024, we disposed of a majority of our partnership interest in St. George Villas, which was previously reported
within the Other segment, and The Hamilton, which was previously reported within the Development and Redevelopment
segment. We also reclassified as held for sale 1001 Brickell Bay Drive, which was previously reported within the Other
segment, and Yacht Club Apartments, which was previously reported in our Operating segment. Prior period segment
information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the
business.
Our CODM evaluates performance and allocates resources for all of our segments using property net operating income
("PNOI"), which is our measure of segment profit or loss. PNOI is defined as rental and other property revenues, excluding
utility reimbursements, less direct property operating expenses, including utility reimbursements, for the consolidated
communities; but excluding
•
the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor
consolidate, our investment in IQHQ, the Mezzanine Investment, and investments in real estate technology funds;
and
•
property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of
segment performance.
F-43
Our CODM uses historical and projected PNOI to allocate resources (including employees, property, and financial or
capital resources) for each segment predominantly in the annual budget process. PNOI is used to review operating trends,
perform analytical comparisons between periods, and to monitor budget-to-actual variances on at least a quarterly basis in order
to assess performance and allocate resources. The corporate goals, which impact short term incentive compensation for
employees, also include consideration of PNOI.
The accounting policies of segments are the same as those described in the summary of significant accounting policies
described in Note 2.
The following tables present the results of operations of consolidated properties with our segments for the years ended
December 31, 2024, 2023, and 2022 (in thousands):
Development and
Redevelopment Operating
Other
Adjustments
Corporate
and
Amounts
Not
Allocated to
Segments
Consolidated
December 31, 2024
Rental and other property revenues
$
9,852 $ 140,099 $
6,690 $
7,977 $
44,061 $
208,679
Controllable operating expenses
4,527
18,567
6,746
—
6,239
36,079
Real estate taxes, net of capitalized amounts
1,963
16,653
593
—
7,312
26,521
Utilities expense, net of utility reimbursements
1,959
3,096
255
7,977
1,410
14,697
Property insurance expense, net of capitalized
amounts
1,019
2,773
118
—
2,059
5,969
Other property operating expenses
—
—
—
—
7,718
7,718
Property operating expenses
9,468
41,089
7,712
7,977
24,738
90,984
Property net operating income (loss)
384
99,010
(1,022 )
—
19,323
117,695
Other operating expenses not allocated to
segments
—
—
—
—
(119,196 )
(119,196 )
Other items included in income before
income tax
—
—
—
—
(105,570 )
(105,570 )
Income (loss) before income tax
$
384 $
99,010 $
(1,022 ) $
— $
(205,443 ) $
(107,071 )
Development and
Redevelopment Operating
Other
Adjustments
Corporate
and
Amounts
Not
Allocated to
Segments
Consolidated
December 31, 2023
Rental and other property revenues
$
109 $ 134,078 $
2,691 $
6,800 $
43,317 $
186,995
Controllable operating expenses
670
18,094
4,029
—
6,096
28,889
Real estate taxes, net of capitalized amounts
84
15,513
475
—
5,634
21,706
Utilities expense, net of utility reimbursements
114
3,144
179
6,800
1,432
11,669
Property insurance expense, net of capitalized
amounts
59
2,605
27
—
2,111
4,802
Other property operating expenses
—
—
—
—
6,646
6,646
Property operating expenses
927
39,356
4,710
6,800
21,919
73,712
Property net operating income (loss)
(818 )
94,722
(2,019 )
—
21,398
113,283
Other operating expenses not allocated to
segments
—
—
—
—
(101,699 )
(101,699 )
Other items included in income before
income tax
—
—
—
—
(181,655 )
(181,655 )
Income (loss) before income tax
$
(818 ) $
94,722 $
(2,019 ) $
— $
(261,956 ) $
(170,071 )
(1)
(2)
(3)
(4)
(5)
(6)
(1)
(2)
(3)
(4)
(5)
(6)
F-44
Development and
Redevelopment Operating
Other
Adjustments
Corporate
and
Amounts
Not
Allocated to
Segments
Consolidated
December 31, 2022
Rental and other property revenues
$
24 $ 124,443 $
— $
7,306 $
58,571 $
190,344
Controllable operating expenses
126
17,226
383
—
9,389
27,124
Real estate taxes, net of capitalized amounts
64
15,674
74
—
6,955
22,767
Utilities expense, net of utility reimbursements
1
3,082
—
7,306
1,397
11,786
Property insurance expense, net of capitalized
amounts
—
1,821
—
—
1,328
3,149
Other property operating expenses
—
—
—
—
6,966
6,966
Property operating expenses
191
37,803
457
7,306
26,035
71,792
Property net operating income (loss)
(167 )
86,640
(457 )
—
32,536
118,552
Other operating expenses not allocated to
segments
—
—
—
—
(198,640 )
(198,640 )
Other items included in income before
income tax
—
—
—
—
189,510
189,510
Income (loss) before income tax
$
(167 ) $
86,640 $
(457 ) $
— $
23,406 $
109,422
(1) Represents the reclassification of utility reimbursements, which are included in Rental and other property revenues in our Consolidated Statements of
Operations, in accordance with GAAP, from revenues to property operating expenses for the purpose of evaluating segment results.
(2) Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includes
property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our
segment performance measure.
(3) Controllable operating expenses primarily consists of property personnel costs, marketing, repairs and maintenance, turnover, and contract services
expense.
(4) Other property operating expenses include property management costs and casualty gains or losses.
(5) Other operating expenses not allocated to segments consists of depreciation and amortization and general and administrative expense.
(6) Other items included in Income before income tax benefit (expense) consists primarily of lease modification income, gain on disposition of real estate,
interest income, interest expense, mezzanine investment income (loss), net, realized and unrealized gains (losses) on interest rate contracts, and realized
and unrealized gains (losses) on equity investments.
Net real estate and non-recourse property debt, net, of our segments as of December 31, 2024 and 2023, were as follows (in
thousands):
Development
and
Redevelopment
Operating
Other
Corporate
Total
As of December 31, 2024
Buildings and improvements
$
620,000 $
653,184 $
75,741 $
— $
1,348,925
Land
165,633
231,046
1,503
—
398,182
Total real estate
785,633
884,230
77,244
—
1,747,107
Accumulated depreciation
(20,872 )
(468,040 )
(10,362 )
—
(499,274 )
Net real estate
$
764,761 $
416,190 $
66,882 $
— $
1,247,833
Non-recourse property debt and
construction loans, net
$
385,240 $
685,420 $
— $
— $
1,070,660
(1)
(2)
(3)
(4)
(5)
(6)
(1)
F-45
Development
and
Redevelopment
Operating
Other
Corporate
Total
As of December 31, 2023
Buildings and improvements
$
492,993 $
655,059 $
75,725 $
370,025 $
1,593,802
Land
163,513
231,047
1,503
224,758
620,821
Total real estate
656,506
886,106
77,228
594,783
2,214,623
Accumulated depreciation
(952 )
(456,360 )
(4,204 )
(119,286 )
(580,802 )
Net real estate
$
655,554 $
429,746 $
73,024 $
475,497 $
1,633,821
Non-recourse property debt and
construction loans, net
$
201,103 $
686,147 $
— $
260,491 $
1,147,741
(1) During the years ended December 31, 2024 and 2023 certain properties were sold or reclassified as held for sale, and therefore are not included in our
segment balance sheets at year end. We added a Corporate column to the tables above for presentation purposes to display these assets and the associated
debt as of December 31, 2023.
Capital additions within our segments for the years ended December 31, 2024, 2023 and 2022, were as follows (in
thousands):
Year Ended December 31,
2024
2023
2022
Development and Redevelopment
$
126,125
$
258,888
$
159,419
Operating
12,772
11,788
23,997
Other
26
8,782
33,201
Corporate amounts not allocated to segments
2,749
13,463
56,763
Total capital additions
$
141,672
$
292,921
$
273,380
(1) During the years ended December 31, 2024, 2023 and 2022, certain capital additions pertained to properties that were sold or reclassified as held for sale,
and therefore are not included in our segments as capital additions at those respective year ends. We added a Corporate row to the table above for
presentation purposes to display these capital additions as of December 31, 2024, 2023 and 2022, respectively.
In addition to the amounts disclosed in the tables above, as of December 31, 2024, the Development and Redevelopment
segment right-of-use lease assets and lease liabilities aggregated to $107.7 million and $121.8 million, respectively, and as of
December 31, 2023, aggregated to $109.0 million and $118.7 million, respectively. As of December 31, 2024, right-of-use
lease assets and lease liabilities primarily related to our investments in Upton Place, Strathmore Square and Oak Shore.
(1)
(1)
F-46
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2024
(In Thousands)
(2)
Gross Amount at Which
Initial Costs
Costs
Capitalized
Carried at Close of Period
(3)
(4)
(5)
Buildings
and
Total Initial
Subsequent
to
Buildings
and
Total
Carrying
Accumulated
Date
Location
Encumbran
ces
Land
Improveme
nts
Acquisition
Costs
Acquisition
Land
Improveme
nts
Value
Depreciation
Acquired
Operating:
118-122 West 23rd Street
New York, NY
(16,472 )
14,985
23,459
38,444
6,220
14,985
29,679
44,664
(13,623 )
Jun 2012
173 E. 90th Street
New York, NY
(12,138 )
12,066
4,535
16,601
8,857
12,066
13,392
25,458
(7,533 )
May 2004
237-239 Ninth Avenue
New York, NY
(6,148 )
8,495
1,866
10,361
1,849
8,495
3,715
12,210
(2,561 )
Mar 2005
1045 on the Park Apartments
Homes
Atlanta, GA
(6,007 )
2,793
6,662
9,455
1,548
2,793
8,210
11,003
(3,322 )
Jul 2013
2200 Grace
Lombard, IL
(11,193 )
642
7,788
8,430
531
642
8,319
8,961
(6,108 )
Aug 2018
Bank Lofts
Denver, CO
(18,540 )
3,525
9,045
12,570
5,546
3,525
14,591
18,116
(9,382 )
Apr 2001
Bluffs at Pacifica, The
Pacifica, CA
—
8,108
4,132
12,240
18,013
8,108
22,145
30,253
(16,367 )
Oct 2006
Elm Creek
Elmhurst, IL
(78,095 )
5,910
30,830
36,740
30,357
5,910
61,187
67,097
(42,311 )
Dec 1997
Evanston Place
Evanston, IL
(46,670 )
3,232
25,546
28,778
16,994
3,232
42,540
45,772
(27,067 )
Dec 1997
Hillmeade
Nashville, TN
(46,026 )
2,872
16,070
18,942
22,985
2,872
39,055
41,927
(29,530 )
Nov 1994
Hyde Park Tower
Chicago, IL
(29,484 )
4,731
14,927
19,658
14,818
4,731
29,745
34,476
(17,877 )
Oct 2004
Plantation Gardens
Plantation, FL
(60,133 )
3,773
19,443
23,216
24,796
3,773
44,239
48,012
(34,354 )
Oct 1999
Royal Crest Estates (Warwick)
Warwick, RI
—
22,433
24,095
46,528
7,909
22,433
32,004
54,437
(27,539 )
Aug 2002
Royal Crest Estates (Nashua)
Nashua, NH
(173,435 )
68,230
45,562
113,792
17,139
68,231
62,700
130,931
(56,440 )
Aug 2002
Royal Crest Estates (Marlboro)
Marlborough, MA
(68,495 )
25,178
28,786
53,964
14,240
25,178
43,026
68,204
(37,379 )
Aug 2002
Waterford Village
Bridgewater, MA
—
29,110
28,101
57,211
13,985
29,110
42,086
71,196
(36,001 )
Aug 2002
Eldridge
Elmhurst, IL
(26,691 )
3,483
35,706
39,189
163
3,483
35,869
39,352
(4,432 )
Aug 2021
Wexford Village
Worcester, MA
—
6,349
17,939
24,288
5,838
6,349
23,777
30,126
(19,207 )
Aug 2002
Willow Bend
Rolling Meadows,
IL
(43,501 )
2,717
15,437
18,154
18,588
2,717
34,025
36,742
(29,355 )
May 1998
Yorktown Apartments
Lombard, IL
(46,857 )
2,413
10,374
12,787
52,506
2,413
62,880
65,293
(47,652 )
Dec 1999
Total Operating
(689,885 )
231,045
370,303
601,348
282,882
231,046
653,184
884,230
(468,040 )
Development and redevelopment:
Bioscience 4
Aurora, CO
—
—
—
—
5,021
—
5,021
5,021
—
Feb 2023
34th Street
Miami, FL
(18,407 )
19,582
—
19,582
41,840
19,872
41,550
61,422
—
Jul 2021
One Edgewater
Miami, FL
—
12,377
—
12,377
5,767
14,560
3,584
18,144
—
Jul 2021
Flying Horse
Colorado Springs,
CO
—
4,257
—
4,257
3,860
4,269
3,848
8,117
—
Jul 2021
Oak Shore
Corte Madera, CA
(19,651 )
—
—
—
57,326
—
57,326
57,326
(1,773 )
Jun 2021
Upton Place
Washington, DC
(215,000 )
—
21,280
21,280
275,084
—
296,364
296,364
(14,566 )
Dec 2020
Strathmore Square
Washington, DC
(140,692 )
—
—
—
160,391
—
160,391
160,391
(4,533 )
Feb 2022
300 W. Broward Blvd.
Ft. Lauderdale, FL
—
21,355
—
21,355
16,485
20,616
17,224
37,840
—
Jan 2022
Fitzsimons Phase Four
Aurora, CO
—
2,016
—
2,016
2,193
2,040
2,169
4,209
—
Dec 2022
Sears Parcel 1
Ft. Lauderdale, FL
—
68,485
—
68,485
25,037
68,485
25,037
93,522
—
Jun 2022
Sears Parcel 2
Ft. Lauderdale, FL
—
20,737
—
20,737
3,958
20,460
4,235
24,695
—
Jul 2022
Sears Parcel 3
Ft. Lauderdale, FL
—
16,402
—
16,402
2,180
15,331
3,251
18,582
—
Jun 2022
Total Development and
redevelopment
(393,750 )
165,211
21,280
186,491
599,142
165,633
620,000
785,633
(20,872 )
Other:
The Benson Hotel
Aurora, CO
—
1,503
4,414
5,917
71,327
1,503
75,741
77,244
(10,362 )
Jan 2021
Total Other
—
1,503
4,414
5,917
71,327
1,503
75,741
77,244
(10,362 )
Held for sale:
1001 Brickell Bay Drive
Miami, FL
(81,300 )
150,018
152,791
302,809
11,552
150,018
164,343
314,361
(90,897 )
Jul 2019
Yacht Club Apartments
Miami, FL
(77,949 )
31,362
32,214
63,576
21,832
31,363
54,045
85,408
(35,943 )
Dec 2003
Total Held for sale
(159,249 )
181,380
185,005
366,385
33,384
181,381
218,388
399,769
(126,840 )
Debt issuance costs and other non-
cash adjustments (1)
13,336
Total Portfolio
$ (1,229,548 ) $
579,139
$
581,002
$
1,160,141
$
986,735
$
579,563
$
1,567,313
$
2,146,876
$
(626,114 )
(1)
Includes unamortized fair market adjustments of debt assumed in the acquisition of properties.
(2)
Includes costs capitalized since acquisition or date of initial acquisition of the community.
(3)
The aggregate cost of land and depreciable property for federal income tax purposes was approximately $1.6 billion as of December 31, 2024. (unaudited)
(4)
Depreciable life for buildings and improvements ranges from five to 30 years and is calculated on a straight-line basis.
(5)
Date we acquired the apartment community or first acquired the partnership that owns the community.
F-47
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO OP L.P.
SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Years Ended December 31, 2024, 2023, and 2022
(In Thousands)
2024
2023
2022
Total real estate balance at beginning of year
$
2,214,623 $
1,963,483 $
1,791,499
Additions during the year:
Acquisitions
—
1,893
146,236
Capital additions
141,672
292,921
273,380
Dispositions
(193,878)
(30,347)
(233,308)
Write-offs of fully depreciated assets and other
(15,541)
(13,327)
(14,324)
Amounts related to assets held for sale
(399,769)
—
—
Total real estate balance at end of year
$
1,747,107 $
2,214,623 $
1,963,483
Accumulated depreciation balance at beginning of year
$
580,802 $
530,722 $
561,115
Depreciation
79,609
63,407
143,983
Dispositions
(18,756)
—
(160,052)
Write-offs of fully depreciated assets and other
(15,541)
(13,327)
(14,324)
Amounts related to assets held for sale
(126,840)
—
—
Accumulated depreciation balance at end of year
$
499,274 $
580,802 $
530,722
Exhibit 10.29
1
PERFORMANCE RESTRICTED STOCK AGREEMENT (TSR)
(Second Amended and Restated 2015 Stock Award and Incentive Plan)
This PERFORMANCE RESTRICTED STOCK AGREEMENT, dated as of
[______________] (the “Agreement”), is by and between Apartment Investment and
Management Company, a Maryland corporation (the “Company”), and [______________] (the
“Recipient”). Capitalized terms used but not otherwise defined in this Agreement shall have the
respective meanings set forth in the Apartment Investment and Management Company Second
Amended and Restated 2015 Stock Award and Incentive Plan (the “Plan”).
WHEREAS, effective [______________] (the “Date of Grant”), the Compensation and
Human Resources Committee (the “Committee”) of the Board of Directors (the “Board”) of the
Company granted the Recipient a Performance Restricted Stock Award, pursuant to which the
Recipient shall receive shares of the Company’s Class A Common Stock, par value $0.01 per
share (“Common Stock”), pursuant to and subject to the terms and conditions of the Plan.
NOW, THEREFORE, in consideration of the Recipient’s services to the Company and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Number of Shares and Share Price. The Company hereby grants the Recipient a
Performance Restricted Stock Award (the “Stock Award”) with a target of [______________]
shares of Common Stock (the “Restricted Stock”) pursuant to the terms of this Agreement and
the provisions of the Plan. The Recipient may ultimately vest into more shares of Common
Stock or fewer or no shares of Common Stock, as set forth in more detail in this Agreement.
2. Restrictions and Restricted Period.
(a)
Restrictions. Shares of Restricted Stock granted hereunder may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of and shall be subject to a
risk of forfeiture until the lapse of the Restricted Period (as defined below). The Company shall
not be required (i) to transfer on its books any shares of Restricted Stock which shall have been
sold or transferred in violation of any of the provisions set forth in this Agreement, or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such shares shall have been so transferred.
(b)
Lapse of Restrictions; Restricted Period. The restrictions set forth above
shall lapse and the Restricted Stock shall become freely transferable (provided, that such transfer
is otherwise in accordance with federal and state securities laws) and non-forfeitable as set forth
in this Section 2(b) and on Exhibit A.
(c)
(i)
The Company’s total shareholder return (as defined in more detail
on Exhibit A, “TSR”) over the period beginning on [______________] and ending on
[______________] (the “Performance Period”), as calculated by comparison to the indices
stipulated on Exhibit A to this Agreement (and using the methodology set forth on such Exhibit
Exhibit 10.29
2
A), shall be compared to the threshold, target and maximum TSR hurdles set forth on Exhibit A
to determine the “Vesting Portion” (as defined on Exhibit A) of the Stock Award as a percentage
of the Target Award. Such calculations shall be determined by the Committee no later than
[______________] (the date of such determination, the “Determination Date”). Restrictions
with respect to 100% of the related Vesting Portion of the Stock Award set forth on Exhibit A
shall lapse as of the later of the Determination Date and [______________] (the “Vesting Date”).
(ii)
Except as set forth in Section 3, such lapse of restrictions shall occur
only if the Recipient has remained employed by the Company through the Vesting
Date, as the case may be (the “Restricted Period”). The portion of the Restricted
Stock which does not vest as of the Vesting Date based on TSR performance, and
any related accrued but unpaid dividends that are at that time subject to
restrictions as set forth herein, shall, as of the Vesting Date, be forfeited to the
Company without payment of any consideration by the Company, and neither the
Recipient nor any of his or her successors, heirs, assigns or personal
representatives shall thereafter have any further rights or interests in such shares
of Restricted Stock or certificates.
(iii) In order to enforce the foregoing restrictions, the Committee may (A)
require that the certificates representing the shares of Restricted Stock remain in
the physical custody of the Company or in book entry until any or all of such
restrictions expire or have been removed, and (B) cause a legend or legends to be
placed on the certificates or book entry which make appropriate reference to the
restrictions imposed under the Plan.
(iv) All determinations with respect to the calculations pursuant to this
Agreement shall be made in the sole discretion of the Committee.
(d)
Rights of a Stockholder. From and after the Date of Grant and for so long as
the Restricted Stock is held by or for the benefit of the Recipient, the Recipient shall have all the
rights of a stockholder of the Company with respect to the Restricted Stock, including but not
limited to the right to receive dividends and the right to vote such shares, subject to the
provisions of paragraph 2(d) hereof.
(e)
Dividends. Stock distributed in connection with a Common Stock split or
Common Stock dividend, and other property distributed as a dividend (including cash), shall be
subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with
respect to which such Common Stock or other property has been distributed. Notwithstanding
the generality of the foregoing, cash dividends paid on Restricted Stock shall be deferred for
payment until the Determination Date; provided such deferral is in compliance with Section
409A of the Code, in cash, shares of Common Stock or other property. Such deferred dividends
shall be paid to recipient as promptly as practicable in the pay period following the
Determination Date.
3. Termination of Employment. Except as otherwise set forth in this Agreement, in the
event that the Recipient ceases to be employed by the Company for any reason prior to the lapse
of the Restricted Period, then the Restricted Stock and any accrued but unpaid dividends that
Exhibit 10.29
3
are at that time subject to restrictions set forth herein, shall be forfeited to the Company without
payment of any consideration by the Company, and neither the Recipient nor any of his or her
successors, heirs, assigns or personal representatives shall thereafter have any further rights or
interests in such shares of Restricted Stock or certificates. In the event that the Recipient’s
employment with the Company is terminated due to his death or total and permanent disability,
then the Restricted Period set forth in Section 2(b) hereof shall immediately lapse and the
Restricted Stock shall become immediately and fully vested, with the level of TSR performance
calculated as if the date of termination was the final day of the Performance Period, and as if the
level of TSR performance as of such date was the higher of (a) target or (b) actual TSR
performance as of such date, as determined in the sole discretion of the Committee in accordance
with Section 2(b) and Exhibit A. Restricted Stock not vesting in accordance with the foregoing
sentence shall be forfeited to the Company without payment of any consideration by the
Company, and neither the Recipient nor any of his or her successors, heirs, assigns or personal
representatives shall thereafter have any further rights or interests in such shares of Restricted
Stock or certificates. For purposes of this Section 3, the Recipient’s employment will have
terminated by reason of total and permanent disability if, in the reasonable and good faith
judgment of the Committee, the Recipient is totally and permanently disabled and is unable to
return to or perform his or her duties on a full-time basis.
4. Change in Control. The Restricted Stock issued hereunder shall, in addition to any
provisions relating to vesting contained in this Agreement, become immediately and fully vested,
and the Restricted Period set forth in Section 2(b) hereof shall immediately lapse, upon the
termination of the Recipient’s employment with the Company by the Company without Cause or
by the Recipient for Good Reason, in either case within the period commencing six months prior
to and ending twenty-four (24) months following the occurrence of a Change in Control (as
defined below), with the level of TSR performance calculated as if the date of the Change in
Control was the final day of the Performance Period, and as if the level of TSR performance as
of such date was the higher of (a) target or (b) actual TSR performance as of such date, as
determined in the sole discretion of the Committee in accordance with Section 2(b) and Exhibit
A.
(a)
For purposes of this Agreement, a “Change in Control” shall mean the occurrence
of any of the following events:
(i)
an acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “person” (as the term “person” is
used for purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) immediately after which such person has “beneficial ownership”
(within the meaning of Rule 13d‑3 promulgated under the Exchange Act) (“Beneficial
Ownership”) of 50% or more of the combined voting power of the Company’s then outstanding
Voting Securities; provided, however, in determining whether a Change in Control has occurred,
the acquisition of Voting Securities in a Non-Control Acquisition (as hereinafter defined) shall
not constitute an acquisition that would cause a Change in Control. “Non-Control Acquisition”
shall mean an acquisition (A) by or under an employee benefit plan (or a trust forming a part
thereof) maintained by (1) the Company or (2) any corporation, partnership or other person of
which a majority of its voting power or its equity securities or equity interest is owned directly or
indirectly by the Company or in which the Company serves as a general partner or manager (a
“Subsidiary”), (B)
Exhibit 10.29
4
by the Company or any Subsidiary, or (C) by any person in connection with a Non-Control
Transaction (as hereinafter defined). “Non-Control Transaction” shall mean a merger,
consolidation, share exchange or reorganization involving the Company, in which (1) the
stockholders of the Company, immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately following such merger, consolidation,
share exchange or reorganization, at least 50% of the combined voting power of the outstanding
voting securities of the corporation that is the successor in such merger, consolidation, share
exchange or reorganization (the “Surviving Company”) in substantially the same proportion as
their ownership of the Voting Securities immediately before such merger, consolidation, share
exchange or reorganization, and (2) the individuals who were members of the Board of Directors
of the Company immediately prior to the execution of the agreement providing for such merger,
consolidation, share exchange or reorganization constitute at least 50% of the members of the
board of directors of the Surviving Company;
(ii)
the individuals who constitute the Board as of the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least 50% of the Board; provided,
however, that if the election, or nomination for election by the Company’s stockholders, of any
new director was approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall be considered as a member of the Incumbent Board; provided, further, that no
individual shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened “election contest” (as described in
Rule 14a-11 promulgated under the Exchange Act) (an “Election Contest”) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other than the Board of
Directors (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle
any Election Contest or Proxy Contest; or
(iii) the consummation of any of the following: (A) a merger, consolidation,
share exchange or reorganization involving the Company (other than a Non-Control
Transaction); (B) a complete liquidation or dissolution of the Company; or (C) the sale or other
disposition of all or substantially all of the assets of the Company to any person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person (a “Subject Person”) acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company that, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by such Subject Person,
provided that if a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such share acquisition by
the Company, such Subject Person becomes the Beneficial Owner of any additional Voting
Securities that increases the percentage of the then outstanding Voting Securities Beneficially
Owned by such Subject Person, then a Change in Control shall occur.
(b)
“Cause” shall mean the termination of the Recipient’s employment because of the
occurrence of any of the following events, as determined by the Board in accordance with the
procedure below:
Exhibit 10.29
5
(i) the failure by the Recipient to attempt in good faith to perform his or her duties
or to follow the lawful direction of the individual to whom the Recipient reports; provided,
however, that the Company shall have provided the Recipient with written notice of such failure
and the Recipient has been afforded at least fifteen (15) days to cure same;
(ii) the indictment of the Recipient for, or the Recipient’s conviction of or plea of
guilty or nolo contendere to, a felony or any other serious crime involving moral turpitude or
dishonesty;
(iii) the Recipient’s willfully engaging in misconduct in the performance of his or
her duties (including theft, fraud, embezzlement, securities law violations, a material violation of
the Company’s code of conduct or a material violation of other material written policies) that is
injurious to the Company, monetarily or otherwise, in more than a de minimis manner;
(iv) the Recipient’s willfully engaging in misconduct unrelated to the performance
of his or her duties for the Company that is materially injurious to the Company, monetarily or
otherwise;
(v) the material breach by the Recipient of any material written agreement with
the Company.
For purposes of this Section 4(b), no act, or failure to act, on the part of the Recipient
shall be considered “willful” unless done, or omitted to be done, by the Recipient in bad faith
and without reasonable belief that his or her action or omission was in the best interest of the
Company. Any termination shall be treated as a termination for Cause only if (i) the Recipient is
given at least five (5) business days’ written notice of termination specifying the alleged Cause
event and shall have the opportunity to appear (with counsel) before the full Board to present
information regarding his or her views on the Cause event, and (ii) after such hearing, the
Recipient is terminated for Cause by at least a majority of the Board. After providing the notice
of termination in the foregoing sentence, the Board may suspend the Recipient with full pay and
benefits until a final determination pursuant to this Section 4(b) has been made. Notwithstanding
the foregoing provisions of this Section 4(b), if the Recipient is party to an employment
agreement with the Company that provides a definition of Cause, such definition shall apply
instead of the foregoing provisions of this Section 4(b).
(c)
“Good Reason” shall mean (i) a reduction in the Recipient’s base salary; (ii) a
material diminution in the Recipient’s title or responsibilities; or (iii) relocation of the
Recipient’s primary place of employment more than fifty miles; provided, however, that the
Recipient may only terminate employment for Good Reason by delivering written notice to the
Board within ninety (90) days following the date on which the Recipient first knows of the event
constituting Good Reason, which notice specifically identifies the facts and circumstances
claimed by the Recipient to constitute Good Reason, and the Company has failed to cure such
facts and circumstances within thirty (30) days after receipt of such notice; and provided further,
however, that if the Recipient is party to an employment agreement with the Company that
provides a
Exhibit 10.29
6
definition of Good Reason, such definition shall apply instead of the foregoing provisions of this
Section 4(c).
5.
Tax Withholding; Tax Treatment.
(a)
Tax Withholding. Notwithstanding anything to the contrary, the release of the
shares of Restricted Stock hereunder shall be conditioned upon the Recipient making adequate
provision for federal, state or other withholding obligations, if any, which may arise upon the
vesting of the Restricted Stock.
(b)
Tax Treatment. Set forth below is a brief summary as of the Date of Grant of
certain United States federal tax consequences of the award of Restricted Stock. THIS
SUMMARY DOES NOT ADDRESS SPECIFIC STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES THAT MAY BE APPLICABLE TO THE RECIPIENT. THE RECIPIENT
UNDERSTANDS THAT THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT REGULATIONS, WE
ADVISE YOU THAT, UNLESS OTHERWISE EXPRESSLY INDICATED, ANY FEDERAL
TAX ADVICE CONTAINED IN THIS AGREEMENT WAS NOT INTENDED OR WRITTEN
TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (I) AVOIDING TAX-
RELATED PENALTIES UNDER THE CODE OR (II) PROMOTING, MARKETING OR
RECOMMENDING
TO
ANOTHER
PARTY
ANY
TAX-RELATED
MATTERS
ADDRESSED HEREIN.
The Recipient shall recognize ordinary income at the time or times the Restricted Stock
vests in an amount equal to the aggregate Fair Market Value of such shares on each such date.
The Recipient hereby acknowledges and agrees that, with respect to the grant of
Restricted Stock, the Recipient will not make an election with the Internal Revenue Service
electing pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the
“Code”), to be taxed currently on the aggregate Fair Market Value of the Restricted Stock as of
the Date of Grant. The Recipient further acknowledges and agrees that if the Recipient makes
such an election, the grant of Restricted Stock shall be immediately forfeited and shall be of no
further force or effect.
BY SIGNING THIS AGREEMENT, THE RECIPIENT REPRESENTS THAT HE OR
SHE HAS REVIEWED WITH HIS OR HER OWN TAX ADVISORS THE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THAT HE OR SHE IS RELYING
SOLELY
ON
SUCH
ADVISORS
AND
NOT
ON
ANY
STATEMENTS
OR
REPRESENTATIONS OF THE COMPANY OR ANY OF ITS AGENTS. THE RECIPIENT
UNDERSTANDS AND AGREES THAT HE OR SHE (AND NOT THE COMPANY) SHALL
BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAY ARISE AS A RESULT OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
6. Miscellaneous.
Exhibit 10.29
7
(a)
Entire Agreement. This Agreement and the Plan contain the entire
understanding and agreement of the Company and the Recipient concerning the subject matter
hereof, and supersede all earlier negotiations and understandings, written or oral, between the
parties with respect thereto.
(b)
Captions. The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience. They do not define, limit, construe or describe the
scope or intent of the provisions of this Agreement.
(c)
Counterparts. This Agreement may be executed in counterparts, each of
which when signed by the Company or the Recipient will be deemed an original and all of which
together will be deemed the same agreement.
(d)
Notices. Any notice or communication having to do with this Agreement
must be given by personal delivery or by certified mail, return receipt requested, addressed, if to
the Company or the Committee, to the attention of the General Counsel of the Company at the
principal office of the Company and, if to the Recipient, to the Recipient’s last known address
contained in the personnel records of the Company.
(f)
Succession and Transfer. Each and all of the provisions of this Agreement
are binding upon and inure to the benefit of the Company and the Recipient and their permitted
successors, assigns and legal representatives.
(g)
Amendments. Subject to the provisions of the Plan, this Agreement may be
amended or modified at any time by an instrument in writing signed by the parties hereto.
(h)
Governing Law. This Agreement and the rights of all persons claiming
hereunder will be construed and determined in accordance with the laws of the State of Maryland
without giving effect to the choice of law principles thereof.
(i)
Plan Controls. This Agreement is made under and subject to the provisions
of the Plan, and all of the provisions of the Plan are hereby incorporated by reference into this
Agreement. In the event of any conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan shall govern. By signing this Agreement, the
Recipient confirms that he or she has received a copy of the Plan and has had an opportunity to
review the contents thereof.
(j)
No Guarantee of Continued Service. The Recipient acknowledges and
agrees that nothing herein, including the opportunity to make an equity investment in the
Company, shall be deemed to create any implication concerning the adequacy of the Recipient’s
services to the Company, any Company Subsidiary or any Partnership or Partnership Subsidiary
shall be construed as an agreement by the Company, any Company Subsidiary or any Partnership
or Partnership Subsidiary, express or implied, to employ the Recipient or contract for the
Recipient’s services, to restrict the right of the Company, any Company Subsidiary or any
Partnership or Partnership Subsidiary, as applicable, to discharge the Recipient or cease
Exhibit 10.29
8
contracting for the Recipient’s services or to modify, extend or otherwise affect in any manner
whatsoever, the terms of any employment agreement or contract for services that may exist
between the Recipient and the Company, any Company Subsidiary or any Partnership or
Partnership Subsidiary, as applicable.
Exhibit 10.29
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: ____________________________________
Name:
Title:
RECIPIENT:
By: ___________________________________
Name:
Address:
___________________________
___________________________
Exhibit 10.29
10
EXHIBIT A
This Exhibit sets forth the calculation methodology with respect to the Agreement. Certain
defined terms may be found at the end of this Exhibit A. Terms not defined on this Exhibit A
shall have the meaning set forth in the body of the Agreement.
With respect to 67% of the Restricted Stock:
Performance Level
Relative TSR vs. Nareit
Apartment Index TSR:
Performance vs. Index
Over Performance Period
Portion of Target Shares
Vesting
(“Vesting Portion”)
Threshold
30 Percentile
50%
Target
55 Percentile
100%
Maximum
80 Percentile
200%
With respect to 33% of the Restricted Stock:
Performance Level
Relative TSR vs. Nareit
Equity REIT Index TSR:
Performance vs. Index
Over Performance Period
Portion of Target Shares
Vesting
(“Vesting Portion”)
Threshold
30 Percentile
50%
Target
55 Percentile
100%
Maximum
80 Percentile
200%
TSR results above the Threshold level and below the Maximum level shall result in a Vesting
Portion that is interpolated between the Threshold and Maximum Vesting Portions set forth on
this Exhibit A. TSR results below the Threshold level will cause the Restricted Stock to be
forfeited to the Company without payment of any consideration by the Company, and neither the
Recipient nor any of his or her successors, heirs, assigns or personal representatives shall
thereafter have any further rights or interests in such shares of Restricted Stock or certificates.
If the performance level is above Target but as of the Determination Date the Company has
negative absolute TSR with respect to the Performance Period, then the Restricted Stock shall
vest at the Target level as of the dates set forth in Section 2(b) of the Agreement, with the
Vesting Portion in excess of Target (the “Excess Portion”) vesting only upon the Company’s
achievement of positive absolute TSR with respect to the period beginning on the first day of the
Performance Period; provided, however, that if the Company has not achieved positive absolute
TSR with respect to the period beginning on the first day of the Performance Period as of the
third anniversary of the Determination Date, then the Excess Portion shall be forfeited to the
Company without payment of any consideration by the Company, and neither the Recipient nor
th
th
th
th
th
th
Exhibit 10.29
11
any of his or her successors, heirs, assigns or personal representatives shall thereafter have any
further rights or interests in such shares of Restricted Stock or certificates.
For purposes of these calculations:
“TSR” means the Company’s Total Shareholder Return as reported by SNL Financial or another
third party judged by the Committee to be a reputable third party, which measurement shall be
confirmed by the Committee. For purposes of calculating Aimco’s TSR, the “starting” share
price will be calculated using the average closing price for the 20-day trading period up to and
including [______________], and the “ending” share price be calculated using the average
closing price for the 20-day period up to and including [______________].
When measuring the TSR of the Company, the calculation shall be adjusted as deemed
appropriate by the Committee to reflect any change in corporate structure of the nature
referenced in Section 3.4 of the Plan.
Measurement of the TSR of the Nareit Apartment Index and The Nareit Equity REIT Index for
purposes of comparison to the Company’s TSR shall be as reported by SNL Financial or another
third party judged by the Committee to be a reputable third party, which measurement shall be
confirmed by the Committee.
“bps” shall mean basis points, each of which shall equal 1/100th of 1%.
EXECUTION COPY
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT
MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR
CONFIDENTIAL. THE OMITTED PORTIONS OF THIS DOCUMENT ARE MARKED BY [xxxx].
INTERESTS PURCHASE AND SALE AGREEMENT
by and among
AHOTB HOLDING, LLC and
AIMCO OP L.P.,
collectively, as Seller
and
BRICKELL BAY PROPERTY OWNER LLC, as Buyer
Property Known As:
1001 BRICKELL BAY DRIVE AND
1111 BRICKELL BAY DRIVE, MIAMI, FLORIDA
December 27, 2024
i
TABLE OF CONTENTS
Page
SECTION 1.
Recitals Incorporated; Definitions
2
SECTION 2.
Agreement to Sell and Purchase
16
SECTION 3.
Purchase Price; Deposit
17
SECTION 4.
Property Investigation
18
SECTION 5.
Title and Title Insurance
21
SECTION 6.
Closing
24
SECTION 7.
Closing Costs and Adjustments
25
SECTION 8.
Conditions Precedent
29
SECTION 9.
Closing Deliveries
31
SECTION 10.
Seller’s Covenants Pending Closing
38
SECTION 11.
Assignment by Buyer
44
SECTION 12.
Destruction; Condemnation
45
SECTION 13.
Defaults and Remedies
46
SECTION 14.
Seller’s Representations and Warranties
48
SECTION 15.
Buyer’s Representations and Warranties
62
SECTION 16.
Survival, Indemnification and Release
64
SECTION 17.
Notices
68
SECTION 18.
Tax Matters
69
SECTION 19.
Broker
74
SECTION 20.
Tax Certiorari Proceedings
74
SECTION 21.
Date for Performance; Time of the Essence
75
SECTION 22.
Severability
75
SECTION 23.
Successors and Assigns
75
SECTION 24.
Construction
76
SECTION 25.
Entire Agreement
76
SECTION 26.
Amendment
76
SECTION 27.
Applicable Law
77
SECTION 28.
Relationship of the Parties
77
SECTION 29.
Incorporation by Reference; References
77
SECTION 30.
Captions
77
SECTION 31.
Counterparts
77
SECTION 32.
Waiver of Trial By Jury; Venue and Jurisdiction; Litigation Costs
77
SECTION 33.
Confidentiality; Solicitation
78
SECTION 34.
No Third Party Beneficiary
80
SECTION 35.
Exculpation
81
SECTION 36.
No Recordation
81
SECTION 37.
Further Assurances
81
SECTION 38.
Waiver
81
SECTION 39.
Disclaimers and Release
81
ii
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 Legal Description (1001 Brickell Land)
Schedule 2 Legal Description (Yacht Club Land)
Schedule 3 Escrow Agent’s Wiring Instructions
Schedule 4 Escrow Terms
Schedule 5 Rent Roll
Schedule 6 List of Existing Service Contracts
Schedule 7 Leasing Matters
Schedule 8
Existing Litigation Matters
Schedule 9
List of Organizational Documents of the 1001 Brickell Companies and Yacht
Club Owner
Schedule 10
Permitted Exceptions
Schedule 11
Property Insurance
Schedule 12
[xxxxxxxxxxxxx]
Schedule 13
Existing Contracts
Schedule 14
License and Access Agreements
Schedule 15
List of Active Real Property Tax Disputes
Schedule 16
List of Preferred Shareholders in the REIT
Schedule 17
List of 1001 Brickell Property Space Leases
Schedule 18
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
Schedule 19
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
EXHIBITS
Exhibit A
Form of Assignment and Assumption of Member Interests
Exhibit A-1
Form of Assignment and Acceptance of Common Stock of Brickell Bay
Miami REIT Corp
Exhibit B
Form of Title Affidavit
Exhibit C
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
Exhibit D
Form of Tenant Notice Letter
Exhibit E
Intentionally Omitted
Exhibit F
Form of Officer/Director Resignation Letter
Exhibit G
Intentionally Omitted
Exhibit H
Form of Release of Officers and Directors
Exhibit I
Owner Disclosed Liabilities
Exhibit J-1 Organizational Chart for 1001 Brickell Owner
Exhibit J-2 Organizational Chart for Yacht Club Owner
Exhibit J-3 Organizational Chart for TRS
Exhibit K
Form of Affidavit Confirming Buyer Is Not a Foreign Principal
Exhibit L
Intentionally Omitted
Exhibit M
Form of REIT Opinion
iiii
Exhibit N
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
Exhibit O
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
Exhibit P
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
Exhibit Q
Form of Seller Bring-Down Certificate
Exhibit R
Form of Buyer Bring-Down Certificate
Exhibit S
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
1
INTERESTS PURCHASE AND SALE AGREEMENT
This INTERESTS PURCHASE AND SALE AGREEMENT (this “Agreement”), is
made and entered into as of December 27, 2024 (the “Effective Date”), by and among AHOTB
HOLDING, LLC, a Delaware limited liability company (“1001 Brickell Seller”) and AIMCO
OP L.P., a Delaware limited partnership (“Yacht Club Seller”), and BRICKELL BAY
PROPERTY OWNER LLC, a Delaware limited liability company (“Buyer”).
W I T N E S S E T H:
WHEREAS, 1001 Brickell Seller is the owner and holder of all issued and outstanding
common stock of Brickell Bay Miami REIT Corp., a Delaware corporation (the “REIT”);
WHEREAS, the REIT is the owner of 100% of the limited liability company interests in
1001 Brickell Holdings, LLC, a Delaware limited liability company (“1001 Brickell Holdings”);
WHEREAS, 1001 Brickell Holdings is the owner of 100% of the limited liability company
interests in 1001 Brickell Owner, LLC, a Delaware limited liability company (formerly known as
Brickell REIT Merger Sub, LLC (“Merger Sub”)) (“1001 Brickell Owner”);
WHEREAS, 1001 Brickell Owner, as the successor by merger to Brickell Bay Tower SPE,
LLC (“BBT SPE”), pursuant to that certain Certificate of Merger of BBT SPE into Merger Sub
filed December 30, 2020 and effective as of January 1, 2021 (the “Certificate of Merger”), is the
fee owner of the 1001 Brickell Property (as hereinafter defined);
WHEREAS, Yacht Club Seller is the owner of 100% of the limited liability company
interests in Aimco Yacht Club at Brickell, LLC, a Delaware limited liability company (“Yacht
Club Owner”);
WHEREAS, Yacht Club Owner is the fee owner of the Yacht Club Property (as hereinafter
defined); and
WHEREAS, 1001 Brickell Seller, Yacht Club Seller and Buyer have agreed that (i) 1001
Brickell Seller shall sell all issued and outstanding common stock of the REIT (the “REIT
Interests”) to Buyer, and Buyer shall purchase the REIT Interests from 1001 Brickell Seller, and
(ii) Yacht Club Seller shall sell all of the issued and outstanding limited liability company
membership interests in Yacht Club Owner (the “Yacht Club Interests”) to Buyer, and Buyer
shall purchase the Yacht Club Interests from Yacht Club Seller, upon the terms and provisions
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of $100.00 (as partial consideration for Seller’s
obligations under this Agreement and the rights granted to Buyer under this Agreement) paid by
Buyer to Seller, and the mutual covenants and agreements hereinafter set forth, and for other
good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby
acknowledged, Seller and Buyer hereby agree as follows:
2
SECTION 1. RECITALS INCORPORATED; DEFINITIONS
The recitals to this Agreement are hereby incorporated as if fully set forth herein. The
following terms shall have the indicated meanings:
“1001 Brickell Buyer Closing Documents” shall have the meaning set forth in Section
9(b).
“1001 Brickell Companies” shall mean, collectively, the REIT, 1001 Brickell Holdings
and 1001 Brickell Owner.
“1001 Brickell Holdings” shall have the meaning set forth in the recitals.
“1001 Brickell Holdings Interests” shall have the meaning set forth in Section 14(b).
“1001 Brickell Land” shall mean that certain plot, piece, and parcel of land located in the
County of Miami-Dade, State of Florida, described in Schedule 1 attached hereto and made a
part hereof, which land is located at 1001 Brickell Bay Drive, Miami, Florida, together with all
easements, rights of way, privileges, appurtenances, encumbrances, and other rights, if any,
pertaining, benefitting or appurtenant thereto.
“1001 Brickell Owner” shall have the meaning set forth in the recitals.
“1001 Brickell Owner Interests” shall have the meaning set forth in Section 14(b).
“1001 Brickell Property” shall mean, collectively, (i) the 1001 Brickell Land and the
Improvements located thereon (collectively, the “1001 Brickell Real Property”), (ii) Personal
Property located in or on the 1001 Brickell Real Property (the “1001 Brickell Personal
Property”), (iii) all Permits issued for or with respect to the 1001 Brickell Real Property or 1001
Brickell Personal Property, (iv) all Space Leases, Non-Terminable Service Contracts and Books
and Records relating to the 1001 Brickell Real Property (or any portion thereof) and (v) all of
1001 Brickell Owner’s right, title and interest in and to all Intangible Personal Property and all
Intangible Personal Property related to the ownership, use or operation of the 1001 Brickell Real
Property and/or the 1001 Brickell Personal Property in 1001 Brickell Owner’s or 1001 Brickell
Seller’s possession or control.
“1001 Brickell Seller” shall have the meaning set forth in the introductory paragraph
hereof.
“1001 Brickell Seller Closing Documents” shall have the meaning set forth in Section
9(a).
“Access Agreement” shall have the meaning set forth in Section 4(b).
“Additional Extension Option” shall have the meaning set forth in Section 6(d).
“Affiliate” shall mean, with respect to any Person, any corporation, limited liability
company, partnership, trust or other entity Controlling, Controlled by or under common Control
with the Person in question.
3
“Agreement” shall have the meaning set forth in the introductory paragraph hereof.
“Applicable Month” shall have the meaning set forth in Section 10(m).
“Applicable Quarter” shall have the meaning set forth in Section 10(m).
“Assignment and Assumption of Member Interests” shall mean the Assignment and
Assumption of Member Interests, in the form attached hereto as Exhibit A and made a part
hereof, executed by Yacht Club Seller and assigning all of the Yacht Club Interests to Buyer.
“Assignment and Acceptance of Stock” shall mean the Assignment and Acceptance of
Common Stock, in the form attached hereto as Exhibit A-1 and made a part hereof, executed by
1001 Brickell Seller and assigning all of the REIT Interests to Buyer.
“Balance Sheet Date” shall have the meaning set forth in Section 14(b) hereof.
“Bank Accounts” shall mean all bank accounts, reserves, escrows, safe deposits, lock
boxes or other funds or deposits in the name of Owner or Seller or any of their respective
Affiliates (or held for the benefit of Owner and/or Seller) that are to remain in place after the
Closing.
“Books and Records” shall mean, collectively, electronic and/or written copies of all
books, records and accounts relating to the Property and its operation and its income, expenses
and assets for the period of Owner’s ownership of the Property, including all share transfer
books, minute books and other corporate records of each of the 1001 Brickell Companies and
Yacht Club Owner, as the case may be, and any computer files of Seller; provided, however, the
following shall not be considered “Books and Records” (and shall not be provided or conveyed
to Buyer): (1) items that are proprietary to Seller or any of Seller’s Affiliates; (2) internal
memoranda regarding the sale, financing and/or valuation of the Property and (3) attorney and
accountant work product, and work product prepared by or for Seller or any of its Affiliates, that
is confidential in nature.
“Broker” shall mean CBRE Inc.
“Brokerage Commission” shall have the meaning set forth in Section 19 hereof.
“Business Day” shall mean any day other than a Saturday, Sunday or federal or legal
holiday on which the banks are authorized to close in any of the State of New York or the State
of Florida.
“Buyer” shall have the meaning set forth in the introductory paragraph hereof.
“Buyer Control Parties” shall mean [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxx].
“Buyer Exculpated Parties” shall mean, collectively, any director, officer, employee,
shareholder, direct or indirect member, manager, direct and indirect owner or representative,
Affiliate, partner, parent, subsidiary, lender, legal counsel and/or agent of Buyer.
4
“Buyer Indemnitees” shall mean Buyer, Buyer Exculpated Parties and, from and after the
Closing, the Subsidiaries, and each of their respective shareholders, members, partners, trustees,
beneficiaries, directors, officers and employees, and the successors, permitted assigns, legal
representatives, heirs and devisees of each of the foregoing.
“Buyer Knowledge Party” shall mean each of David Weitz and Erik Rutter; provided,
however, in no event shall the foregoing or any usage of this defined term impose any personal
liability on the aforementioned individual(s).
“Buyer’s Representatives” shall mean, collectively, (i) Buyer’s and its attorneys,
consultants, accountants, architects, engineers, contractors, agents, representatives and other
qualified professionals, (ii) any actual or prospective lender of or investor, directly or indirectly,
in Buyer, and (iii) any consultant, accountant, architect, engineer, agent, representative and other
qualified professional of any actual or prospective lender of or investor, directly or indirectly, in
Buyer.
“Buyer’s Termination Notice” shall have the meaning set forth in Section 4(a).
“Cash” shall mean all cash on hand or on deposit in any bank, operating account or other
account or reserve maintained by or on behalf of Owner, together with any and all credit card
charges, checks and other instruments which have been submitted for payment as of the Closing,
including, without limitation, any capital or other reserves maintained by or on behalf of Owner.
“Close Year” shall have the meaning set forth in Section 18(a).
“Closing” shall have the meaning set forth in Section 6(a) hereof.
“Closing Date” shall mean the date upon which the Closing shall actually occur.
“Closing Documents” shall mean, collectively, the 1001 Brickell Seller Closing
Documents, the 1001 Brickell Buyer Closing Documents, the Yacht Club Seller Closing
Documents, and the Yacht Club Buyer Closing Documents.
“Closing Payment” shall mean the balance of the Purchase Price after taking into account
the Deposit, as adjusted for the various apportionments, pro-rations, credits and other
adjustments as set forth in this Agreement (including pursuant to Section 7 hereof).
“Code” shall mean the United States Internal Revenue Code of 1986, as amended, and
the final and temporary Treasury Regulations promulgated and not withdrawn or modified
thereunder.
“Commitment” shall mean, collectively, one or more commitment(s) for an owner’s title
insurance policy with respect to the Real Property issued by the Title Company.
“Confidential Information” shall have the meaning set forth in Section 33(a) hereof.
“Control” shall mean, with respect to any Person, majority ownership of capital and
profits and the power (either individually or together with others) to direct or cause the direction
of the
5
management and policies of such Person, directly or indirectly, whether through ownership of
voting securities, membership or partnership interests, by contract or otherwise, which power
may be subject to the right of a third-party to approve so-called “major decisions” such as, by
way of example and not as a limitation of any other consent rights, consent to a sale or
refinancing and Control shall not be deemed to exist solely as a result of a Person having such
“major decision” approval or veto rights or having rights to remove a general partner or
managing member in the case of a bad act or material default (it being agreed that the actual
removal of such general partner or managing member shall constitute Control by the Person
which then becomes the replacement general partner or managing member). “Controlled” and
“Controlling” shall have correlative meanings.
“Cutoff Time” shall have the meaning set forth in Section 7(b) hereof.
“Damages Threshold” shall mean [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxx].
“Data Room” shall have the meaning set forth in Section 4(a).
“Deposit” shall mean the Initial Deposit, by itself and together with (i) the First
Extension Deposit as and when the First Extension Deposit has been deposited with Escrow
Agent, (ii) the Second Extension Deposit as and when the Second Extension Deposit has been
deposited with Escrow Agent, and (iii) all interest earned on the Initial Deposit, the First
Extension Deposit and the Second Extension Deposit.
“Effective Date” shall have the meaning set forth in the introductory paragraph hereof.
“ERISA” shall have the meaning set forth in Section 14(a) hereof.
“Escrow Agent” shall mean the Title Company.
“Escrow Agent’s Wiring Instructions” shall mean Escrow Agent’s wiring instructions
attached hereto as Schedule 3.
“Existing Contracts” shall have the meaning set forth in Section 14(b).
“Existing Service Contracts” shall have the meaning set forth in Section 14(c) hereof.
“Existing Survey” shall mean, collectively, (i) with respect to the 1001 Brickell Land and
the Improvements thereon, that certain survey prepared by Schwebke –Shiskin & Associates,
Inc., dated May 11, 1982 and last revised March 29, 2019 and (ii) with respect to the Yacht Club
Land and the Improvements thereon, that certain ALTA/ACSM Land Title Survey entitled
“Boundary and Topographic Survey” and “Mean High Water Line Survey”, Yacht Club at
Brickell – 1111 Brickell Bay Drive, prepared by Fortin, Leavy, Skiles, Inc., dated December 3,
2015 (Job No. 151531).
“Financial Statements” shall have the meaning set forth in Section 14(b) hereof.
“First Extension Deposit” shall have the meaning set forth in Section 6(b) hereof.
6
“First Extension Option” shall have the meaning set forth in Section 6(b).
“First Extension Notice” shall have the meaning set forth in Section 6(b).
“Fundamental Representations” shall have the meaning set forth in Section 16(a).
“GAAP” shall have the meaning set forth in Section 14(b).
“Governmental Authority” shall mean any federal, state, county, municipal or other
government or any governmental or quasi-governmental agency, department, commission,
board, bureau, officer or instrumentality, foreign or domestic, or any of them.
“Hypothetical Short Taxable Year” shall have the meaning set forth in Section 9(a)(xxii)
hereof.
“Imposition” shall have the meaning set forth in Section 7(c) hereof.
“Improvements” shall have the meaning set forth in Section 2(b) hereof.
“Indemnification Claim” shall have the meaning set forth in Section 16(e) hereof.
“Indemnification Loss” means, with respect to any Indemnitee, any actual (and not
contingent or speculative) liability, damage, loss, cost or expense, including, without limitation,
reasonable attorneys’ fees and expenses and court costs, incurred by such Indemnitee as a result
of the act, omission or occurrence in question, and shall not include any consequential, special or
punitive damages.
“Indemnification Notice” shall have the meaning set forth in Section 16(e).
“Indemnitee” shall have the meaning set forth in Section 16(e) hereof.
“Indemnitor” shall have the meaning set forth in Section 16(e) hereof.
“Initial Deposit” shall mean Thirty-Eight Million and No/100 Dollars ($38,000,000.00).
“Initial Title Objection Deadline” shall have the meaning set forth in Section 5(a).
“Intangible Personal Property” shall mean all of Owner’s right, title and interest in and to
all intangible personal property related to the ownership, use or operation of the Real Property
and/or the Personal Property in Owner’s or Seller’s possession or control, including, without
limitation (i) any and all guaranties, warranties and indemnities (including, without limitation,
any general contractor warranties), (ii) zoning and development rights (including, without
limitation, air rights) and entitlements, (iii) to the extent in Owner’s or Seller’s possession, any
drawings, plans, specifications, studies, reports, building permits, surveys, technical descriptions
and certificates of occupancy relating to the Real Property or the Personal Property, (iv)
advertising materials, email addresses, social media accounts and telephone exchange numbers
identified with the Real Property, if any, and (v) other transferable intangible property,
miscellaneous rights,
7
benefits or privileges of any kind or character with respect to the Property, including all logos,
trade names, trademarks, copyrights, websites and internet domain names, but specifically
excluding any intangible personal property owned by any Tenants.
“Interests” shall mean the REIT Interests and/or the Yacht Club Interests, as the context
may require.
“IRS” shall mean the Internal Revenue Service.
“Land” shall have the meaning set forth in Section 2(a) hereof.
“Leasing Costs” shall mean, with respect to a particular Space Lease, all capital costs,
expenses incurred for capital improvements, equipment, painting, decorating, partitioning and
other items to satisfy the construction obligations of the landlord under such Space Lease
(including any expenses incurred for architectural or engineering services in respect of the
foregoing), “tenant allowances” in lieu of or as reimbursements for the foregoing items, free rent,
rent abatements or rent concessions (including, base rent and any additional rent such as
operating expenses, taxes, insurance and any other amounts for which the tenant would be
responsible under such Space Lease, but for such abatement or concession), leasing
commissions, brokerage commissions, legal, design and other professional fees and costs, in
each case, to the extent the landlord is responsible for the payment of such cost or expense under
the relevant Space Lease or any other agreement relating to such Space Lease.
“License and Access Agreements” shall mean, collectively, all access agreements and
similar licenses, occupancy and use agreements in effect as of the Effective Date or hereafter
entered into in accordance with this Agreement (other than Space Leases), granting one or more
Persons the right to enter, access, use or otherwise occupy any portion of the Real Property,
whether or not on a temporary, continuous or intermittent basis and all amendments,
modifications assignments and guaranties relating thereto. For purposes of this definition, the
License and Access Agreements shall include the agreements listed on Schedule 14 attached
hereto as well as any License and Access Agreements set forth on the Rent Roll.
“Major Loss or Damage” shall have the meaning set forth in Section 12(d) hereof.
“Maximum Fundamental/Tax Rep Liability Amount” shall have the meaning set forth in
Section 16(d).
“Maximum Property Rep Liability Amount” shall mean [xxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx].
“Monetary Encumbrance” shall mean each of the following: (i) an encumbrance to title
of the Property or any portion thereof that is a mortgage, deed of trust, security agreement,
financing statement or other lien or encumbrance which secure a debt caused or created by
Owner or its Affiliates; (ii) a judgment lien, mechanics’ or material men’s lien or other monetary
lien that is filed against the Property or any portion thereof which may be cured or removed by
the payment of money; and (iii) any municipal code violation (which violation results in a
monetary fine)
8
against Seller, a Subsidiary, the Property or any portion thereof which, in each case, may be
cured by the payment of a quantifiable sum of money to the applicable Governmental Authority.
“Must-Cure Item” shall mean each of the following: (i) any Monetary Encumbrance; (ii)
any Voluntary Lien; (iii) any tax or assessment suffered or incurred or otherwise affecting the
Property or any portion thereof that is due and payable at or before Closing, subject to the
prorations provisions contained in this Agreement; (iv) any lis pendens filed against the Property
or any portion thereof; and (v) any notice(s) of commencement encumbering the Property,
including, without limitation, the (a) that certain notice of commencement recorded October 13,
2023 in O.R. Book 33923, Page 343 in the Public Records of Miami-Dade County, Florida, (b)
that certain notice of commencement recorded April 12, 2024 in O.R. Book 34177, Page 1863 in
the Public Records of Miami-Dade County, Florida, (c) that certain notice of commencement
recorded April 12, 2024 in O.R. Book 34178, Page 2257 in the Public Records of Miami-Dade
County, Florida, (d) that certain notice of commencement recorded June 14, 2024 in O.R. Book
34273, Page 2681 in the Public Records of Miami-Dade County, Florida, (e) that certain notice
of commencement recorded April 30, 2024 in O.R. Book 34202, Page 3029 in the Public
Records of Miami-Dade County, Florida, and (f) that certain notice of commencement recorded
October 18, 2024 in O.R. Book 34451, Page 4032 in the Public Records of Miami-Dade County,
Florida.
“Net Capital Gain” shall have the meaning set forth in Section 18(a)(v).
“Non-Terminable Service Contracts” shall have the meaning set forth in Section 4(f)
hereof.
“Organizational Documents” means, with respect to any Person (other than a natural
person) as applicable, any certificates or articles of incorporation, formation, organization and
designation, any limited liability company, operating, voting, stockholder and partnership
agreements, by-laws, any profit participation or similar agreements, any stock certificates,
membership interest certificates or other certificates of ownership and any equivalent documents,
instruments, side letters and agreements relating to the organization or governance of such
Person, in each case, as assigned, amended, amended and restated, modified or supplemented.
“Other Property Rights” shall have the meaning set forth in Section 2(c).
“Owner” shall mean (i) with respect to the 1001 Brickell Property, 1001 Brickell Owner
and (ii) with respect to the Yacht Club Property, Yacht Club Owner, as the context shall require.
“Permits” shall have the meaning set forth in Section 2(c) hereof.
“Permitted Exceptions” shall have the meaning set forth in Section 5(e) hereof.
“Person” shall mean an individual, corporation, partnership, joint venture, trust, trustee,
limited liability company, unincorporated organization, real estate investment trust or any other
form of entity.
“Personal Property” shall have the meaning set forth in Section 2(c) hereof.
9
“Post-Closing Confidential Information” shall have the meaning set forth in Section
33(b).
“Post-Closing Tax Period” shall mean any taxable period beginning on or after the
Closing Date.
“Post-Effective Date Service Contracts” shall have the meaning set forth in Section 4(f).
“Pre-Closing Tax Period” shall mean any taxable period ending on or prior to the Closing
Date and the portion of any Straddle Period ending on (and including) the Closing Date.
“Preferred Proxy Holder” shall have the meaning set forth in Section 14(a).
“Preferred Shares Proxy” shall have the meaning set forth in Section 14(a).
“Preferred Stock” means the preferred stock in the REIT.
“Property” means one or both of the 1001 Brickell Property and/or the Yacht Club
Property, as the context shall require.
“Property Investigation” shall have the meaning set forth in Section 4(a) hereof.
“Property Representations” shall have the meaning set forth in Section 16(a).
“Purchase Price” shall have the meaning set forth in Section 3(a) hereof.
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“Real Estate Investment Trust” shall mean a real estate investment trust within the
meaning of Sections 856 through 859 of the Code.
“Real Property” shall have the meaning set forth in Section 2(b) hereof.
“Recertification Report” shall have the meaning set forth in Section 4(g).
“Redevelopment Activities” shall have the meaning set forth in Section 4(e).
“REIT” shall have the meaning set forth in the recitals.
“REIT Interests” shall have the meaning set forth in the recitals.
“REIT Qualification Period” shall have the meaning set forth in Section 18(a) hereof.
“REIT Qualified Buyer” shall mean a Person that, as the sole holder of the REIT
Interests, would enable the REIT not to be “closely held” within the meaning of Section 856(a)
(6) and (h) of the Code (i.e., not more than 50% in value of the REIT’s outstanding shares would
be owned, directly or indirectly (within the meaning of Section 544 of the Code, as modified by
Section 856(h)(1)(B) of the Code), by five or fewer “individuals” as defined in Section 542(a)(2)
of the Code, as modified by Section 856(h)(1)(B) of the Code).
“REIT Subsidiaries” shall mean 1001 Brickell Holdings and 1001 Brickell Owner.
“REIT Tax Representations” shall have the meaning set forth in Section 14(d).
“Rent Roll” shall have the meaning set forth in Section 14(c) hereof.
“Rents” means all base or fixed rent, together with (to the extent applicable) all common
area maintenance expenses, taxes (or escalations thereof), additional rents, operating expense
reimbursements, “pass-through” charges, escalations, percentage rents, insurance premiums and
all other sums required to be paid by Tenants under their respective Space Leases.
“Representation Change Materiality Threshold” shall have the meaning set forth in
Section 8(a).
“Review Period” shall mean the period commencing on the Effective Date and expiring
at 5:00 p.m. (New York City time) on December 27, 2024.
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11
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“Sales Tax” shall have the meaning set forth in Section 10(h).
“Sales Tax Certificate” shall have the meaning set forth in Section 10(h).
“Sales Tax Reports” shall have the meaning set forth in Section 10(h).
“Scheduled Closing Date” shall mean March 31, 2025, as such date may be extended
pursuant to the terms hereof.
“Second Extension Deposit” shall have the meaning set forth in Section 6(c) hereof.
“Second Extension Notice” shall have the meaning set forth in Section 6(c).
“Second Extension Option” shall have the meaning set forth in Section 6(c).
“Security Deposit Credit Election” shall have the meaning set forth in Section 7(g).
“Seller” shall mean (i) with respect to the sale of the REIT Interests, the 1001 Brickell
Seller, and (ii) with respect to the sale of the Yacht Club Interests, the Yacht Club Seller, as the
case may be.
“Seller Exculpated Parties” shall mean, collectively, any director, officer, employee,
shareholder, direct or indirect member, manager, direct and indirect owner or representative,
Affiliate, partner, parent, subsidiary, lender, legal counsel and/or agent of Seller.
“Seller Financing Option” shall have the meaning set forth in Section 39.
“Seller Indemnitees” means Seller and its Affiliates (but expressly excluding the 1001
Brickell Companies and Yacht Club Owner from and after the Closing), and each of their
respective shareholders, members, partners, trustees, beneficiaries, directors, officers and
employees, and the successors, permitted assigns, legal representatives, heirs and devisees of
each of the foregoing.
“Seller Liabilities” shall mean, all liabilities for (i) the payment of any amounts due and
payable or accrued but not yet due or payable prior to the Closing, under the Space Leases in
effect on the Closing Date, Service Contracts (including without limitation Existing Contracts)
and Permits, each subject to adjustment pursuant to Section 7 hereof and except to the extent
Buyer receives a credit for any such liabilities at the Closing, (ii) the payment of all Taxes due
and payable or accrued but not yet due or payable prior to the Closing Date by any of the 1001
Brickell Companies or Yacht Club Owner, each subject to adjustment pursuant to Section 7
hereof and except to the extent Buyer receives a credit for any such Taxes at the Closing, (iii)
any claim for personal injury or property damage to a Person (other than injury or damage to
Buyer or any Buyer Exculpated Party) which injury or damage occurred prior to the Closing
Date and is based on any event which occurred at, on or about the Property or with respect to the
ownership, lease, operation
12
or use of the Property, during the period of Owner’s ownership of the Property (unless to the
extent caused by Buyer or any Buyer Exculpated Party), including, without limitation, any
litigation disclosed on Schedule 8, (iv) all amounts due and payable by Seller in connection with
this Agreement (including, without limitation, all amounts due and payable under Section 7
hereof, as subject to proration or adjustment as may be expressly set forth in such Section 7, and
all amounts due and payable under Section 18), (v) all amounts (including, without limitation,
Taxes, fines, penalties, interest and attorney’s fees and expenses) due as a result of, arising under
or otherwise accruing in connection with those certain real property Tax disputes disclosed on
Schedule 15 attached hereto and (vi) any claim for sums owed under any construction contract
for renovation work at the Property that was performed prior to the Closing Date, subject to
adjustment pursuant to Section 7 hereof if such renovation work is a Leasing Cost and except to
the extent Buyer receives a credit for any such sums.
“Seller Prepared Return” shall have the meaning set forth in Section 18(b)(i) hereof.
“Seller/Representative Parties” shall have the meaning set forth in Section 33(b).
“Seller’s Knowledge” shall mean and refer solely to facts within the actual knowledge,
without any obligation of due inquiry or investigation (other than the duty to inquire with the
property manager(s) of the Property and asset manager(s) of the Interests), of Matthew Konrad,
Tom Marchant and Angus Yau (collectively, the “Seller Knowledge Parties”) and shall not be
construed to refer to the knowledge of any other employee, officer, director, member, manager,
direct or indirect owner, Affiliate or agent of Seller; provided, however, in no event shall the
foregoing impose any personal liability on the aforementioned individual(s). Seller represents
the Seller Knowledge Parties are the individuals at Seller with the most knowledge of the matters
covering Seller’s representations and warranties set forth in this Agreement.
“Service Contract Termination Notice” shall have the meaning set forth in Section 4(f)
hereof.
“Service Contracts” shall mean all contracts, agreements or other documents binding on
or entered into by a 1001 Brickell Company and/or Yacht Club Owner (excluding Space Leases),
including, without limitation, contracts for the repair, maintenance, care, protection, and/or
operation of the Property, including, without limitation, all service contracts, equipment leases,
concession agreements, referral agreements, brokerage agreements, leasing agreements and
property management agreements, together with all amendments, modifications and assignments
relating thereto.
“Settlement Statement” shall mean a closing settlement statement apportioning revenues,
expenses and any costs as required by this Agreement.
“SNDAs” shall have the meaning set forth in Section 10(g).
“Space Leases” shall mean, collectively, all leases and other occupancy agreements
(other than License and Access Agreements) relating to the Real Property (or any portion
thereof), including, without limitation, (i) all leases, licenses and similar agreements for storage
space and (ii) all leases and other occupancy agreements now existing or hereafter entered into
by Owner in
13
accordance with this Agreement and all amendments, modifications, assignments and guaranties
relating thereto.
“Straddle Period” shall have the meaning set forth in Section 18(b)(iv) hereof.
“Straddle Period Return” shall have the meaning set forth in Section 18(b)(ii) hereof.
“Subsidiaries” shall mean, collectively, the REIT, 1001 Brickell Holdings, 1001 Brickell
Owner and Yacht Club Owner.
“Survey” shall have the meaning set forth in Section 5(a).
“Survival Period” shall have the meaning set forth in Section 16(a) hereof.
“Tax” or “Taxes” mean (i) any United States federal, state, local or foreign income, gross
receipts, license, payroll, employment-related, excise, goods and services, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real property, personal property,
sales, use, ad valorem, escheat, capital gains, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax, levy or assessment by a Governmental Authority of
any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or
not; and (ii) any liability for or in respect of any amounts described in clause (i) as a transferee or
successor, by contract, or as a result of having filed any Tax Return on a combined, consolidated,
unitary, affiliated or similar basis with any other Person.
“Tax Contest” shall mean any Tax audit, information request, examination contest,
voluntary disclosures or agreements or other similar proceeding, or any related correspondence
or communication with a taxing authority, with respect to Taxes or Tax Returns of the REIT, any
REIT Subsidiary or Yacht Club Owner.
“Tax Dispute Accountant” shall mean a nationally recognized independent accounting firm
selected by Seller and reasonably acceptable to Buyer.
“Tax Representations” shall have the meaning set forth in Section 14(d).
“Tax Return” means any return, declaration, report, claim for refund, or information
return or statement related to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
“Tenant” means a tenant under a Space Lease.
“Tenant Audit” shall have the meaning set forth in Section 7(d) hereof.
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“Tenant Notice Letter” shall have the meaning set forth in Section 9(a) hereof.
“Tenants” shall mean the tenants under the Space Leases.
“Terminated Service Contract” shall have the meaning set forth in Section 4(f) hereof.
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“Third-Party Claim” means, (i) with respect to any of the Seller Indemnitees, any claim,
demand, lawsuit, arbitration or other legal or administrative action or proceeding against such
Seller Indemnitee by any Person which is not Buyer or an Affiliate of Buyer, and (ii) with
respect to any Buyer Indemnitee, any claim, demand, lawsuit, arbitration or other legal or
administrative action or proceeding against such Buyer Indemnitee by any Person which is not
Seller or an Affiliate of Seller.
“Title Affidavit” shall have the meaning set forth in Section 9(a) hereof.
“Title Company” shall mean Commonwealth Land Title Insurance Company or such
other national title insurance company selected by Buyer.
“Title Evidence” shall have the meaning set forth in Section 5(a).
“Title Objection Statement” shall have the meaning set forth in Section 5(a) hereof.
“Title Objections” shall have the meaning set forth in Section 5(a) hereof.
“Title Policy” shall have the meaning set forth in Section 5 hereof.
“Transfer Tax” shall mean any transfer, documentary, sales, use, stamp, registration or
other such Taxes (including any applicable state and local grantor or grantee Taxes) payable in
connection with the transactions contemplated in this Agreement.
“TRS” means Brickell Bay Tower, Inc., a Delaware corporation.
“Trued-Up Additional Rents” shall have the meaning set forth in Section 7(d) hereof.
“Updated Survey” shall have the meaning set forth in Section 5(a).
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“Voluntary Lien” shall mean any lien or encumbrance created by, or arising out of the
acts or omissions of, Seller or a Subsidiary on or against the Property or any portion thereof.
“Yacht Club Buyer Closing Documents” shall have the meaning set forth in Section 9(d).
“Yacht Club Interests” shall have the meaning set forth in the recitals.
“Yacht Club Land” shall mean that certain plot, piece, and parcel of land located in the
County of Miami-Dade, State of Florida, described in Schedule 2 attached hereto and made a
part hereof, which land is located at 1111 Brickell Bay Drive, Miami, Florida, together with all
easements, rights of way, privileges, appurtenances, encumbrances, and other rights, if any,
pertaining, benefitting or appurtenant thereto.
“Yacht Club Owner” shall have the meaning set forth in the recitals.
“Yacht Club Property” shall mean, collectively, (i) the Yacht Club Land and the
Improvements located thereon (collectively, the “Yacht Club Real Property”), (ii) Personal
Property located in or on the Yacht Club Real Property (the “Yacht Club Personal Property”),
(iii) all Permits issued for or with respect to the Yacht Club Real Property or Yacht Club
Personal Property, (iv) all Space Leases, Non-Terminable Service Contracts and Books and
Records relating to the Yacht Club Real Property (or any portion thereof) and (v) all of Yacht
Club Owner’s right, title and interest in and to all Intangible Personal Property and all Intangible
Personal
16
Property related to the ownership, use or operation of the Yacht Club Real Property and/or the
Yacht Club Personal Property in Yacht Club Owner’s or Yacht Club Seller’s possession or
control.
“Yacht Club Seller” shall have the meaning set forth in the introductory paragraph
hereof.
“Yacht Club Seller Closing Documents” shall have the meaning set forth in Section 9(c).
“Yacht Club Tax Representations” shall have the meaning set forth in Section 14(d).
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SECTION 2. AGREEMENT TO SELL AND PURCHASE
Seller agrees to sell, assign and transfer to Buyer, and Buyer agrees to purchase and
accept from Seller, upon the terms and conditions set forth in this Agreement, all of the Interests,
free and clear of any liens, claims or encumbrances. The assets to be indirectly acquired by
Buyer upon the acquisition of the Interests shall include the following:
(a)
Land. Fee simple title to the 1001 Brickell Land and the Yacht Club Land
(collectively, the “Land”).
(b)
Improvements. All buildings and improvements located on the Land, together
with all of Owner’s right, title and interest in and to any systems, fixtures and equipment now
attached or appurtenant to the Land (collectively, the “Improvements” and, together with the
Land and all of Owner’s right, title and interest in and to all parking areas, open or proposed
streets and lands underlying any adjacent streets or roads, alleys, strips or gores of land adjacent
to the Land, collectively, the “Real Property”).
(c)
Associated Property and Interests. All of the following (the “Other Property
Rights”):
(i)
all tangible personal property and fixtures owned by Owner and/or Owner’s
Affiliates, located in or on the Real Property, including all of Owner’s and/or Owner’s Affiliates’
interests in (A) all furniture, equipment, signs and related personal property, (B) all heating,
lighting, plumbing, drainage, electrical, air conditioning, and other mechanical fixtures and
equipment and systems, and (C) all electrical equipment and systems; but excluding in any case
personal property owned by Tenants, utility companies or as otherwise excluded by this
Agreement (all such tangible personal property and fixtures, after giving effect to the specifically
excluded categories, are referred to collectively as the “Personal Property”);
(ii)
Owner’s right, title and interest in and to all licenses, permits, authorizations
and approvals issued for or with respect to the Real Property or Personal Property by any
Governmental Authority relating to the use, occupancy, maintenance or operation of the Real
Property, including all easements, rights of way, covenants, reciprocal easement agreements,
licenses, permits and approvals (all of the foregoing are collectively referred to as the “Permits”);
(iii) Owner’s right, title and interest in and to the Space Leases and the Non-
Terminable Service Contracts;
17
(iv) all Books and Records; provided, that, Seller may retain copies of the Books
and Records; and
(v)
all Intangible Personal Property.
Notwithstanding the foregoing, Seller shall cause Owner to withdraw all Cash or pay
such Cash to Seller or an affiliate at or prior to Closing and close all Bank Accounts in
accordance with Section 7(g) hereof (provided that the foregoing shall not apply to cash security
deposits held with respect to Space Leases, which shall be handled in accordance with Section
7(g)(ii) hereof), such that the Bank Accounts and Cash (other than cash security deposits held
with respect to Space Leases) will not be held by the 1001 Brickell Companies or Yacht Club
Owner at Closing and will therefore not be part of the “Property.”
SECTION 3. PURCHASE PRICE; DEPOSIT
(a)
Purchase Price. In consideration of the sale by Seller to Buyer of the Interests,
Buyer shall pay to Seller the sum of FIVE HUNDRED TWENTY MILLION AND NO/100
DOLLARS ($520,000,000.00) (the “Purchase Price”). The Purchase Price, subject to all
apportionments, credits, prorations, increases and other adjustments as provided in this
Agreement (including, without limitation, pursuant to Section 7 and Section 39 hereof), shall be
payable as follows:
(i)
the Initial Deposit shall be deposited by Buyer in escrow with Escrow Agent
no later than the earlier of (A) three (3) Business Days after the Effective Date and (B) the
expiration of the Review Period, by wire transfer of immediately available federal funds and to
an account designed by Escrow Agent. If Buyer does not terminate this Agreement prior to the
expiration of the Review Period in accordance with Section 4(a) hereof, then the Deposit shall
become nonrefundable to Buyer except as otherwise expressly set forth in this Agreement.
(ii)
The Closing Payment shall be paid no later than the Closing Date by wire
transfer of immediately available federal funds to Escrow Agent pursuant to wiring instructions
to be provided by Escrow Agent to Buyer, and such Closing Payment shall be paid by Escrow
Agent to Seller pursuant to the terms hereof.
(iii) At Closing, Seller shall credit to Buyer against the Purchase Price an amount
equal to the cost to redeem the Preferred Stock as of one (1) Business Day after the expiration of
the REIT Qualification Period, together with any redemption premium and any accrued but
unpaid dividends thereon.
(b)
Deposit. The Deposit shall be placed by the Escrow Agent in an interest bearing
account and shall be held in accordance with the escrow terms set forth on Schedule 4.
(c)
Allocation of Purchase Price. Buyer and Seller agree that (1) if Buyer does not
timely exercise the Seller Financing Option, then (i) a portion of the Purchase Price, in the
amount of [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx], shall be allocated
to the sale and purchase of the Yacht Club Interests and (ii) a portion of the Purchase Price, in
the amount of [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx], shall be
allocated to the
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sale and purchase of the REIT Interests and (2) if Buyer timely exercises the Seller Financing
Option and the Closing occurs with the simultaneous consummation of the Seller Financing, then
(i)
a
portion
of
the
Purchase
Price,
in
the
amount
of
[xxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx], shall be allocated to the sale and purchase of the
Yacht Club Interests and (ii) a portion of the Purchase Price, in the amount of
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx], shall be allocated to the sale
and purchase of the REIT Interests. Seller and Buyer agree that no portion of the Purchase Price
is allocated to the Personal Property or to any of the Other Property Rights. Buyer and Seller
shall report and file all federal, state and local tax returns and related tax documents, in a manner
consistent with the allocations set forth in this Section 3(c), and neither Buyer nor Seller shall
take any position inconsistent with such agreed upon allocation of the Purchase Price in any tax
return or otherwise, except as otherwise required pursuant to a final “determination” within the
meaning of Section 1313(a) of the Code.
SECTION 4. PROPERTY INVESTIGATION
(a)
Termination Right. Seller has made a data site accessible through URL address
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxx] (the “Data Room”) available to Buyer. Buyer shall have the Review Period (and,
subject to the provisions below and in the Access Agreement, thereafter until the Closing Date if
Buyer does not elect to terminate this Agreement) to conduct, at Buyer’s sole cost and expense,
Buyer’s inspection and review of the physical condition of the Property and all other
examinations, evaluations, analyses, appraisals, inspections, reviews of files and documents,
testing, studies, investigations and other reasonable matters relating to the Property, the Interests,
1001 Brickell Companies and Yacht Club Owner, which Seller shall make available in the Data
Room (the “Property Investigation”), subject to the terms of the Access Agreement as
incorporated herein pursuant to Section 4(b) hereof. After the Review Period, Buyer shall have
the right (subject to the terms of the Access Agreement as incorporated herein pursuant to
Section 4(b) hereof) to access the Property to perform non-invasive visual inspections of the
Property upon not less than two (2) Business Days’ prior notice to Seller, provided that Buyer
shall use commercially reasonable efforts to minimize interference with the use, occupancy or
enjoyment rights of any Tenants of any portion of the Property and any such Tenant’s
employees, contractors, customers or guests. At any time before the expiration of the Review
Period, Buyer shall have the right, in its sole and absolute discretion, to terminate this
Agreement, for any reason whatsoever or for no reason, by giving written notice to Seller of
Buyer’s election to terminate this Agreement (“Buyer’s Termination Notice”), which Buyer’s
Termination Notice may be sent by email without the need for personal or overnight delivery. If
Buyer timely gives a Buyer’s Termination Notice, then Buyer shall receive a return of the
Deposit, this Agreement shall terminate and no party to this Agreement shall have any further
rights, duties, obligations or liabilities under this Agreement, except for those rights, duties,
obligations and liabilities that are expressly stated to survive the termination of this Agreement.
If Buyer fails to timely give Seller a Buyer’s Termination Notice as provided above, then (i)
Buyer shall no longer have any right to terminate this Agreement under this Section 4(a), and (ii)
except as otherwise expressly provided in this Agreement, the Deposit shall be non-refundable to
Buyer and Buyer and Seller shall be bound to consummate the transactions described in this
Agreement. For the avoidance of doubt, any termination of this Agreement by Buyer under this
Section 4(a) shall be a termination as to all of Seller’s and Buyer’s rights under this Agreement.
19
(b)
Access to Property. Seller and Buyer acknowledge that prior to the Effective
Date, Seller and [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx],
which is an Affiliate of Buyer entered into that certain Access and Due Diligence Agreement
dated as of [xxxxxxxx] 2024 (the “Access Agreement”). In connection with its Property
Investigation, Seller and Buyer shall comply with and be bound by the terms of Sections 1, 2, 4,
5 and 7 of the Access Agreement, which terms are hereby incorporated into this Agreement by
reference as if set forth in full, mutatis mutandis; provided, however that (i) all references to
“Seller” in the Access Agreement shall mean Seller hereunder and all references to “Purchaser”
in the Access Agreement shall mean Buyer hereunder, (ii) the Investigation Period (as defined in
the Access Agreement) shall mean the Review Period and shall end on the last day of the Review
Period (and continue thereafter until the Closing Date if Buyer does not elect to terminate this
Agreement pursuant to Section 4(a) hereof) , and (iii) if and to the extent that there are any
inconsistencies between any of the terms and provisions of the Access Agreement and any of the
terms and provisions contained in this Agreement, then the provisions of this Agreement shall
control.
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(h)
Survival. Buyer’s obligations under Sections 4(b) and 4(e) hereof shall survive
any termination of this Agreement. Seller’s obligations under Section 4(f) and 4(g) hereof shall
survive the Closing.
SECTION 5. TITLE AND TITLE INSURANCE
At the Closing, title to the Real Property shall be sufficient to enable the Title Company
to issue to Buyer one or more Owner’s Policy of Title Insurance (ALTA Form 2006) insuring
Owner’s fee title to the Property, in the amount of the Purchase Price subject only to the
Permitted Exceptions (the “Title Policy”).
(a)
Initial Title Objections. Buyer acknowledges that it has received, as of the
Effective Date: (i) the Commitment, (ii) copies of all of the exception documents referred to in
such Commitment and (iii) the Existing Survey. Buyer may, at its cost and expense, obtain (x)
such new surveys or updates to the Existing Survey (“Updated Survey”) as Buyer deems
necessary or desirable (the Existing Survey and the Updated Survey are hereinafter referred to
collectively as the “Survey”), (y) searches for any municipal violations, open permits, tax liens
or other municipal liens or outstanding municipal fees affecting the Property and/or (z) UCC
searches relating to Seller and/or the Personal Property (collectively with the Commitment, the
“Title Evidence”). Buyer shall deliver to Seller a written statement (a “Title Objection
Statement”) of any defects in or objections to title to the Real Property, other than the Permitted
Exceptions, disclosed in the Commitment or the Survey (the “Title Objections”), no later than
five (5) Business Days prior to the end of the Review Period (the “Initial Title Objection
Deadline”). Buyer and Seller acknowledge and agree that the matters described on Exhibit S
attached hereto constitute the Title Objection Statement and that such Title Objection Statement
is deemed to have been timely delivered to Seller prior to the Initial Title Objection Deadline.
Any title exceptions, encumbrances, liens or other title or survey matters (other than Must-Cure
Items) disclosed in the Commitment or in the Survey received more than five (5) Business Days
prior to the Initial Title Objection Deadline and not specifically identified in a Title Objection
Statement delivered no later than the Initial Title Objection Deadline shall be deemed to be a
“Permitted Exception” for the Property and Buyer shall have irrevocably waived its right to raise
a Title Objection with respect to such matters.
(b)
Supplemental Title Objections. Notwithstanding anything to the contrary herein,
Buyer may raise additional Title Objections (other than Permitted Exceptions referred to in
Section 5(e) hereof and matters deemed Permitted Exceptions under Section 5(a) hereof or this
Section 5(b)) in accordance with this Section 5(b). If any update to the Title Evidence reflects
any additional title exceptions, encumbrances, liens or other title or survey matters first shown on
any such update, then Buyer shall have the right to send an additional Title Objection Statement
to Seller within ten (10) Business Days after Buyer receives any such update to the Title
Evidence objecting to such additional matters, and each item raised in such Title Objection
Statement shall be deemed to be Title Objections. Seller shall have five (5) Business Days from
receipt of any such Title Objection Statement(s) to respond thereto pursuant to Section 5(c)
hereof (and the Scheduled Closing Date shall be extended as necessary to afford Seller the full
five (5) Business Day time period as set forth in Section 5(c) below to respond). Notwithstanding
the foregoing, any additional or supplemental exceptions (other than Must-Cure Items) raised by
Title Company and not
22
specifically identified in an additional Title Objection Statement within such ten (10) Business
Day period shall also be deemed to be a Permitted Exception, and Buyer shall have irrevocably
waived its right to raise a Title Objection with respect to such matters.
(c)
Elections Regarding Title Objections. If Buyer shall timely deliver a Title
Objection Statement within the applicable time period referred to in Sections 5(a) or 5(b) hereof,
then Seller shall have the right, but not the obligation, to attempt to cure any Title Objections set
forth therein. Within five (5) Business Days after receipt of a Title Objection Statement, Seller
may notify Buyer in writing whether Seller elects to attempt to cure any such Title Objections. If
Seller fails to notify Buyer in writing on or before such period whether Seller elects to attempt to
remove, satisfy or cure any such Title Objections, or if such Title Objection is delivered to Seller
prior to the end of the Review Period and Seller fails to notify Buyer in writing whether Seller
elects to attempt to cure any such Title Objection by the date that is three (3) Business Days prior
to the expiration of the Review Period, then, in each case, Seller shall have been deemed to have
elected not to attempt to remove, satisfy or cure such Title Objections. If Seller elects to attempt
to cure any such Title Objections, then Seller shall have until the Scheduled Closing Date to
attempt to remove, satisfy or cure such Title Objections, and for this purpose Seller shall be
entitled to a reasonable adjournment of the Scheduled Closing Date, but in no event shall the
adjournment exceed thirty (30) days in the aggregate.
If Seller elects (or is deemed to elect) not to cure any Title Objection, or if Seller is
unable on or prior to the Scheduled Closing Date (including any such adjournment) to effect a
cure of any Title Objection that it has elected to attempt to cure, then Buyer shall elect, by
written notice to Seller given within five (5) Business Days after receipt of written notice from
Seller that Seller has elected (or is deemed to have elected) not to cure any such Title Objections
(or if such Title Objections are delivered to Seller prior to the end of the Review Period, then in
no event later than the end of the Review Period) or that Seller is unable to effect a cure of such
Title Objections, as the case may be, one of the following options:
(i)
to accept a transfer of the Interests with the Property subject to the Permitted
Exceptions and any Title Objection that Seller is unwilling or unable to cure, and without
reduction of the Purchase Price, in which case any such Title Objection shall be deemed to be a
“Permitted Exception”; or
(ii)
to terminate this Agreement in its entirety, in which case (y) Buyer shall
receive a return of the Deposit and (z) neither Buyer nor Seller shall have any further rights,
obligations or liabilities hereunder except to the extent that any obligation or liability set forth
herein expressly survives termination of this Agreement.
If Buyer shall fail to notify Seller in writing of Buyer’s election of the options in clauses
(i) or (ii) referred to above in this Section 5(c) within such three (3) Business Day period, then
Buyer shall be deemed to have elected clause (i) above.
Notwithstanding anything to the contrary contained herein: (A) Seller shall be required
to remove all Must-Cure Items prior to Closing (and in connection therewith Seller and Buyer
have agreed to cause Owner’s current mortgage lenders to assign at the Closing the existing
mortgages on the Real Property in accordance with Section 7(a) hereof) and Seller’s failure to
cure any
23
Must-Cure Items prior to Closing shall be a default under this Agreement; (B) Seller shall have
no affirmative obligation to cure any Title Objection that is not a Must-Cure Item (and Seller’s
failure to cure any Title Objection that is not a Must-Cure Item shall in no event constitute a
breach by Seller of its obligations under this Agreement); and (C) Buyer shall have no right to
raise any Permitted Exception as a Title Objection.
(d)
Right to Use Deposit and Closing Payment to Cure or Discharge Title Objections.
If on the Closing Date the Property continues to be encumbered by any other Title Objections
which Seller in its sole and absolute discretion has elected to cure, pay or discharge or any Must-
Cure Item , Seller may, in addition to any other methods available to it under this Agreement, use
any portion (or all) of the Deposit and the Closing Payment to satisfy the same, provided that
Seller shall simultaneously either deliver to Title Company and Buyer at the Closing instruments
in recordable form, sufficient to satisfy such Must-Cure Items and any other Title Objections of
record, together with the cost of recording or filing such instruments, or otherwise arrange with
Title Company for the issuance of the Title Policy free of any such Must-Cure Items and any
other Title Objections of record (and not merely affirmative title coverage over any such Must-
Cure Item(s) and/or Title Objection(s) of record, as applicable).
(e)
Permitted Exceptions. In addition to the matters deemed “Permitted Exceptions”
under Sections 5(a) or 5(b) hereof, the following shall also constitute “Permitted Exceptions”,
and, notwithstanding anything to the contrary contained herein, shall not be a Title Objection:
(i)
Subject to adjustment pursuant to Section 7(c) hereof, real estate taxes or
assessments or any installments thereof, which, although a lien on the Closing Date, are not yet
due and payable prior to the Closing Date;
(ii) the rights of possession of Tenants under Space Leases affecting the Property
and in effect as of the Effective Date, as tenants only without any purchase option(s) or right(s)
of first offer or refusal to purchase any portion of the Property;
(iii) any liens or encumbrances created on any portion of the Property by Buyer
or its agents or representatives;
(iv) the items set forth on Schedule 10 annexed hereto; and
(v)
state of facts shown on the Existing Survey, as the same may be updated by
Buyer prior to the Initial Title Objection Deadline.
SECTION 6. CLOSING
(a)
Closing. The closing of the transactions described in this Agreement (the
“Closing”) shall be through an escrow arrangement with Title Company no later than 5:00 p.m.
(New York City time) on the Scheduled Closing Date.
(b)
First Extension Option. Buyer shall have the right to extend the then Scheduled
Closing Date for any reason or no reason to a date that is no later than August 15, 2025 (the
“First Extension Option”) by delivering (i) written notice thereof (the “First Extension Notice”)
to Seller,
24
not less than thirty (30) days prior to the then applicable Scheduled Closing Date, setting forth
the new Scheduled Closing Date, which date shall be a Business Day that is not later than August
15, 2025, and (ii) to Escrow Agent, no later than one (1) Business Day following delivery of the
First Extension Notice, a one-time additional deposit in the amount of Five Million and No/100
Dollars ($5,000,000.00) (the “First Extension Deposit”). If the First Extension Notice is timely
given to Seller and the First Extension Deposit is timely delivered to Escrow Agent, then the date
set forth in the First Extension Notice shall be the new Scheduled Closing Date. If the First
Extension Notice and/or the First Extension Deposit are not timely delivered as aforesaid, the
First Extension Option and the Second Extension Option shall both be null and void and of no
force and effect. The First Extension Deposit shall be non-refundable to Buyer other than as
expressly set forth herein and shall be added to and be a part of the Deposit.
(c)
Second Extension Option. Provided that Buyer has timely exercised the First
Extension Option, Buyer shall have the right to extend the then Scheduled Closing Date for any
reason or no reason to a date that is no later than November 18, 2025 (the “Second Extension
Option”) by delivering (i) written notice thereof (the “Second Extension Notice”) to Seller not
less than thirty (30) days prior to the then applicable Scheduled Closing Date, setting forth the
new Scheduled Closing Date, which date shall be a Business Day that is not later than November
18, 2025, and (ii) to Escrow Agent, no later than one (1) Business Day following delivery of the
Second Extension Notice, a one-time additional deposit in the amount of Seven Million and
No/100 Dollars ($7,000,000.00) (the “Second Extension Deposit”). If the Second Extension
Notice is timely given to Seller and the Second Extension Deposit is timely delivered to Escrow
Agent, then the date set forth in the Second Extension Notice shall be the new Scheduled Closing
Date. If the Second Extension Notice and/or the Second Extension Deposit are not timely
delivered as aforesaid, the Second Extension Option shall be null and void and of no force and
effect. The Second Extension Deposit shall be non-refundable to Buyer other than as expressly
set forth herein and shall be added to and be a part of the Deposit.
(d)
Additional Extension Option. In addition to Buyer’s right to exercise each of the
First Extension Option and the Second Extension Option (subject to and in accordance with the
terms of this Section 6), each of Buyer and Seller shall have the right to extend the then
Scheduled Closing Date by up to two (2) Business Days (the “Additional Extension Option”) for
any reason or no reason and without the payment of any monetary amount, by providing written
notice to the other party of its exercise of its Additional Extension Option on or before the then
Scheduled Closing Date. For the avoidance of doubt, neither party’s exercise of the Additional
Extension Option shall nullify the other party’s right to exercise its Additional Extension Option.
SECTION 7. CLOSING COSTS AND ADJUSTMENTS
(a)
Closing Costs. Seller shall pay (i) the Brokerage Commission, (ii) fifty percent
(50%) of all escrow or closing charges of the Title Company, (iii) all recording fees for the
release of any liens on the Property, as required pursuant to the terms of this Agreement, and (iv)
all Transfer Taxes (if any) payable in connection with the transfer of the Interests to Buyer.
Buyer shall pay (i) the cost of the base premium for Buyer’s title insurance policy and all other
title costs (including, without limitation, any additional title premiums, costs or charges for
extended coverage or endorsements), (ii) the cost of any new or updated survey of the Property,
(iii) all costs
25
and expenses incurred by Buyer in connection with its Property Investigation, (iv) all costs and
expenses incurred by Buyer in connection with any financing obtained by Buyer (including the
cost of any lender title insurance policy), and (v) fifty percent (50%) of all escrow or closing
charges of the Title Company. Without limiting Section 32(c) herein, each party shall pay the
cost of its own counsel. Any other closing costs not specifically allocated in this Agreement
between Buyer and Seller shall be borne and paid in accordance with local custom. Seller agrees
to use commercially reasonable efforts (but without any obligation to pay any sums) to cause
Owner’s current mortgage lenders to assign at the Closing the existing mortgages on the Real
Property to one or more mortgage lenders determined by Buyer. If any such assignment occurs
at the Closing (or, in the alternative, if Buyer is obtaining a mortgage from Owner’s current
mortgage lenders and instead of any assignment of the existing mortgages on the Real Property
there is an amendment and restatement of such existing mortgage and/or an assumption of the
existing mortgage), then at the Closing Seller shall receive from Buyer an amount equal to one-
half of the documentary stamp tax savings and one-half of the intangible tax savings actually
realized by Buyer solely as a result of such assignment (i.e., one-half of the documentary stamp
tax and one-half of the intangible tax that Buyer would have otherwise had to pay at the Closing
if such assignment of the existing mortgage to Buyer’s new lender had not occurred). In
addition, at the Closing Buyer shall receive a credit against the Purchase Price in an amount
equal to one-half of the documentary stamp tax and other Transfer Tax savings realized by Seller
as a result of Buyer’s acquiring the Interests rather than the Property directly (i.e., one-half of the
documentary stamp tax and other Transfer Tax that Seller would have had to pay at the Closing
if Buyer had instead acquired fee simple title to the Property by deed).
(b)
Adjustments. Unless otherwise provided in this Agreement, adjustments between
Seller and Buyer shall be made as of 11:59 p.m. (the “Cutoff Time”) on the day immediately
prior to the Closing Date, with the income and expenses for the Property accrued on or prior to
the Cutoff Time being allocated to Seller and the income and expenses accruing after the Cutoff
Time being allocated to Buyer, all as set forth below. All of such adjustments and allocations
shall be made in immediately available funds at the Closing and shall be shown on the
Settlement Statement for such Closing as net increases or decreases to the Purchase Price to the
extent possible. The computation of the adjustments for the Settlement Statement shall be jointly
prepared by Buyer and Seller using actual calculations through the Cutoff Time and, where
necessary, estimated amounts.
(c)
Impositions. All real estate taxes, personal property taxes, or any other taxes and
special assessments (special or otherwise) of any nature upon the Property (collectively,
“Imposition”) levied, assessed or pending for the tax year in which the Closing occurs shall be
adjusted as of the Closing Date and, if no tax bills or assessment statements for such tax year are
available, such amounts shall be estimated by Seller on the basis of the best available
information for such taxes and assessments that will be due and payable on the Property for the
fiscal year in which Closing occurs, with an adjustment between Buyer and Seller promptly after
the actual tax bills and assessment statements become available.
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(d)
Rents and Leasing Costs.
(i)
All Rents shall be adjusted and prorated as of the Cutoff Time on an if, as
and when collected basis. Unpaid and delinquent Rents collected by Owner after the Closing
from any Tenant who owes Rents for periods prior to the Cutoff Time shall be applied as
follows: (x) first, in payment of Rents owed by such Tenant for the month in which the Closing
Date occurs; (y) second in payment of Rents then owed by such Tenant for each month after the
month in which the Closing Date occurs, until all then current periods have been paid in full, and
(z) third, in payment of Rents then owed by such Tenant for each month preceding the month in
which the Closing Date occurs, until all such prior periods have been paid in full. Each such
amount, less any costs of collection (including reasonable attorney fees) reasonably allocable
thereto, shall be adjusted and prorated as provided above. If any Rents are collected by Owner
after the Closing, and Seller is entitled to receive all or any portion of such Rents pursuant to this
Section 7(d), then Buyer shall cause Owner to hold such Rents in trust for the benefit of Seller
until such amount is paid over. Buyer will cause Owner to make a good faith and diligent effort
after Closing to bill Tenants for and collect all Rents, but Buyer shall not be obligated to cause
Owner to institute any lawsuit or other collection procedures to collect delinquent Rents, nor
shall Seller or its Affiliates have any right, from and after Closing, to institute any lawsuit or
other collection procedures to collect delinquent Rents.
(ii)
If there are any Rents which, although relating to a period prior to the
Closing, do not become due and payable until after Closing or are paid prior to Closing but are
subject to adjustment after Closing (such as year-end common area expense reimbursements,
percentage rent, operating expense and real estate taxes and the like), then any such Rents
received by Owner (or its agents) subsequent to Closing shall, to the extent applicable to a period
extending through Closing, be prorated between Seller and Buyer in the manner provided for in
Section 7(d)(i) above if, as and when received by Owner. Without limiting the generality of the
foregoing, to the extent that any portion of such Rent (“Trued-Up Additional Rents”) payable
under the Space Leases is required to be paid by the Tenants in monthly or other installments on
account of estimated amounts for any calendar year (or, if applicable, any other applicable
accounting period), and at the end of such calendar year (or other applicable accounting period,
as the case may be), such estimated amounts are to be recalculated based upon the actual
expenses, taxes and other relevant factors for that calendar year or other applicable accounting
period, with the appropriate adjustments being made with such Tenants, then the Trued-Up
Additional Rents shall initially be prorated between Seller and Buyer at the Closing based on
such estimated payments actually paid by such Tenants. At the time(s) of final calculation and
collection from (or refund to) each Tenant of the amounts in reconciliation of actual Trued-Up
Additional Rents for a period for which estimated amounts paid by such Tenant have been
prorated as described above, there shall be a re-proration between Seller and Buyer, and Seller
and Buyer shall work in good faith to cause Owner to collect from the Tenant in question any
unpaid costs from such Tenant and/or pay to the Tenant in question any excess amounts
collected from such Tenant, as the case may be. If any amounts are collected by Owner after the
Closing, and Seller is entitled to receive all or any portion of such amounts pursuant to this
Section, then Buyer shall cause Owner to hold such amounts in trust for the benefit of Seller until
such amounts are paid to Seller.
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(iii) If, after the Closing, any Tenant commences an audit of Rents (a “Tenant
Audit”) for periods, in whole or in part, prior to Closing, or if any Tenant Audits that have been
commenced prior to Closing have not been fully completed and resolved as of Closing, then
Seller and Buyer shall be responsible after the Closing for providing information in its
possession reasonably requested by Tenants and otherwise reasonably cooperating with the other
in the resolution of such Tenant Audits. If any Tenants are due refunds as a result of such Tenant
Audits, Seller and Buyer agree to work in good faith to pay such amounts to the Tenant in
question in a manner consistent with this Section 7(d) and if Tenants are required to make
additional payments as a result of such Tenant Audits, Seller and Buyer agree to work in good
faith to collect such amount from the Tenant in question and adjust such amounts in a manner
consistent with this Section 7(d). If any amounts are collected by Owner after the Closing, and
Seller is entitled to receive all or any portion of such amounts pursuant to this Section, then
Buyer shall cause Owner to hold such amounts in trust for the benefit of Seller until such
amounts are paid over. Each of Seller and Buyer shall make its Books and Records available
after Closing to the other and to Tenants per the terms of the Space Leases for the purposes of
audit rights granted to such Tenants.
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(e)
Utilities. Gas, electricity and other utility charges (if any) for which Owner is
liable shall be apportioned as of the Cutoff Time on the basis of the most recent meter reading
occurring prior to Closing or, if unmetered, on the basis of a current bill for each such utility.
Seller shall use reasonable efforts to cause Owner to obtain readings of meters measuring utility
consumption at the Property for all periods through (and including) the Cutoff Time. Seller shall
pay, and be responsible, for all bills rendered on the basis of such readings. If such readings are
not obtained for any metered utility, then, at the Closing, apportionment shall be made on the
basis of the most recent period for which such readings are available. Upon the taking of
subsequent actual readings, there shall be a recalculation of the applicable utility charges, and
Seller or Buyer, as the case may be, shall promptly remit to the other party hereto any amounts to
which such party shall be entitled by reason of such recalculation (with Seller being obligated to
pay all such utility charges pertaining to the period through the Cutoff Time, and Buyer being
obligated to pay all such utility charges pertaining to the period thereafter). Unmetered water
charges or sewer rents shall be apportioned on the basis of the charges therefor for the same
period during the previous calendar year, but applying the current rate thereto.
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(f)
Permits. Permit, license and inspection fees applicable to the Property (but not
for any Tenant’s use or occupation thereof to the extent such fees are the responsibility of such
Tenant under its Space Lease), if any, on the basis of the fiscal year for which levied shall be
prorated as of the Cutoff Time.
(g)
Cash.
(i)
At Closing Seller shall cause Owner to withdraw all Cash at or prior to
Closing and distribute or pay such Cash to Seller or an affiliate, following which Seller shall
promptly close the Bank Accounts. For the avoidance of doubt, this Section 7(g)(i) shall not
apply to cash security deposits (which shall be handled in accordance with Section 7(g)(ii)
hereof) or to the proceeds of any insurance policies following a casualty or to any condemnation
awards (which shall be handled in accordance with Section 12 hereof).
(ii) Cash security deposits (together with all interest accrued thereon, if any) held
by 1001 Brickell Owner under the Space Leases for the 1001 Brickell Property or by Yacht Club
Owner under Space Leases for the Yacht Club Property shall not be prorated and Seller shall, at
Closing, cause Owner to withdraw all Cash to be distributed or paid to Seller or an affiliate and
give Buyer a credit against the Purchase Price in the amount of the cash security deposits held
under the Space Leases (following which Seller shall promptly close the applicable Bank
Accounts).
(h)
Other. Any other operating expenses or other items of income or expense
pertaining to the Property which are customarily prorated between a buyer and a seller of a
similar property in the area in which such Property is located, but taking into account that this is
a sale of direct or indirect ownership interests in the Property and not a sale of the fee estate in
the Property.
(i)
Post-Closing Reconciliation. Seller and Buyer shall reasonably cooperate after
the Closing to make a final determination of the allocations and adjustments required under this
Agreement within ninety (90) days after the Closing Date; provided, however, (i) with respect to
Impositions, Section 7(c) hereof shall control and (ii) with respect to Trued-Up Additional Rents,
Sections 7(d)(ii) and 7(d)(iii) hereof shall control. Upon the final reconciliation of the
allocations and adjustments under this Section 7, any party owing another party any sums
hereunder shall promptly pay such party such sums within ten (10) Business Days after the
reconciliation of such sums. For purposes of this Section 7, it is the intent of the parties that,
with respect to the Property, Seller shall be entitled to all income and receipts accruing prior to
the Cutoff Time and shall be responsible for all costs, expenses and liabilities of the Property
arising from events occurring before the Cutoff Time, and Buyer shall be entitled to all income
and receipts accruing after the Cutoff Time and shall be responsible for all costs, expenses and
liabilities of the Property arising from events occurring after the Cutoff Time.
(j)
Survival. The provisions of this Section 7 shall survive Closing.
SECTION 8. CONDITIONS PRECEDENT
(a)
Buyer’s Conditions of Closing. Buyer’s obligation to pay the Purchase Price at
the Closing and to otherwise consummate the Closing are subject to the following conditions
29
precedent being satisfied as of the Scheduled Closing Date (or waived in writing by Buyer in its
sole and absolute discretion):
(i)
Seller shall have timely and duly performed in all material respects all of
Seller’s covenants and obligations under this Agreement to be performed, including, without
limitation, timely delivered to Buyer or Title Company as applicable all of the Closing
Documents and any other documents and materials required to be delivered by or on behalf of
Seller at Closing pursuant to Section 9(a) or (c) hereof or elsewhere in this Agreement;
(ii) all of Seller’s Fundamental Representations and Tax Representations shall be
true and correct in all material respects on and as of the Closing Date (as if remade on such date)
and all other representations and warranties shall be true and correct in all material respects as of
the Closing Date, except (x) where stated to be as of a specified earlier date certain (for the
avoidance of doubt, the phase “as of the Effective Date” or “as of the date hereof” shall not
constitute a specified date for purposes hereof), (y) to the extent resulting from any actions of
Buyer or (z) changes in facts that are expressly permitted under this Agreement; provided,
however, without limiting Buyer’s right to bring an Indemnification Claim in accordance with
this Agreement after Closing if Closing occurs and no Buyer Knowledge Party had actual
knowledge of such change(s) in fact prior to Closing (without independent inquiry or
investigation), to the extent the inaccuracy of any representation or warranty could reasonably be
expected to result in liabilities, damages, losses, costs or expenses in excess of the
Representation Change Materiality Threshold, then same shall constitute a failure of a condition
to Buyer’s obligation to proceed to Closing hereunder;
(iii) The Title Company shall have irrevocably committed to issue the Title
Policy subject only to the Permitted Exceptions;
(iv)[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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(v)
No lien or encumbrance shall have attached to or against any of the Interests
or any ownership interests in any 1001 Brickell Company;
(vi)
Seller shall, at its sole cost and expense, obtain a forty (40)-year
recertification with respect to the 1001 Brickell Real Property pursuant to and in accordance with
Miami-Dade County Code Section 8-11(f) and shall provide Buyer with reasonably satisfactory
evidence that Seller has obtained such recertification;
(vii) The TRS shall have been dissolved or one hundred percent (100%) of the
interests in the TRS shall have been transferred to an entity other than the 1001 Brickell
Companies or Yacht Club Owner in a manner that does not result in any gain for U.S. federal
income tax purposes;
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(ix) The Existing Intercompany Debt shall have been repaid in full;
(x)
Provided that Buyer timely exercises the Seller Financing Option pursuant to
Section 39, Seller or its applicable Affiliate has provided the Seller Financing in accordance with
Section 39; and
(xi) All contingencies or conditions to Buyer’s closing obligation identified in
this Agreement have been satisfied or waived by Buyer.
Seller and Buyer agree that the untruth, inaccuracy or incorrectness of a representation or
warranty shall be deemed material only if Buyer’s liabilities, damages, losses, costs or expenses
resulting from all untrue, inaccurate and/or incorrect representations and warranties can be
reasonably expected to exceed the Damages Threshold in the aggregate (“Representation Change
Materiality Threshold”). Buyer shall have the right to waive the satisfaction, in whole or in part,
of any of the conditions precedent set forth in this Section 8(a), but no waiver shall be effective
unless it is in writing and duly executed by Buyer; provided, however, that if Buyer does close
then such condition shall be deemed waived. If any condition precedent set forth in this Section
8(a) is not satisfied or waived by Buyer as of the Scheduled Closing Date, then Buyer shall have
the right to terminate this Agreement by sending written notice thereof to Seller (but in no event
later than the Scheduled Closing Date), and upon delivery of such termination notice, the Deposit
shall be returned to Buyer, following which this Agreement shall terminate and thereafter neither
Buyer nor Seller shall have any further rights, obligations or liabilities hereunder except to the
extent that any obligation or liability set forth herein expressly survives termination of this
Agreement. Notwithstanding the foregoing, it is understood and agreed that nothing in this
Section 8(a) shall relieve Seller from liability for any breach of this Agreement by Seller and that
the provisions of Section 13(a) hereof shall govern and control in the event of a default by Seller
under this Agreement.
(b)
Seller’s Conditions of Closing. Seller’s obligations to consummate the Closing
are subject to the following conditions precedent being fully satisfied as of the Scheduled
Closing Date or waived by Seller in its sole and absolute discretion:
(i)
Buyer shall have timely and duly performed in all material respects all of
Buyer’s covenants and obligations under this Agreement, including, without limitation, timely
delivered to Seller or Title Company as applicable all of the Closing Documents and any other
documents and materials required to be delivered by or on behalf of Buyer at Closing pursuant to
Section 9(b) hereof or elsewhere in this Agreement;
(ii)
Buyer shall have delivered to the Title Company all funds required by this
Agreement, including the Deposit and Closing Payment;
(iii) All of Buyer’s representations and warranties in this Agreement shall be true
and correct in all material respects as of the Closing Date, or as of such other date to which such
representation or warranty expressly is made; and
(iv) All contingencies or conditions to Seller’s closing obligations identified in
this Agreement have been satisfied or waived by Seller.
31
Seller shall have the right to waive the satisfaction, in whole or in part, of any of the conditions
precedent set forth in this Section 8(b), but no waiver shall be effective unless it is in writing and
duly executed by Seller (except that, if Seller does close, then such condition shall be deemed
waived). Notwithstanding the foregoing, it is understood and agreed that nothing in this Section
8(b) shall relieve Buyer from liability for any breach of this Agreement by Buyer and that the
provisions of Section 13(b) hereof shall govern and control in the event of a default by Buyer
under this Agreement.
SECTION 9. CLOSING DELIVERIES
(a)
Seller’s Closing Deliveries For the Sale of the REIT Interests. At or prior to the
Closing for the sale of the REIT Interests, in addition to any other documents required under this
Agreement, 1001 Brickell Seller shall execute, acknowledge and deliver (or cause to be
executed, acknowledged and delivered) to Buyer or the Title Company the following (the “1001
Brickell Seller Closing Documents”):
(i)
the original Assignment and Acceptance of Stock;
(ii)
all of the issued and outstanding membership interests of 1001 Brickell
Owner, free and clear of all liens, charges, encumbrances, security interests, rights of first offer
or refusal or other restrictions of any kind;
(iii) the written resignation of each officer, manager, trustee and director (if any)
of each of the 1001 Brickell Companies and an executed release from each such Person of all
claims against any of the 1001 Brickell Companies effective as of the Closing Date in the form
of Exhibit F annexed hereto;
(iv) to the extent not previously delivered to Buyer or not located at the Property,
the original (or copies if originals are not available) Books and Records;
(v)
an IRS Form W-9 executed by (or on behalf of) 1001 Brickell Seller;
(vi)
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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(vii) a copy of Seller’s counterpart of the Settlement Statement by PDF;
(viii)
a title affidavit in the form attached hereto as Exhibit B (the “Title
Affidavit”) with any additional revisions reasonably required by the Title Company to omit any
title exceptions related to any work or other improvements performed at the 1001 Brickell
Property or any portion thereof within the ninety (90) days immediately prior to Closing,
executed by Seller;
(ix) such evidence as Buyer and/or the Title Company may reasonably require as
to the authority of 1001 Brickell Seller and the 1001 Brickell Companies to consummate the
Closing, including such documents (such as limited liability company resolutions, corporate
resolutions, or partnership authorizations and certified limited liability company, corporate, or
partnership formation documents, as the case may be) as are reasonably required by the Title
32
Company evidencing the authorization of the sale of the REIT Interests by 1001 Brickell Seller
and the delivery by 1001 Brickell Seller of all of the Closing documents required by this
Agreement with respect to such sale; provided, however, that if 1001 Brickell Seller shall be
required by the Title Company to provide limited liability company operating agreements,
partnership agreements or other similar agreements of 1001 Brickell Seller or its direct or
indirect shareholders, members or partners, 1001 Brickell Seller may provide redacted copies as
long as provisions relating to authorization remain unredacted and are acceptable to the Title
Company;
(x)
such agreements, affidavits or other documents as may be reasonably
required by the Title Company from Seller (including from Seller on behalf of any 1001 Brickell
Company) to issue the Title Policy for the 1001 Brickell Property (including, without limitation,
to evidence the transfer, via merger from BBT SPE to 1001 Brickell Owner, of record title to the
1001 Brickell Property effective as of January 1, 2021);
(xi) to the extent not previously delivered to Buyer or not located at the 1001
Brickell Property, originals (or copies where originals are not available) of all applicable Space
Leases, Non-Terminable Service Contracts and Permits, in each case only to the extent in 1001
Brickell Seller’s or 1001 Brickell Owner’s reasonable possession or control, if any;
(xii) to the extent not previously delivered to Buyer or not located at the 1001
Brickell Property and to the extent in 1001 Brickell Seller’s or 1001 Brickell Owner’s reasonable
possession or control, computer and security codes, and keys relating to the operation, use and
maintenance of the 1001 Brickell Property;
(xiii) [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
(xiv)
with respect to any security deposits held by 1001 Brickell Owner under
the Space Leases for the 1001 Brickell Property which are in the form of letters of credit, the
original of each such letter of credit (it being agreed that such letters of credit shall remain in the
name of 1001 Brickell Owner);
(xv) a certificate of good standing for each of the 1001 Brickell Seller and the
1001 Brickell Companies, dated no earlier than thirty (30) days prior to the Closing, from each
applicable State of formation, which shall state that such Persons are in good standing as of the
date of issuance;
(xvi)
copies of certificates of compliance from the Florida Department of
Revenue, dated no earlier than thirty (30) days prior to the Closing, showing that (x) the Florida
Department of Revenue has not issued a notice of intent to audit as to 1001 Brickell Seller or any
of the 1001 Brickell Companies and (y) each of the 1001 Brickell Seller and the 1001 Brickell
Companies has filed all required Tax Returns and paid all Taxes arising from the operation of the
1001 Brickell Property;
(xvii)
copies of letters addressed to the Tenants under Space Leases for the
1001 Brickell Property in the form attached hereto as Exhibit D (each, a “Tenant Notice Letter”).
Notwithstanding the foregoing, Buyer and 1001 Brickell Seller hereby agree that such letters
shall
33
have the form filled in and completed for each Tenant by Buyer and sent by Buyer to each
Tenant promptly after Closing;
(xviii)
copies of letters signed by 1001 Brickell Owner to be delivered by 1001
Brickell Seller upon the consummation of the Closing to the applicable counterparties under any
Terminated Service Contracts for the 1001 Brickell Property providing notice of the termination
of such Terminated Service Contracts (to the extent not delivered prior to the Closing Date);
(xix)
evidence that all Terminated Service Contracts for the 1001 Brickell
Property have been terminated effective as of Closing and that all costs, expenses, penalties,
premiums and other amounts payable thereunder have been paid in full;
(xx) copies of all Organizational Documents of each 1001 Brickell Company,
certified by Seller as the true, correct and complete copies thereof;
(xxi)
An updated rent roll for the 1001 Brickell Property, in substantially the
same form as the rent roll attached hereto as Schedule 5, and prepared no more than three (3)
days prior to the Scheduled Closing Date, certified by Seller to be true, correct and complete as
of the date thereof (the “Updated 1001 Brickell Rent Roll”);
(xxii)
An opinion, substantially in the form attached hereto as Exhibit M, from
Skadden, Arps, Slate, Meagher and Flom LLP to be addressed to Buyer and the REIT and dated
as of the Closing Date, subject to customary exceptions, assumptions and qualifications and
based on customary factual representations contained in an officers’ certificate executed by
officers of the REIT that, commencing with the REIT’s initial taxable year ended December 31,
2021 through the REIT’s hypothetical short taxable year ended on the Closing Date immediately
prior to the Closing (“Hypothetical Short Taxable Year”), the REIT has been organized and has
operated in conformity with the requirements for qualification and taxation as a real estate
investment trust under the Code (without taking into account any effects of the Closing, any
action (or inaction) taken after the Closing, or the distribution requirements of Section 857(b) of
the Code for such Hypothetical Short Taxable Year);
(xxiii)[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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(xxiv)
A certificate stating that each representation and warranty set forth
herein by Seller is true and correct in all material respects, in substantially the same form as set
forth on Exhibit Q attached hereto, duly executed by 1001 Brickell Seller;
(xxv)
Evidence that the Existing Intercompany Debt has been paid in full;
(xxvi)
if required pursuant to Section 39 of this Agreement, the Definitive
Documents (as defined on Schedule 19) duly executed by 1001 Brickell Seller or its applicable
Affiliate; and
34
(xxvii)
such other documents, instruments or agreements required to be
executed, acknowledged and/or delivered by 1001 Brickell Seller pursuant to this Agreement or
otherwise reasonably required to consummate the Closing of the sale of the REIT Interests
pursuant to this Agreement.
(b)
Buyer’s Closing Deliveries for the Purchase of the REIT Interests. At or prior to
the Closing for the REIT Interests, in addition to the applicable Closing Payment and any other
documents required under this Agreement, Buyer, at its sole cost and expense, shall execute and
acknowledge, if appropriate, and deliver (or cause to be so executed, acknowledged and
delivered, as the case may be) to 1001 Brickell Seller or Title Company the following (the “1001
Brickell Buyer Closing Documents”):
(i)
The original Assignment and Acceptance of Stock;
(ii) a counterpart of the Settlement Statement by PDF;
(iii)
such evidence as 1001 Brickell Seller and/or the Title Company may
reasonably require as to the authority of Buyer to consummate the Closing, including such
documents (such as limited liability company resolutions, corporate resolutions, or partnership
authorizations and certified limited liability company, corporate, or partnership formation
documents) as are reasonably required by 1001 Brickell Seller and/or the Title Company
evidencing the authorization of the purchase of the REIT Interests by Buyer, provided, however,
that if Buyer shall be required to provide limited liability company operating agreements,
partnership agreements or other similar agreements of Buyer or its direct or indirect members or
partners, then Buyer may provide redacted copies as long as provisions relating to authorization
remain unredacted and are acceptable to the Title Company;
(iv) An affidavit in the form of Exhibit K hereto, confirming that Buyer is not a
Foreign Principal as defined in Florida Statutes Section 692.201;
(v)
the release by the 1001 Companies of all claims against each of the officers
and directors (if any) of the 1001 Companies effective as of the Closing Date, in the form of
Exhibit H annexed hereto;
(vi) a certificate stating that each representation and warranty set forth herein by
Buyer is true and correct in all material respects, in substantially the same form as set forth on
Exhibit R attached hereto, duly executed by Buyer;
(vii) provided that Buyer timely exercises the Seller Financing Option pursuant to
Section 39 and Buyer elects to close with Seller Financing, the Definitive Documents (as defined
on Schedule 19) duly executed by Buyer or its applicable Affiliates; and
(viii)
such other documents, instruments or agreements required to be
executed, acknowledged and/or delivered by Buyer pursuant to this Agreement or otherwise
reasonably required to consummate the Closing of the sale of the REIT Interests pursuant to this
Agreement.
35
(c)
Seller’s Closing Deliveries for the Sale of the Yacht Club Interests. At or prior to
the Closing for the sale of the Yacht Club Interests, in addition to any other documents required
under this Agreement, Yacht Club Seller shall execute and acknowledge and deliver (or cause to
be executed, acknowledged and delivered) to Buyer, the following (the “Yacht Club Seller
Closing Documents”):
(i)
the original Assignment and Assumption of Member Interests;
(ii) [intentionally omitted];
(iii) the written resignation of each officer, manager, trustee and director (if any)
of Yacht Club Owner and an executed release from each such Person of all claims against Yacht
Club Owner effective as of the Closing Date in the form of Exhibit F annexed hereto;
(iv) to the extent not previously delivered to Buyer or not located at the Yacht
Club Property, the original (or copies if originals are not available) Books and Records;
(v)
an original IRS Form W-9 executed by (or on behalf of) Yacht Club Seller;
(vi) a copy of Buyer’s counterpart of the Settlement Statement by PDF;
(vii) the Title Affidavit, executed by Seller (with any additional revisions
reasonably required by the Title Company to omit any title exceptions relating to any work or
other improvements performed at the Yacht Club Property or any portion thereof within the
ninety (90) days immediately prior to Closing);
(viii)
such evidence as Buyer and/or the Title Company may reasonably
require as to the authority of Yacht Club Seller to consummate the Closing, including such
documents (such as limited liability company consents, corporate resolutions, or partnership
authorizations and certified limited liability company, corporate, or partnership formation
documents) as are reasonably required by Title Company evidencing the authorization of the sale
of the Yacht Club Interests by Yacht Club Seller and the delivery by Yacht Club Seller of all of
the Closing documents required by this Agreement with respect to such sale, provided, however,
that if Yacht Club Seller be required to provide limited liability company operating agreements,
partnership agreements or other similar agreements of Yacht Club Seller or its direct or indirect
members or partners, Yacht Club Seller may provide redacted copies as long as provisions
relating to authorization remain unredacted and are acceptable to the Title Company;
(ix)
such agreements, affidavits or other documents as may be reasonably
required by the Title Company from Seller (including from Seller on behalf of Yacht Club
Owner) to issue the Title Policy for the Yacht Club Property;
(x)
to the extent not previously delivered to Buyer or not located at the Yacht
Club Property, originals (or copies where originals are not available) of all Space Leases, Non-
Terminable Service Contracts and Permits, in each case, only to the extent in Yacht Club Seller’s
or Yacht Club Owner’s reasonable possession or control, if any;
36
(xi) to the extent not previously delivered to Buyer or not located at the Yacht
Club Property and to the extent in Yacht Club Seller’s or Yacht Club Owner’s reasonable
possession or control, computer and security codes, and keys relating to the operation, use and
maintenance of the Yacht Club Property;
(xii)[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
(xiii)
a certificate of good standing for Yacht Club Seller and Yacht Club
Owner, dated no earlier than thirty (30) days prior to the Closing, from the Delaware Secretary of
State, which shall state that such Persons are in good standing as of the date of issuance;
(xiv)
copies of certificates of compliance from the Florida Department of
Revenue, dated no earlier than thirty (30) days prior to the Closing, showing that (x) the Florida
Department of Revenue has not issued a notice of intent to audit as to Yacht Club Seller or Yacht
Club Owner and (y) each of Yacht Club Seller and Yacht Club Owner has filed all required Tax
Returns and paid all Taxes arising from the operation of the Yacht Club Property;
(xv) copies of Tenant Notice Letters addressed to the Tenants under Space Leases
for the Yacht Club Property. Notwithstanding the foregoing, Buyer and Yacht Club Seller
hereby agree that such letters shall have the form filled in and completed for each Tenant by
Buyer and sent to each Tenant at Closing by Buyer;
(xvi)
copies of letters signed by Yacht Club Owner to be delivered by Yacht
Club Owner upon the consummation of the Closing to the applicable counterparties under any
Terminated Service Contracts for the Yacht Club Property providing notice of the termination of
such Terminated Service Contracts (to the extent not delivered prior to the Closing Date);
(xvii)
evidence that all Terminated Service Contracts for the Yacht Club
Property have been terminated effective as of Closing and that all costs, expenses, penalties,
premiums and other amounts payable thereunder have been paid in full;
(xviii)
copies of all Organizational Documents of Yacht Club Owner, certified
by Seller as the true, correct and complete;
(xix)
an updated rent roll for the Yacht Club Property, in substantially the
same form as the rent roll attached hereto as Schedule 5, and prepared no more than three (3)
days prior to the Scheduled Closing Date, certified by Seller to be true, correct and complete as
of the date thereof (the “Updated Yacht Club Rent Roll”; together with the Updated 1001
Brickell Rent Roll, collectively, the “Updated Rent Roll”); )
(xx) if required pursuant to Section 10 of this Agreement, copies of the YC
Termination Notices not previously delivered to Buyer;
(xxi)
a certificate stating that each representation and warranty set forth
herein by Seller is true and correct in all material respects, in substantially the same form as set
forth on Exhibit Q attached hereto, duly executed by Yacht Club Seller;
37
(xxii)
evidence that the Existing Intercompany Debt has been paid in full;
(xxiii)
if required pursuant to Section 39 of this Agreement, the Definitive
Documents (as defined on Schedule 19) duly executed by Yacht Club Seller or its applicable
Affiliate; and
(xxiv)
such other documents, instruments or agreements required to be
executed, acknowledged and/or delivered pursuant to this Agreement or otherwise reasonably
required to consummate the Closing of the sale of the Yacht Club Interests pursuant to this
Agreement.
(d)
Buyer’s Closing Deliveries for the Purchase of the Yacht Club Interests. At or
prior to the Closing for the Yacht Club Interests, in addition to the applicable Closing Payment
and any other documents required under this Agreement, Buyer, at its sole cost and expense,
shall execute and acknowledge, if appropriate, and deliver to Escrow Agent or Yacht Club Seller
the following (the “Yacht Club Buyer Closing Documents”):
(i)
A counterpart of the Assignment and Assumption of Member Interests;
(ii) a copy of Seller’s counterpart of the Settlement Statement by PDF;
(iii)
such evidence as Yacht Club Seller and/or the Title Company may
reasonably require as to the authority of Buyer to consummate the Closing, including such
documents (such as limited liability company resolutions, corporate resolutions, or partnership
authorizations and certified limited liability company, corporate, or partnership formation
documents) as are reasonably required by Yacht Club Seller and/or the Title Company
evidencing the authorization of the purchase of the Yacht Club Interests by Buyer, provided,
however, that if Buyer be required to provide limited liability company operating agreements,
partnership agreements or other similar agreements of Buyer or its direct or indirect members or
partners, Buyer may provide redacted copies as long as provisions relating to authorization
remain unredacted and are acceptable to the Title Company;
(iv) the release by Yacht Club Owner of all claims against each of the officers
and directors (if any) of Yacht Club Owner effective as of the Closing Date, in the form of
Exhibit H annexed hereto;
(v)
An affidavit in the form of Exhibit K hereto, confirming that Buyer is not a
Foreign Principal as defined in Florida Statutes Section 692.201;
(vi) [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
(vii) provided that Buyer timely exercises the Seller Financing Option pursuant to
Section 39 and Buyer elects to close with Seller Financing, the Definitive Documents (as defined
on Schedule 19) duly executed by Buyer or its applicable Affiliates; and
(viii)
such other documents, instruments or agreements required to be
executed, acknowledged and/or delivered pursuant to this Agreement or otherwise reasonably
required to consummate the Closing of the sale of the Yacht Club Interests pursuant to this
Agreement.
38
SECTION 10.
SELLER’S COVENANTS PENDING CLOSING
Between the Effective Date and the Closing Date or earlier termination of this
Agreement, the following shall apply:
(a)
Operating the Property. Subject to the terms and provisions of this Section 10,
Seller shall use commercially reasonable efforts to cause Owner to operate and maintain the
Property in a manner substantially consistent with the manner in which Owner has operated and
maintained the Property prior to the date hereof (including, without limitation, the timely
payment of all debt service); provided, however, that neither Seller nor the Subsidiaries shall
make (or have any obligation to make) any capital improvements, alterations or capital repairs to
the Property without Buyer’s prior written consent, except as required by law.
(b)
Property Insurance. Seller shall, at its or Owner’s expense, cause Owner to
continue to maintain the property insurance maintained by Owner with respect to the Property
that is currently in effect as of the Effective Date as disclosed on Schedule 11 attached hereto,
evidence of which Seller shall provide to Buyer upon request.
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(e)
Service Contracts. Seller shall, and shall cause its applicable Subsidiaries to,
perform its material obligations under the Service Contracts (including License and Access
Agreements) and provide Buyer with prompt written notice following any amendment or
termination of any Service Contracts (including License and Access Agreements). After the date
hereof, neither Seller nor Subsidiary shall enter into any new Service Contract (including any
new License and Access Agreement) or renew any existing Service Contract (including License
and Access Agreements) unless such Service Contract (or License and Access Agreement) is
terminable upon sixty (60) days or less notice without any penalty with respect to which Buyer
has not received a credit at Closing. If Seller or any Subsidiary enters into any such Service
Contract
41
(including any such License and Access Agreement), then it shall promptly provide written
notice thereof to Buyer. For the avoidance of doubt, any such new Service Contract (including
any such new License and Access Agreement) shall be deemed a Terminated Service Contract
except as otherwise provided under Section 4(f) hereof.
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(g)
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(h)
Florida Sales Tax. Within twenty (20) Business Days following the Effective
Date and again twenty (20) Business Days prior to the Scheduled Closing Date, Seller shall
request and obtain from the Florida Department of Revenue a Sales Tax Certificate relating to
leasing and other similar tax due in connection with the ownership, use and/or operation of the
Property (“Sales
42
Tax”). Seller shall provide Buyer with a copy of each Sales Tax Certificate within five (5)
Business Days following Seller’s receipt thereof. If any Sales Tax Certificate indicates that
Sales Tax is due, then such Sales Tax shall be deducted on the Settlement Statement and paid
from proceeds otherwise due to Seller at the Closing. For the purposes of this Section 10(h), a
“Sales Tax Certificate” means a certificate of compliance from the Florida Department of
Revenue, within the meaning of Section 213.758(4)(a)1.a., Florida Statutes, and any successor
statute thereto with respect to sales tax and any applicable sales surtax as near to the Closing as is
reasonably practicable, showing no outstanding sales tax delinquencies and no pending audits of
any of Seller’s Sales Tax Reports. Through the Closing Date, Seller shall cause to be collected
and remitted all sales tax levied and timely file all required sales tax reports and returns (the
“Sales Tax Reports”) pursuant to Chapter 212 of the Florida Statutes with respect to the Property
to the State of Florida, Department of Revenue for the months prior to the month of the Closing.
Promptly after the Closing, Seller shall pay or cause to be paid to the Florida Department of
Revenue all sales tax collected for rent received by the Owner prior to the Closing under the
Leases for the month in which the Closing occurs; provided, however, that, if the Closing takes
place on the first day of a month, then Buyer shall pay to the Florida Department of Revenue
sales tax collected for rent received under the applicable Space Leases for the month in which the
Closing occurs. Further, Seller shall be responsible for all sales tax due to the Florida
Department of Revenue with respect to such Space Leases for the time period prior to the month
of the Closing, except to the extent Buyer collects any sales tax for periods prior to the month of
the Closing. This Section 10(h) shall survive the Closing.
(i)
Litigation. Seller will advise Buyer, promptly following notice thereof, of any
litigation, arbitration, proceeding or administrative hearing (including condemnation) before any
Governmental Authority or court which affects Seller, any Subsidiary, or the Property.
(j)
Notices. Seller will furnish Buyer with a copy of any notices (or pleadings)
regarding any litigation, actions or violations of law, statue, ordinance, regulation or order of any
governmental or public authority relating to Seller, any Subsidiary or the Property promptly (but
in any event within five (5) Business Days) following Seller’s receipt thereof, but, if received by
such date, in no event later than two (2) Business Days prior to the Closing Date.
(k)
Organizational Documents; Distributions. Seller shall not and shall not cause or
permit any Subsidiary to: (i) amend their respective Organizational Documents, (ii) issue or sell
any equity interests, or any options, warrants, convertible securities or other rights of any kind to
acquire any equity interests in any Subsidiary, (iii) transfer, assign, pledge, alienate or encumber
any of the Interests, the 1001 Brickell Holdings Interests or the 1001 Brickell Owner Interests; or
(iv) incur, issue, make or receive any Intercompany Debt, whether as debtor or creditor
thereunder. Seller shall cause any Intercompany Debt incurred, issued, made or received by a
Subsidiary, whether as debtor or creditor thereunder (including, without limitation, the Existing
Intercompany Debt), to be repaid in full or otherwise satisfied and extinguished no later than the
Closing Date.
(l)
Property. Seller shall not and shall not cause or permit any Subsidiary to: (i) sell
to a third party, or to create, incur or suffer to exist any further lien or other encumbrance or to
grant any option, pledge, offer, right, right of first refusal or right of first offer with respect to the
Property or any part thereof or interest therein, or (ii) grant any easements or rights-of-way
43
affecting the Property or to consent in writing to any change to the zoning or use classification of
the Property.
(m)
Monthly and Quarterly Financial Statements. Seller shall provide to Buyer true,
complete and correct copies of the following (collectively, the “Updated Financial Statements”):
(i) within forty-five (45) days following the end of each calendar month (such month, the
“Applicable Month”), each Subsidiary’s monthly income and operating statements, trial balance
and balance sheet for the Applicable Month; and (ii) solely with respect to the REIT, within
forty-five (45) days following the end of each calendar quarter (such quarter, the “Applicable
Quarter”), the income and asset tests and related compliance checklists, including, without
limitation, reasonable backup used in the preparation of such tests and compliance checklists for
the Applicable Quarter.
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(o)
Requirements with Respect to Code Violations. Seller shall use commercially
reasonable efforts and shall cause Yacht Club Owner and 1001 Brickell Owner to use
commercially reasonable efforts to cure or cause to be cured, prior to Closing, any code
enforcement violations applicable to the Yacht Club Property or the 1001 Brickell Property
(excluding Must-Cure Items, for which the provisions of Section 5 shall apply) (collectively,
“Code Enforcement Violations”), including, without limitation, those violation(s) associated
with Code Violation Case No. 00109972. For the avoidance of doubt, so long as Seller, Yacht
Club Owner and 1001 Brickell Owner comply with the foregoing covenant set forth in this
Section 10(o), Seller shall not be in default hereunder for failure to cure any Code Enforcement
Violations as of the Closing Date, nor shall such failure to cure any Code Enforcement
Violations excuse Buyer’s obligation to close on the Closing Date so long as Seller provides a
credit to Buyer, at Closing, in an amount equal to (i) the face amount of all fines, fees and
interest associated with any such uncured Code Enforcement Violations set forth on Exhibit S
and (ii) the face amount of all fines, fees and interest associated with any such uncured Code
Enforcement Violations first arising after the Effective Date and resulting from any action or
omission by Seller or its Affiliates.
(p)
Requirements with Respect to Certain Permitted Exceptions. With respect to that
certain Easement granted to Florida Power & Light Company, recorded May 21, 1998 in Official
Records Book 18114, Page 412 (the “FPL Easement”), Yacht Club Seller agrees to, and shall
cause Yacht Club Owner to, use commercially reasonable efforts, promptly after the date hereof,
to obtain from Florida Power & Light, prior to Closing, a non-disturbance agreement in
recordable form expressly allowing for the improvements currently constructed on the Yacht
Club Property over the FPL Easement to remain upon such easement area. With respect to (i)
that certain Grant of Easement granted to Comcast, recorded January 4, 2008 in Official Records
Book 26142, Page 3666 and (ii) that certain Grant of Easement granted to Comcast, recorded
October 11, 2011 in Official Records Book 27854, Page 231, Yacht Club Seller agrees to, and
shall cause Yacht Club Owner to, use commercially reasonable efforts, promptly after the date
hereof, to cause Comcast to terminate and release such easement agreements of record in
accordance with Section 15(f) of that certain Services Agreement dated December 5, 2018 by
and between Comcast Cable Communications Management, LLC (“Comcast”) and Yacht Club
Owner. For the avoidance of doubt, so long as Yacht Club Seller and Yacht Club Owner comply
with the foregoing covenants set forth in this Section 10(p), Seller shall not be in default
hereunder for failure of (x) Florida Power & Light to provide the requested non-disturbance
agreement or (y) Comcast to provide the requested releases of the historical easement
agreements, and the failure of Comcast and/or Florida Power & Light to provide the requested
deliverables (in spite of such efforts) shall not be a condition to Buyer’s obligation to close on
the Closing Date. Buyer shall reasonably cooperate (at no material cost or expense to Buyer)
with Seller in connection with its satisfaction of the covenants set forth in this Section 10(p).
Seller shall, from time to time, and promptly following Buyer’s written request therefor, keep
Buyer reasonably apprised as to the status of its compliance with the covenants set forth in this
Section 10(p).
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SECTION 11.
ASSIGNMENT BY BUYER
Buyer shall not directly or indirectly assign its rights under this Agreement without first
obtaining Seller’s written consent, which consent may be withheld in Seller’s sole and absolute
discretion; it being agreed that a transfer of any direct or indirect legal, beneficial or other
ownership interest in Buyer shall be deemed to be an indirect assignment of Buyer’s rights under
this Agreement. Notwithstanding the foregoing or anything else to the contrary contained herein,
Buyer shall have the right, without Seller’s consent, to assign Buyer’s rights and obligations in
this Agreement to one or more Affiliates of Buyer so long as (a) Buyer notifies Seller of such
assignment (which notice shall contain a certification by Buyer of its ownership of or affiliation
with the proposed assignee(s)) at least five (5) Business Days prior to the Closing and
concurrently delivers to Seller a copy of the assignment agreement between Buyer and the
assignee(s), (b) such assignment shall not relieve Buyer from any of its obligations under this
Agreement, and (c) the assignee(s) shall assume all of Buyer’s obligations under this Agreement
on a joint and several basis with Buyer. For purposes of clarity, an assignee hereunder shall be
deemed to be an Affiliate of Buyer if one or more Buyer Control Parties, directly and/or
indirectly, Controls such assignee, which may include Control by one or more Buyer Control
Parties jointly with other Persons who are not Buyer Control Parties. Any assignment made in
violation of this Section 11 shall be null and void.
SECTION 12.
DESTRUCTION; CONDEMNATION
(a)
General. Prior to Closing, Seller shall promptly (but in no event later than the
Scheduled Closing Date) provide Buyer with written notice of any loss or damage affecting the
applicable Property (or any portion thereof) due to a casualty or condemnation or if same shall
become the subject of a pending condemnation of which Seller or any Subsidiary has received
written notice. Such notice shall include a detailed description of the portion of the Property
affected thereby and an estimate of the cost to repair and restore such loss or damage and the
time required for same. Upon Closing, full risk of loss with respect to the Property shall pass to
Buyer.
(b)
Minor Loss or Damage. In the event of loss or damage affecting a Property or
any portion thereof that is not a Major Loss or Damage, this Agreement shall remain in full force
and effect, provided Seller shall (or Seller shall cause its applicable Subsidiaries to), at Closing,
(x) credit to Buyer the amount of any outstanding deductible with respect to any loss or damage,
which credit shall not exceed the actual cost to repair the applicable Property, and the cost of
repair for any uninsured damage or destruction (if any), and (y) assign by a written instrument in
form and substance reasonably approved by Buyer (and, if applicable, credit with respect to
claims and proceeds actually received by Seller or a Subsidiary prior to the Closing Date) to
Buyer (or its designee) all of Seller’s and each Subsidiary’s right, title and interest to any claims
and proceeds Seller and its Subsidiaries may have with respect to any insurance policies
(including any business or rent interruption insurance attributable to the period following the
Cutoff Time) or condemnation awards relating to the applicable Property (and with respect to
any proceeds collected by Seller or any Subsidiary that are credited, less (without duplication)
any reasonable out-of-pocket costs (including reasonable attorneys’ fees) actually incurred by
Seller to collect such proceeds and any portion of such proceeds that Seller uses to make
temporary or emergency repairs to the applicable Property that Seller deems to be reasonable).
46
(c)
Major Loss or Damage. Unless as a result of any action(s) of Buyer or any of
Buyer’s Representatives, in the event of a “Major Loss or Damage” affecting a Property or any
portion thereof, Buyer may terminate this Agreement in its entirety by sending written notice
thereof to Seller within ten (10) Business Days after Seller sends Buyer written notice of the
occurrence of a Major Loss or Damage (it being agreed that the Scheduled Closing Date shall be
extended, if necessary, to provide sufficient time for Buyer to make such election), in which
event (i) this Agreement shall terminate in its entirety upon the giving of such notice, (ii)
thereafter neither Buyer nor Seller shall have any further rights, obligations or liabilities
hereunder except to the extent that any obligation or liability set forth herein expressly survives
termination of this Agreement, and (iii) the Deposit shall be returned to Buyer. If Buyer does not
elect to terminate this Agreement within such ten (10) Business Day period, then Buyer shall be
deemed to have elected to proceed with the Closing. If Buyer elects or is deemed to have elected
to proceed with the Closing, then, in such event, Seller shall (or Seller shall cause its applicable
Subsidiaries to), at Closing, (x) credit to Buyer the amount of any outstanding deductible with
respect to any loss or damage, which credit shall not exceed the actual cost to repair the
applicable Property, and any the cost of repair for any uninsured damage or destruction, and (y)
assign by a written instrument in form and substance reasonably approved by Buyer (and, if
applicable, credit with respect to claims and proceeds actually received by Seller or a Subsidiary
prior to the Closing Date) to Buyer (or its designee) all of Seller’s and each Subsidiary’s right,
title and interest to any claims and proceeds Seller and its Subsidiaries may have with respect to
any insurance policies (including any business or rent interruption insurance attributable to the
period following the Cutoff Time) or condemnation awards relating to the applicable Property
(and with respect to any proceeds collected by Seller or any Subsidiary that are credited, less
(without duplication) any reasonable out-of-pocket costs (including reasonable attorneys’ fees)
actually incurred by Seller to collect such proceeds and any portion of such proceeds that Seller
uses to make temporary or emergency repairs to the applicable Property that Seller deems to be
reasonable). For avoidance of doubt, any termination of this Agreement by Buyer shall
terminate this Agreement in its entirety and not in part.
(d)
Definition of “Major Loss or Damage”. For the purposes of this Section 12,
“Major Loss or Damage” with respect to the applicable Property refers to the following: (i) loss
or damage to the applicable Property or any portion thereof that either (1) is uninsured (unless
Seller elects to credit Buyer at Closing for the amount of the uninsured loss or damage) or (2) is
insured, and in either instance the cost of repairing or restoring the applicable Property (or such
portion) to a condition substantially identical to that of the applicable Property (or such portion)
prior to the event of loss or damage would be, in the opinion of an architect or construction
consultant selected by Seller and reasonably approved by Buyer, equal to or greater than
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]; or (ii) any loss due to a
condemnation of the applicable Property (or any portion thereof) which decreases the value of
the applicable Property by more than [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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(e)
Settlements. In no event shall Seller or the Subsidiaries agree to any compromise
or settlement with their insurance companies with respect to any casualty (other than with respect
to damage due to a casualty which Seller shall, at its sole cost, repair prior to the Scheduled
Closing Date) or with the condemning authority in respect of such matter, in either case, without
Buyer’s
47
prior written consent; it being agreed that Borrower shall have the sole right after Closing to
negotiate, compromise and settle with all insurance companies and condemning authorities in
respect of all such matters.
SECTION 13.
DEFAULTS AND REMEDIES
(a)
Seller’s Pre-Closing Default. If Seller (i) defaults under this Agreement on the
Scheduled Closing Date by failing or refusing to effectuate the Closing in accordance with the
terms of this Agreement, or (ii) defaults in any other material respect prior to the Scheduled
Closing Date, (including a material breach of Seller’s representations or warranties under this
Agreement other than those representations or warranties by Seller that were true and correct as
of the Effective Date and became untrue following the Effective Date as a result of (1) any action
by Seller or any of its Affiliates undertaken in order to (a) comply with applicable law (provided
such action resulted in such legal compliance), (b) prevent or otherwise cure any default or
otherwise comply with the terms of under a Space Lease (provided such action resulted in, as
applicable, the prevention or cure of such default or such compliance) or (c) prevent or otherwise
cure any default under or otherwise comply with the terms of any Service Contracts, loan
documents placed in the Data Room or Permitted Exceptions (provided such action resulted in,
as applicable, the prevention or cure of such default or such compliance), (2) any action or
omission by a Person other than Seller or any of its Affiliates or (3) any action or omission
expressly permitted under this Agreement) and such default is not cured by the earlier of the
Scheduled Closing Date and ten (10) Business Days after receipt of written notice from Buyer
with respect thereto (as such cure period may be extended if such default cannot reasonably be
cured within such initial cure period) (for clarity, Seller shall have no right to cure defaults under
this clause (ii) with respect to obligations required to be performed by Seller on the Scheduled
Closing Date), then Buyer shall be entitled, as its sole remedies, to elect one of the following: (x)
terminate this Agreement in its entirety and not in part, and receive the return of the Deposit
together with a reimbursement from Seller for Buyer’s out-of-pocket costs and expenses in
connection herewith (not to exceed [xxxxxxxxxxxxxxx] in total (the “Out-of-Pockets Cap”)),
following which no party hereto shall have any further rights, duties, obligations or liabilities
under this Agreement except for those rights, duties, obligations and liabilities that are expressly
stated to survive the termination of this Agreement, (y) enforce specific performance of Seller’s
obligations under this Agreement (in which event Seller will not be entitled to a reimbursement
of its out-of-pocket costs and expenses except as described in this Section 13(a) below and
subject to Section 32(c) hereof) or (z) waive in writing such default and proceed to the Closing
without abatement of the Purchase Price. Without limiting the other provisions of this
Agreement (including, without limitation, Buyer’s rights in the last sentence of this Section
13(a)), Buyer expressly waives its right to seek damages of any kind in the event Seller defaults
under this Agreement at or prior to Closing. If Buyer does not expressly elect a remedy set forth
above, and Buyer fails to file suit for specific performance against Seller in a court of competent
jurisdiction on or before the date that is forty-five (45) days following the Scheduled Closing
Date, then Buyer shall be deemed to have elected the remedy set forth in clause (x) above.
Nothing contained in this Section 13(a) shall limit Buyer’s right against Seller either by reason of
any indemnity obligations of Seller to Buyer expressly stated in this Agreement to survive the
termination of this Agreement or the Closing or to enforce Seller’s obligation under Section
32(c) hereof to pay to Buyer all of Buyer’s reasonable out-of-pocket costs and expenses
(including reasonable counsel fees and court costs) in enforcing the provisions of
48
this Section 13(a). Notwithstanding anything to the contrary contained herein, if the remedy of
specific performance is not available for any reason whatsoever (other than due to the failure by
Buyer to file suit for specific performance by no later than the date that is forty-five (45) days
following the Scheduled Closing Date), then Buyer shall have the right to receive a return of the
Deposit, the right to be reimbursed from Seller for Buyer’s out-of-pocket costs and expenses in
connection herewith (subject to Section 32(c) hereof, not to exceed the Out-of-Pockets Cap in
total) and the right to seek and receive all of its damages, at law or in equity, resulting from such
default.
(b)
Buyer’s Pre-Closing Default. If Buyer (i) defaults under this Agreement on the
Scheduled Closing Date by failing to effectuate the Closing (including making the Closing
Payment) in accordance with the terms of this Agreement, or (ii) defaults in any other material
respect prior to the Scheduled Closing Date and such default is not cured by the earlier of the
Scheduled Closing Date and ten (10) Business Days after receipt of written notice from Seller
with respect thereto (as such cure period may be extended if such default cannot reasonable be
cured within such initial cure period) (other than with respect to delivering the Initial Deposit,
the First Extension Deposit or the Second Extension Deposit to Escrow Agent, for which there
shall not be any notice and cure period), then Seller shall be entitled, as its sole and exclusive
remedy at law or in equity, to (y) terminate this Agreement in its entirety (and not in part) and
recover the Deposit as liquidated damages (and not as a penalty), in full satisfaction of Seller’s
claims against Buyer hereunder or (z) waive in writing such default and proceed to the Closing.
Seller and Buyer agree that Seller’s damages resulting from Buyer’s default are difficult, if not
impossible, to determine and the Deposit is a fair and reasonable estimate of those damages that
Seller may suffer, and the amount of the Deposit has been agreed to in an effort to cause the
amount of such damages to be certain. Nothing contained in this Section 13(b) shall limit (x)
Seller’s right against Buyer by reason of any indemnity obligations of Buyer to Seller expressly
stated in this Agreement to survive the termination of this Agreement or the Closing (including
the indemnity obligations of Seller pursuant to Section 16 hereof) or (y) the right of Seller to
enforce Buyer’s obligation under Section 32(c) hereof to pay to Seller all of Seller’s reasonable
out-of-pocket costs and expenses (including reasonable counsel fees and court costs) in enforcing
the provisions of this Section 13(b).
(c)
Post-Closing Defaults of Buyer and Seller. If Buyer or Seller defaults under this
Agreement after the Closing with respect to any obligation of Buyer or Seller first arising after,
and surviving, the Closing, then Buyer (if Seller is the defaulting party) and Seller (if Buyer is
the defaulting party) shall have all rights and remedies available to Buyer against Seller, and
Seller against Buyer, as applicable, hereunder (including the provisions of Section 16 hereof),
and neither Section 13(a) or 13(b) hereof shall apply.
SECTION 14.
SELLER’S REPRESENTATIONS AND WARRANTIES
(a)
Representations and Warrantees Regarding Seller. Each of 1001 Brickell Seller
and Yacht Club Seller, jointly and severally, hereby represents and warrants to Buyer solely as to
the following matters, each of which is so warranted to be true and correct as of the Effective
Date and as of the Closing Date (except where stated to be as of the Effective Date):
49
(i)
Yacht Club Seller is, and at the Closing shall be, a limited partnership duly
formed, validly existing and in good standing under the laws of the State of Delaware.
(ii)
1001 Brickell Seller is, and at the Closing shall be, a limited liability
company duly formed, validly existing and in good standing under the laws of the State of
Delaware.
(iii) 1001 Brickell Seller is the sole record and beneficial owner and holder of the
REIT Interests, with all rights to vote such interests, free and clear of any mortgage, pledge, lien,
charge or encumbrance or other options, calls, puts, subscriptions, warrants, assessments,
redemption rights, rights of first offer or refusal or other rights of any Person to purchase or vote
any of the REIT Interests or to acquire any interests therein of any kind or nature or that may
entitle it to the issuance of any ownership interests in REIT, except this Agreement and a proxy
with respect to the Preferred Stock (the “Preferred Shares Proxy”) held by William A. McGugin
(the “Preferred Proxy Holder”), a sample copy of which has been made available to Buyer in the
Data Room. There are no voting agreements, proxies or other similar agreements or
understandings with respect to the equity interests of the REIT, other than the Preferred Shares
Proxy. The REIT Interests comprise 100% of the equity interests in the REIT, other than the
Preferred Stock, and there are no other direct legal or beneficial interests in the REIT, other than
the Preferred Stock. 1001 Brickell Seller has not transferred, conveyed, assigned, sold, pledged,
mortgaged, hypothecated or otherwise transferred or granted a lien or security interest in the
REIT Interests. None of the REIT Interests are certificated. The REIT Interests have been duly
authorized and are validly issued, fully paid and non-assessable and have not been issued and
were not issued in violation of any preemptive or other similar right.
(iv) Yacht Club Seller is the sole record and beneficial owner and holder of the
Yacht Club Interests, with all rights to vote such interests, free and clear of any mortgage,
pledge, lien, charge or encumbrance or other options, calls, puts, subscriptions, warrants,
assessments, redemption rights, rights of first offer or refusal or other rights of any Person to
purchase or vote any of the Yacht Club Interests or to acquire any interests therein of any kind or
nature or that may entitle it to the issuance of any ownership interests in Yacht Club Owner,
except this Agreement. There are no voting agreements, proxies or other similar agreements or
understandings with respect to the equity interests of Yacht Club Owner. The Yacht Club
Interests comprise 100% of the equity interests in Yacht Club Owner, and there are no other
direct legal or beneficial interests in Yacht Club Owner. Yacht Club Seller has not transferred,
conveyed, assigned, sold, pledged, mortgaged, hypothecated or otherwise transferred or granted
a lien or security interest in the Yacht Club Interests. None of the Yacht Club Interests are
certificated. The Yacht Club Interests have been duly authorized and are validly issued, fully
paid and non-assessable and have not been issued and were not issued in violation of any
preemptive or other similar right.
(v)
Upon transfer to Buyer at the Closing of the Interests, and upon Buyer’s
payment of the Purchase Price in accordance with this Agreement, Buyer will acquire the
Interests free and clear of any mortgage, pledge, lien, charge or encumbrance or other options,
calls, subscriptions, warrants, assessments, rights of first offer or refusal or other rights of any
Person to purchase or vote any of the Yacht Club Interests or to acquire any interests therein of
any kind or
50
nature, except for restrictions on transfer imposed under applicable securities laws or as
otherwise set forth in the applicable Owner’s Organizational Documents.
(vi)
Seller (and each Subsidiary, as applicable) has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations hereunder and under
all documents contemplated hereunder, and to consummate the transactions contemplated
hereby. The execution, delivery and performance by Seller of this Agreement and all documents
contemplated hereunder to be executed, delivered and performed by or on behalf of Seller, and
the consummation by Seller (and each Subsidiary, as applicable) of the transactions
contemplated hereby, have been duly and validly authorized by all necessary corporate, limited
liability company or partnership action, as the case may be, on the part of Seller and each
applicable Subsidiary. This Agreement has been, and as of the Closing Date all documents
contemplated hereunder to be executed and delivered by Seller have been, duly executed and
delivered by Seller and each applicable Subsidiary and constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms, except as
enforcement may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
(vii) Seller’s execution and delivery of this Agreement and the documents and
instruments to be executed and delivered by Seller on the Closing Date, and the performance by
Seller (including with respect to the 1001 Brickell Companies, Yacht Club Owner and the
Property) of its duties and obligations under this Agreement and such other documents and
instruments in accordance with its and their terms, are consistent with, and do not violate the
Organizational Documents of Seller, any 1001 Brickell Company or Yacht Club Owner, or any
contract or other instrument to which Seller, any 1001 Brickell Company or Yacht Club Owner
is a party, or any law, order, judgment, injunction, award or decree of any court or arbitration
body, by or to which Seller, any 1001 Brickell Company, any Owner or the Property are or may
be bound or subject.
(viii)
Seller is not a “foreign person” as defined in Section 1445(f)(3) of the
Code.
(ix) Seller has not (i) made a general assignment for the benefit of creditors, (ii)
filed a petition for voluntary bankruptcy or filed a petition or answer seeking reorganization or
any arrangement or composition, extension, or readjustment of its indebtedness, (iii) consented,
in any creditor’s proceeding, to the appointment of a receiver or trustee of Seller or any of its
property or any part thereof, or (iv) been named as a debtor in an involuntary bankruptcy
proceeding or received a written notice threatening the same. Seller is not insolvent and the
consummation of the transactions contemplated by this Agreement shall not render Seller
insolvent. No general assignment of the property of Seller has been made for the benefit of
creditors, and no receiver, master, liquidator or trustee has been appointed for Seller or any of its
property.
(x)
Except for this Agreement, Seller has not granted to any Person any option
or other right to purchase the Property or any direct or indirect interest therein or any part
thereof.
(xi) There are no lawsuits, arbitrations, governmental investigations or other
legal proceedings pending before any court or Governmental Authority or threatened in writing
51
(1) which affect the Interests or, if adversely determined, would prevent Seller or any Subsidiary
from entering into this Agreement or performing its material obligations under this Agreement
on the Closing Date or (2) except as set forth on Schedule 8 annexed hereto, against any
Subsidiary. Except as disclosed in the Data Room, neither Seller nor any Subsidiary has
received written notice from any Governmental Authority having jurisdiction over Seller or any
Subsidiary as to the violation (which remains uncured) of any applicable federal, state or local
laws by Seller or any Subsidiary.
(xii) Seller (a) does not appear on the Specially Designated Nationals and
Blocked Persons List of the Office of Foreign Assets Control of the United States Department of
the Treasury, or any other relevant and applicable regulation or executive order administered by
the Office of Foreign Assets Control of the United States Department of the Treasury, (b) is not a
Person with which a transaction is prohibited by Executive Order 13224, the USA PATRIOT
Act, the Trading with the Enemy Act or the foreign asset control regulations of the United States
Treasury Department, (such as the list of boycotting countries published by the U.S. Department
of Treasury pursuant to Code §999(a)(3)) or by any other list of restricted parties maintained by
the U.S. federal government, in each case as amended from time to time, (c) is not Controlled by
any Person described in the foregoing items (a) or (b), (d) is not a Person having its principal
place of business, or the majority of its business operations (measured by revenues), located in
any country described in the foregoing item (b), (e) is not a Person that has been previously
indicted for or convicted of any violation of criminal laws of the United States of America or of
any of the several states, or that would be a criminal violation if committed within the
jurisdiction of the United States of America or any of the several states, relating to terrorism or
money laundering, including any offense under the criminal laws against terrorism, the criminal
laws against money laundering, the Bank Secrecy Act of 1970, as amended, the Money
Laundering Control Act of 1986, as amended or the USA PATRIOT Act, and (f) is not a Person
that could otherwise cause Buyer to be in violation of applicable anti-money laundering,
economic sanctions, anti-bribery, anti-boycott, anti-terrorism laws, rules, regulations, directives
or special measures.
(xiii)
Seller is not and is not acting on behalf of: (i) an “employee benefit
plan” as defined in Section 3(3) of ERISA/the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), (ii) a “plan” as defined in Section 4975 of the Code, that is subject
to Section 4975 of the Code, (iii) an entity deemed to hold “plan assets” within the meaning of
29 C.F.R. §2510.3-101, as modified by Section 3(42) of ERISA, of any such employee benefit
plan or plan, or (iv) a “governmental plan” within the meaning of Section 3(32) of ERISA.
(xiv)
Neither Seller nor any of its Affiliates, nor any of their respective
partners, members, shareholders or other equity owners having a “controlling interest” in Seller
(as defined in Section 287.138(1)(a), Florida Statutes) is, nor have they ever been, a person or
entity prohibited from owning or acquiring (whether by transfer, devise, purchase, grant or
otherwise) real property in the State of Florida in violation of Florida Statutes, Sections 692.202,
692.2023 and 692.204).
(b)
Representations and Warrantees Regarding the 1001 Brickell Companies and
Yacht Club Owner. Each of 1001 Brickell Seller and Yacht Club Seller, jointly and severally,
hereby represents and warrants to Buyer solely as to the following matters, each of which is so
52
warranted to be true and correct as of the Effective Date and as of the Closing Date (except
where stated to be as of the Effective Date):
(i)
Yacht Club Owner is, and at the Closing shall be, a limited liability company
duly formed, validly existing and in good standing under the laws of the State of Delaware and
duly qualified to transact business in the State of Florida, and has all requisite power and
authority to own and operate the Yacht Club Property as currently owned and operated. Since its
formation, Yacht Club Owner’s name has always been “Aimco Yacht Club at Brickell, LLC”.
(ii)
Each of 1001 Brickell Holdings and 1001 Brickell Owner is, and at the
Closing shall be, a limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware. 1001 Brickell Owner is, and at the Closing shall be,
duly qualified to transact business in the State of Florida, and has all requisite power and
authority to own and operate the 1001 Brickell Property as currently owned and operated. Since
its formation, 1001 Brickell Owner’s name has always been “1001 Brickell Owner, LLC”,
except for the period of time from its formation until its name change effective January 1, 2021
pursuant to the Certificate of Merger, during which period 1001 Brickell Owner’s name was
“Brickell REIT Merger Sub, LLC”. 1001 Brickell Owner is the successor by merger to BBT
SPE effective January 1, 2021 pursuant to the Certificate of Merger.
(iii) REIT is, and at the Closing shall be, a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware.
(iv) REIT is the sole record and beneficial owner and holder of the issued and
outstanding limited liability company membership interests in 1001 Brickell Holdings (the “1001
Brickell Holdings Interests”), with all rights to vote such interests, free and clear of any
mortgage, pledge, lien, charge or encumbrance or other options, calls, puts, subscriptions,
warrants, assessments, redemption rights, rights of first offer or refusal or other rights of any
Person to purchase or vote any of the 1001 Brickell Holdings Interests or to acquire any interests
therein of any kind or nature or that may entitle it to the issuance of any ownership interests in
1001 Brickell Holdings. There are no voting agreements, proxies or other similar agreements or
understandings with respect to the equity interests of 1001 Brickell Holdings. The 1001 Brickell
Holdings Interests comprise 100% of the equity interests in 1001 Brickell Holdings, and there
are no other direct legal or beneficial interests in 1001 Brickell Holdings. REIT has not
transferred, conveyed, assigned, sold, pledged, mortgaged, hypothecated or otherwise transferred
or granted a lien or security interest in the 1001 Brickell Holdings Interests. None of the 1001
Brickell Holdings Interests are certificated. The 1001 Brickell Holdings Interests have been duly
authorized and are validly issued, fully paid and non-assessable and have not been issued and
were not issued in violation of any preemptive or other similar right.
(v)
1001 Brickell Holdings is the sole record and beneficial owner and holder of
the issued and outstanding limited liability company membership interests in 1001 Brickell
Owner (the “1001 Brickell Owner Interests”), with all rights to vote such interests, free and clear
of any mortgage, pledge, lien, charge or encumbrance or other options, calls, puts, subscriptions,
warrants, assessments, redemption rights, rights of first offer or refusal or other rights of any
Person to purchase or vote any of the 1001 Brickell Owner Interests or to acquire any interests
therein of any kind or nature or that may entitle it to the issuance of any ownership interests in
53
1001 Brickell Owner. There are no voting agreements, proxies or other similar agreements or
understandings with respect to the equity interests of 1001 Brickell Owner. The 1001 Brickell
Owner Interests comprise 100% of the equity interests in 1001 Brickell Owner, and there are no
other direct legal or beneficial interests in 1001 Brickell Owner. Other than with respect to its
interests in 1001 Brickell Owner which have been pledged to its existing mortgage lender (and
which pledge shall be released at Closing), 1001 Brickell Holdings has not transferred,
conveyed, assigned, sold, pledged, mortgaged, hypothecated or otherwise transferred or granted
a lien or security interest in the 1001 Brickell Owner Interests. Other than with respect to 1001
Brickell Holdings’ interests in 1001 Brickell Owner, which have been certificated and shall be
delivered to Buyer at Closing, none of the 1001 Brickell Owner Interests are certificated. The
1001 Brickell Owner Interests have been duly authorized and are validly issued, fully paid and
non-assessable and have not been issued and were not issued in violation of any preemptive or
other similar right.
(vi) REIT does not own, or have any interest in, capital stock, membership
interest or other equity interest of any Person other than the 1001 Brickell Holdings Interests and
the issued and outstanding stock in TRS. The 1001 Brickell Holdings Interests and the stock of
the TRS are the sole assets of REIT.
(vii) 1001 Brickell Holdings does not own, or have any interest in, capital stock,
membership interest or other equity interest of any Person other than the 1001 Brickell Owner
Interests. The 1001 Brickell Owner Interests owned by 1001 Brickell Holdings are the sole asset
of 1001 Brickell Holdings.
(viii)
1001 Brickell Owner does not own, or have any interest in, capital
stock, membership interest or other equity interest of any Person. The 1001 Brickell Property
and the rents and proceeds thereof (and interests related thereto including the applicable Bank
Accounts) are the sole assets of 1001 Brickell Owner.
(ix) Yacht Club Owner does not own, or have any interest in, capital stock,
membership interest or other equity interest of any Person. The Yacht Club Property and the
rents and proceeds thereof (and interests related thereto including the applicable Bank Accounts)
are the sole assets of Yacht Club Owner.
(x)
True, complete and correct copies of each Subsidiary’s (i) unaudited balance
sheets for the calendar years 2022 and 2023 and the related statements of income for the years
ending on December 31, 2022 and December 31, 2023, (ii) the unaudited balance sheet of each
Subsidiary as of September 30, 2024 (the “Balance Sheet Date”) and the related statement of
income for the nine (9)-month period then ended have been delivered to Buyer in the Data Room
(collectively, the “Financial Statements”) and (iii) as of the Closing Date, the Updated Financial
Statements. The Financial Statements and Updated Financial Statements fairly, completely and
accurately present, in accordance with generally accepted accounting principles (“GAAP”), each
Subsidiary’s financial condition and the results and cash flows of its operations as of the
applicable dates of each such Financial Statement for the periods covered thereby. No
Subsidiary has liabilities required to be reflected on a balance sheet prepared in accordance with
GAAP except (i) those disclosed on Exhibit I annexed hereto, (ii) those which are adequately
reflected or reserved against in the Financial Statements as of the Balance Sheet Date; and (iii)
those which have been incurred in the ordinary course of business since the Balance Sheet Date
and which are not,
54
individually or in the aggregate, material in amount. Except for debts, liabilities and obligations
that are fully reflected in the Financial Statements or that were incurred in the ordinary course of
business since the Financial Statements were issued, no Subsidiary has any material (individually
or in the aggregate) debts, liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by any accounting principles used by, or applicable to, such
Subsidiary to be set forth on its balance sheet or in the notes thereto. As of the Effective Date,
no Subsidiary (1) has any currently outstanding indebtedness, liabilities or obligations to another
Subsidiary, a Seller or any Affiliate of a Seller or (2) has made a loan to, or received a
promissory note or other debt instrument as the creditor or lender thereunder from, another
Subsidiary, a Seller or any Affiliate of a Seller ((1) and (2) collectively, “Intercompany Debt”),
other than that certain loan made by the REIT to Yacht Club Seller in the principal amount of
$54,000,000.00 made on October 31, 2022 pursuant to that certain Promissory Note dated
October 31, 2022 made by Yacht Club Seller for the benefit of the REIT, as amended by that
certain Amendment to Promissory Note dated October 31, 2022, and as secured by that certain
Ownership Interest Pledge Agreement dated October 31, 2022 by Yacht Club Seller, as pledgor,
and the REIT, as pledgee, pledging all of Yacht Club Seller’s membership interests in Yacht
Club Owner (collectively, the “Existing Intercompany Debt”). As of the Closing Date, no
Subsidiary has any currently outstanding Intercompany Debt, whether as debtor or creditor
thereunder.
(xi) The minute books and other similar corporate records of the REIT, true,
correct and complete copies of which have been delivered to Buyer in the Data Room, contain a
true and complete record, in all material respects, of all action taken at all meetings and by all
written consents in lieu of meetings of the stockholders, the boards of directors and committees
of the boards of directors of the REIT. The stock transfer ledgers and other similar records of the
REIT, true, correct and complete copies of which have been delivered to Buyer in the Data
Room, reflect in all respects all record transfers prior to the execution of this Agreement in the
common stock of the REIT. The limited liability company records of each Owner and of 1001
Brickell Holdings, true, correct and complete copies of which have been delivered to Buyer in
the Data Room, contains a true and complete record, in all material respects, of all action taken at
all meetings and by all written consents in lieu of meetings of the members and the managers of
each such Person.
(xii) Other than as set forth on Schedule 16, there are no accrued and unpaid
dividends on the Preferred Stock. Based information provided by the Preferred Proxy Holder,
Schedule 16 identifies the issued and outstanding Preferred Stock and the record owners thereof
as of the date set forth thereon.
(xiii)
None of the 1001 Brickell Companies or Yacht Club Owner has (i)
made a general assignment for the benefit of creditors, (ii) filed a petition for voluntary
bankruptcy or filed a petition or answer seeking reorganization or any arrangement or
composition, extension, or readjustment of its indebtedness, (iii) consented, in any creditor’s
proceeding, to the appointment of a receiver or trustee of any of the 1001 Brickell Companies or
Yacht Club Owner or any of its property or any part thereof, or (iv) been named as a debtor in an
involuntary bankruptcy proceeding or received a written notice threatening the same. Each of
the 1001 Brickell Companies and Yacht Club Owner is not insolvent and the consummation of
the transactions contemplated by this Agreement shall not render any of the 1001 Brickell
Companies or Yacht Club Owner
55
insolvent. No general assignment of the property of each of the 1001 Brickell Companies or
Yacht Club Owner has been made for the benefit of creditors, and no receiver, master, liquidator
or trustee has been appointed for any of the 1001 Brickell Companies or Yacht Club Owner or
any of its property.
(xiv)
Except for this Agreement, none of the 1001 Brickell Companies or
Yacht Club Owner, nor any of their respective Affiliates, has granted to any Person any option or
other right to purchase the Property or any direct or indirect interest therein or any part thereof.
(xv) Exhibit J-1 is a true and correct organizational chart for 1001 Brickell
Owner. Exhibit J-2 is a true and correct organizational chart for Yacht Club Owner. Exhibit J-3
is a true and correct organizational chart for TRS.
(xvi)
There is no litigation, claims, suits, actions, arbitration, proceedings,
judgments, orders, decrees, stipulations or awards (whether rendered by a court, administrative
agency, or by arbitration, pursuant to a grievance or other procedure) existing, pending or to
Seller’s knowledge threatened in writing with respect to the Property or any of the 1001 Brickell
Companies or Yacht Club Owner, other than as set forth on Schedule 8.
(xvii)
Each of the 1001 Brickell Companies and Yacht Club Owner (a) does
not appear on the Specially Designated Nationals and Blocked Persons List of the Office of
Foreign Assets Control of the United States Department of the Treasury, or any other relevant
and applicable regulation or executive order administered by the Office of Foreign Assets
Control of the United States Department of the Treasury, (b) is not a Person with which a
transaction is prohibited by Executive Order 13224, the USA PATRIOT Act, the Trading with
the Enemy Act or the foreign asset control regulations of the United States Treasury Department,
(such as the list of boycotting countries published by the U.S. Department of Treasury pursuant
to Code §999(a)(3)) or by any other list of restricted parties maintained by the U.S. federal
government, in each case as amended from time to time, (c) is not Controlled by any Person
described in the foregoing items (a) or (b), (d) is not a Person having its principal place of
business, or the majority of its business operations (measured by revenues), located in any
country described in the foregoing item (b), (e) is not a Person that has been previously indicted
for or convicted of any violation of criminal laws of the United States of America or of any of
the several states, or that would be a criminal violation if committed within the jurisdiction of the
United States of America or any of the several states, relating to terrorism or money laundering,
including any offense under the criminal laws against terrorism, the criminal laws against money
laundering, the Bank Secrecy Act of 1970, as amended, the Money Laundering Control Act of
1986, as amended or the USA PATRIOT Act, and (f) is not a Person that could otherwise cause
Buyer to be in violation of applicable anti-money laundering, economic sanctions, anti-bribery,
anti-boycott, anti-terrorism laws, rules, regulations, directives or special measures.
(xviii)
Each of the 1001 Brickell Companies and Yacht Club Owner has at all
times since its formation and thereafter satisfied each of the following conditions: (A)it has not
engaged in any business or activity, other than the ownership, financing, operation, management,
and maintenance of the Property and activities incidental thereto; (B) it has not acquired, owned,
held, leased, operated, managed, maintained, developed or improved any tangible assets other
than the Property and improvements related to the operation of the Property; (C) other than as set
forth on
56
the organizational charts attached hereto as Exhibit J-1, Exhibit J-2 and Exhibit J-3, it has not
owned any subsidiary or made any investment in, any other Person; (D) (1) it has not assumed or
guaranteed the debts or obligations of any other Person (other than Owner), (2) held itself out to
be responsible for the debts of another Person (other than Owner), (3) pledged its assets to secure
the obligations of any other Person or otherwise pledged its assets for the benefit of any other
Person (other than a pledge made to secure a loan made to Owner), or (4) held out its credit as
being available to satisfy the obligations of any other Person other than Owner; and (5) it has
had, and has, no employees.
(xix)
Seller has provided Buyer in the Data Room with true, correct and
complete copies of the Organizational Documents of the 1001 Brickell Companies and Yacht
Club Owner, all of which are listed on Schedule 9 annexed to this Agreement. Such
Organizational Documents are the only agreements and/or instruments, oral or written,
governing the formation, ownership, management, governance and existence of the 1001
Brickell Companies and Yacht Club Owner or among the holders of legal or beneficial interests
in the 1001 Brickell Companies and Yacht Club Owner. Such Organizational Documents have
not been amended, amended and restated, modified, supplemented or assigned (except as
provided in the Data Room and identified on Schedule 9 annexed to this Agreement) and are in
full force and effect. No Person has any voting or management rights with respect to (w) REIT
other than 1001 Brickell Seller, (x) Yacht Club Owner other than Yacht Club Seller, (y) 1001
Brickell Owner other than 1001 Brickell Holdings, and (z) 1001 Brickell Holdings other than
REIT and any Person designated by a corporate service provider pursuant to a staffing agreement
or similar document (relating to independent members, independent managers, independent
directors, springing members and/or similar parties) between the applicable Owner and a
corporate service provider, all of which are listed on Schedule 9 annexed to this Agreement.
(xx) Schedule 12 sets forth a correct and complete list of all Bank Accounts and
each trust company, savings institution, brokerage firm, mutual fund or other financial institution
with which a 1001 Brickell Company or Yacht Club Owner has a Bank Account.
(xxi)
None of Seller or any Subsidiary (a) has or has ever had any employees
and/or (b) is a party to any union contracts, collective bargaining agreements, labor agreements
or employee benefit plans with respect to the use or operation of the Property. There are no union
agreements affecting the Property, and no union employees who are employed in connection
with the use, management, maintenance or operation of the Property, in each case, with respect
to which any Subsidiary shall have any obligation or liability following the Closing.
(xxii)
Except for the items identified on Schedule 13 attached hereto (the
“Existing Contracts”), there are no contracts, agreements or other documents binding on or
entered into by 1001 Brickell Holdings or REIT that remain in effect. True, correct and
complete copies of all Existing Contracts in Seller’s or any Subsidiary’s possession have been
made available to Buyer in the Data Room.
(c)
Representations and Warrantees Regarding the Property. Each of 1001 Brickell
Seller and Yacht Club Seller, jointly and severally, hereby represents and warrants to Buyer
solely as to the following matters, each of which is so warranted to be true and correct as of the
Effective Date (except where stated to be as of the Closing Date) and true and correct in all
material respects
57
as of the Closing Date (except where stated to be as of the Effective Date, to the extent resulting
from any actions of Buyer or resulting from changes in facts that are expressly permitted by this
Agreement):
(i)
To Seller’s knowledge, no condemnation proceedings affecting the Property,
or any part thereof, are pending or have been threatened in writing.
(ii)
There are no Space Leases other than as set forth in Schedule 5 attached
hereto. There are no License and Access Agreements other than as set forth in Schedule 14
attached hereto or as otherwise set forth on the Rent Roll. Seller has delivered or made available
to Buyer in the Data Room (i) copies of each Space Lease for the Yacht Club Property in Seller’s
possession and (ii) true, complete and correct copies of each License and Access Agreement. To
Seller’s Knowledge, none of the Space Leases for the Yacht Club Property have been modified,
amended, assigned, extended, renewed or supplemented (whether orally or in writing) except for
the copies thereof in the Data Room. None of the License and Access Agreements have been
modified, amended, assigned, extended, renewed or supplemented (whether orally or in writing)
except for the copies thereof in the Data Room and which are also listed on Schedule 14 with
respect to License and Access Agreements. Except as set forth in Schedule 7 attached hereto, as
of the Effective Date, Owner has not given or received any written notice of a material default
under any of the Space Leases (excluding any default notices as to which the default referenced
therein has been cured). No Tenant has or has asserted any claim against Seller or any
Subsidiary for the return of any security deposit that remains outstanding. Except as set forth in
Schedule 7 attached hereto, as of the Effective Date there are no outstanding Leasing Costs with
respect to any Space Lease that have not been paid in full by Owner. As of the Closing Date,
there are no outstanding Leasing Costs with respect to any Space Lease that have not been paid
in full by Owner or that are not credited against the Closing Payment.
(iii) The only agreements for the payment of unpaid leasing commissions in
connection with the existing Space Leases are those listed on Schedule 7 annexed hereto. Other
than as set forth on Schedule 7, there are no brokerage commissions due in connection with any
of the existing Space Leases. All brokerage commissions payable in connection with the
existing Space Leases have been or will be paid in full by Owner prior to the Closing (either
directly or by credit to Buyer).
(iv) Except for the Service Contracts identified on Schedule 6 attached hereto
(the “Existing Service Contracts”), as of the Effective Date there are no Service Contracts in
effect. True, correct and complete copies of all Existing Service Contracts in Seller’s or Owner’s
possession have been made available to Buyer in the Data Room. To Seller’s Knowledge, as of
the Effective Date neither Seller nor Owner is in default under any of the Existing Service
Contracts. As of the Closing Date, neither Seller nor Owner is in default under any of the Non-
Terminable Service Contracts.
(v)
The rent roll (the “Rent Roll”) attached hereto as Schedule 5 is the Rent Roll
used by Owner in the ordinary course of business as of the Effective Date. As of the Effective
Date, the Rent Roll and, as of the Closing Date, the Updated Rent Roll, includes a true, correct
and complete list of, without limitation, (a) all Space Leases effective as of the date set forth on
the Rent Roll or the Updated Rent Roll, as applicable, (b) with respect to the Rent Roll as of the
58
Effective Date, to Seller’s Knowledge, the names of tenants pursuant to such Space Leases to
which Owner is a direct party or is otherwise bound as landlord thereunder, (c) with respect to
the Updated Rent Roll as of the Closing Date, the names of tenants pursuant to such Space
Leases to which Owner is a direct party or is otherwise bound as landlord thereunder, (d) the
amount, if any, of prepaid rents, and (e) the security deposits required to be held under such
Space Leases. No rent has been paid in advance by any tenant except, as of the Effective Date, as
set forth on the Rent Roll and, as of the Closing Date, as set forth on the Updated Rent Roll.
(vi) The only security deposits held by Owner for the account of the tenants
under the existing Space Leases as of the date hereof are those listed on Schedule 5. All security
deposits are in the form of cash.
(vii) Neither Seller nor any Subsidiary has received written notice of any pending
or threatened special assessments or special assessment proceedings (as a result of planned
public improvements or otherwise) affecting any portion of the Real Property. Neither Seller nor
any Subsidiary has received written notice from any Governmental Authority having jurisdiction
over the Property as to the violation (which will remain uncured beyond the Closing Date) of any
applicable federal, state or local laws, including environmental laws.
(viii)
Except as set forth on Schedule 10 annexed hereto, there are no tax
certiorari proceedings, tax protest proceedings pending or abatements of real estate taxes or
personal property taxes being pursued with respect to the Property for the current or prior tax
years. Neither Seller nor any Subsidiary has received any written notice of a retroactive real
property tax assessment.
(ix)
Neither Seller nor any Subsidiary has transferred any air rights or
development rights appurtenant to the Property and is not seeking to obtain any modification to
the zoning classification or use of the Property.
(x)
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(xi) Seller has delivered or made available to Buyer in the Data Room a true,
correct and complete copy of each Space Lease for the 1001 Brickell Property. None of the
Space Leases for the 1001 Brickell Property have been modified, amended, assigned, extended,
renewed or supplemented (whether orally or in writing) except as listed on Schedule 17.
(d)
Tax-Related Representations and Warranties. With respect to the 1001 Brickell
Companies, 1001 Brickell Seller represents and warrants to Buyer (collectively, the “REIT Tax
Representations”) and with respect to the Yacht Club Owner, Yacht Club Seller represents and
warrants to the Buyer (collectively, the “Yacht Club Tax Representations” and together with the
“REIT Tax Representations”, the “Tax Representations”) as follows. All REIT Tax
Representations are made without regard to any action taken by or inaction of the REIT, the
REIT Subsidiaries, the Buyer or any of their Affiliates from and after the Closing.
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(i) All U.S. federal, all income and other material Tax Returns required to be
filed by or on behalf of the REIT, the REIT Subsidiaries, and the Yacht Club Owner have been
timely and properly filed with the appropriate taxing authorities in all jurisdictions in which such
Tax Returns are required to be filed (after giving effect to any valid extensions of time in which
to make such filings), (B) all such Tax Returns were accurate and complete in all material
respects when filed and were properly executed by an authorized person, (C) all material Taxes
due and payable by the REIT, any of the REIT Subsidiaries, or the Yacht Club Owner have been
fully and timely paid whether or not shown as due on the applicable Tax Return, other than
Taxes that are being contested in good faith in appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, and (D) neither the REIT, nor any
REIT Subsidiary, nor the Yacht Club Owner has executed or filed with the IRS or any other
taxing authority any agreement, waiver or other document or arrangement extending or having
the effect of extending the period for assessment or collection of Taxes (including, but not
limited to, any applicable statute of limitations) that is still in effect (other than pursuant to
extensions of time to file Tax Returns obtained in the ordinary course).
(ii) The REIT has, for all taxable years commencing with its taxable year ended
December 31, 2021 and through and including its taxable year ended December 31, 2023, (1)
qualified to be subject to tax as a Real Estate Investment Trust and (2) has operated since
January 1, 2024 to the date of this Agreement in a manner consistent with the requirements for
qualification and taxation as a REIT, (3) intends to continue to operate in such a manner as to
qualify as a Real Estate Investment Trust through the Closing independent of (and without
having to comply with) any “savings” or “cure” provisions in the Code, including pursuant to
Code Section 856(g)(4) and 856(g)(5), and (4) has not taken or to its knowledge omitted to take
any action that would reasonably be expected to result in a successful challenge by the IRS or
any other taxing authority as to the status of the REIT as a Real Estate Investment Trust.
(iii) The REIT has, commencing with its taxable year ended December 31, 2021,
other than Taxes that have been paid prior to the date hereof, not incurred any material liability
for U.S. federal income Taxes including under Sections 857(b) and 4981 of the Code.
(iv) No challenge to or inquiry regarding the REIT’s status as a Real Estate
Investment Trust has been received or threatened in writing or, to Seller’s Knowledge, is
otherwise pending.
(v) 1001 Brickell Holdings has been, at all times since its formation, treated as a
disregarded entity for U.S. federal income tax purposes and not as a corporation or an association
taxable as a corporation.
(vi) 1001 Brickell Owner has been, at all times since its formation, treated as a
disregarded entity for U.S. federal income tax purposes and not as a corporation or an association
taxable as a corporation.
(vii)
Yacht Club Owner has been, at all times since its formation, treated as a
disregarded entity for U.S. federal income tax purposes and not as a corporation or an association
taxable as a corporation.
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(viii)
The TRS (i) from January 1, 2021 through July 14, 2021 was treated as
a “qualified REIT subsidiary” (as defined in Section 856(i)(2) of the Code) of the REIT and (ii)
has been, at all times since July 15, 2021, treated as a “taxable REIT subsidiary” (as defined in
Section 856(l)(1) of the Code) of the REIT. The TRS does not hold any assets and is not subject
to any liabilities.
(ix) Neither the REIT, nor any REIT Subsidiary, nor Yacht Club Owner has
received any written notice from any taxing authority that it intends to conduct an audit,
examination, inquiry or other proceeding relating to any Taxes or make any assessment, lien or
levy for Taxes. None of the REIT, any REIT Subsidiary, or Yacht Club Owner is a party to any
litigation or pending litigation or administrative proceeding relating to Taxes. None of the REIT,
any REIT Subsidiary, or Yacht Club Owner is subject to a written claim by a taxing authority in
a jurisdiction where the REIT, a REIT Subsidiary or Yacht Club Owner does not file Tax
Returns or pay Taxes that the REIT, a REIT Subsidiary, or Yacht Club Owner, as applicable, is
required to file Tax Returns or pay Taxes in that jurisdiction.
(x) Each of the REIT, the REIT Subsidiaries and the Yacht Club Owner has
complied with all applicable laws relating to the payment and withholding of Taxes and has,
within the time and manner prescribed by law, withheld and paid over to the proper taxing
authorities all material amounts required to be so withheld and paid over under applicable laws,
and has complied with all information reporting and backup withholding requirements in
connection with amounts paid or owing to any employee, shareholder, creditor, independent
contractor, or other third party.
(xi) None of the REIT, any REIT Subsidiary, or the Yacht Club Owner is a party
to any tax sharing, tax indemnity, tax allocation or similar agreement or arrangement pursuant to
which it will have any obligation to make any payments after the Closing, other than commercial
agreements entered into in the ordinary course of business and the principal purpose of which is
not related to Taxes.
(xii)
None of the REIT, any REIT Subsidiary, or the Yacht Club Owner (1)
has requested a private letter ruling from the IRS or comparable rulings or advisory opinions or
letters from other taxing authorities, (2) has granted a power of attorney with respect to any
Taxes that is currently in force, or (3) is the subject of a “closing agreement” within the meaning
of Section 7121 of the Code (or any comparable agreement under applicable state, local or
foreign law).
(xiii)
There are no liens for taxes (other than taxes not yet due and payable or
taxes that are being contested in good faith and have been disclosed to the Buyer) upon any of
the assets of the REIT, any REIT Subsidiary, or the Yacht Club Owner.
(xiv)
None of the REIT, any REIT Subsidiary, or the Yacht Club Owner has
participated in any “reportable transaction” (within the meaning of Treasury Regulations Section
1.6011-4(b).
(xv)
None of the REIT, any REIT Subsidiary, or the Yacht Club Owner has
distributed stock of another Person, or had its stock distributed by another Person, in a
transaction purported or intended to be governed in whole or in part by Section 355 or Section
361 of the Code.
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(xvi)
Other than with respect to the 1001 Brickell Property, neither the REIT
nor any REIT Subsidiary holds, directly or indirectly, any asset the disposition of which would
subject the REIT to Tax pursuant to Section 337(d) or Section 1374 of the Code (or rules similar
to such Sections of the Code), including pursuant to IRS Notice 88-19 or Treasury Regulations
Sections 1.337(d)-5, 1.337(d)-6, or 1.337(d)-7.
(xvii)
Neither the REIT, nor any REIT Subsidiary, nor the Yacht Club Owner
has made an election to defer recognition of income from the discharge of indebtedness under
Section 108(i) of the Code.
(xviii)
The REIT has no earnings and profits attributable to any “non-REIT
year” (within the meaning Section 857 of the Code) of the REIT or any other corporation.
(xix)
None of the REIT, any REIT Subsidiary, or the Yacht Club Owner will
be required to include any item of income in, or exclude any item of deduction from, taxable
income for any Post-Closing Tax Period (or portion of a Straddle Period beginning on the day
immediately following the Closing Date) as a result of any (1) change in method of accounting
requested or occurring prior to the Closing Date, (2) agreement relating to Taxes entered into
with any taxing authority (including a “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign income law)), (3)
installment sale or open transaction disposition made on or prior to the Closing, (4) deferred
intercompany gain or excess loss account described in Treasury Regulations under Section 1502
of the Code (or any corresponding or similar provision of state, local or foreign law), or (5)
prepaid amount received on or prior to the Closing Date.
(xx)
The REIT has made distributions (including consent dividends in
accordance with Section 565 of the Code) sufficient to reduce the REIT’s taxable income for the
Hypothetical Short Taxable Year to zero dollars ($0.00) or a de minimis amount above zero as of
the Closing Date.
(e)
Pre-Closing Breach of Seller Representations. Seller shall notify Buyer if, prior
to the Closing Date, Seller has actual knowledge that any of the representations or warranties of
Seller is or, as of the Closing Date, will be untrue (it being agreed that Seller shall not be deemed
to have actual knowledge unless a Seller Knowledge Party had actual knowledge of the fact in
issue prior to Closing (without independent inquiry or investigation other than the duty to inquire
with the property manager(s) of the Property and asset manager(s) of the Interests)).
(i)
If, prior to the Closing Date, Buyer gains actual knowledge (it being agreed
that Buyer shall not be deemed to have actual knowledge unless a Buyer Knowledge Party had
actual knowledge of the fact in issue prior to Closing (without independent inquiry or
investigation) or if such matter was disclosed in the Data Room on or before the date that is five
(5) Business Days prior to the Closing Date) that any of the representations or warranties of
Seller in any of Section 14(a), 14(b), 14(c), or 14(d) hereof were not true when given or remade
(unless any such change in such representation or warranty was expressly permitted under this
Agreement or otherwise caused by the acts of Buyer or its Affiliates) and Buyer reasonably
believes the damages for all such breaches by Seller collectively aggregate more than the
Damages Threshold (the “Rep Breach Knowledge Date”), then Buyer shall provide written
notice to Seller of same
62
within five (5) Business Days after the Rep Breach Knowledge Date (provided that with respect
to matters disclosed in the Data Room, Seller shall have notified Buyer in writing that the
specific item was uploaded to the Data Room) that such representations or warranties were
untrue or incorrect when given or remade (but in no event later than the Scheduled Closing
Date), which notice shall include Buyer’s good faith reasonable estimate of the damages caused
by such breach(es).
(ii)
Seller shall have the right, but not the obligation, upon written notice to
Buyer, to cure such breach(es) by correcting the facts or circumstances that render such
representations or warranties untrue or incorrect (or if and only if such breach of a representation
or warranty can be cured by the payment of a quantifiable and readily ascertainable monetary
amount [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxx], then by providing Buyer with a credit at Closing in an amount equal to Buyer’s
estimated damages amount therefor). If Seller elects to attempt to cure such breach(es), then
Seller shall have until the Scheduled Closing Date to do so, and for this purpose Seller shall be
entitled to one or more adjournments of the Scheduled Closing Date, not to exceed thirty (30)
days in the aggregate.
(iii) If Seller cures such breach(es) by correcting the facts or circumstances that
render such representations or warranties untrue or incorrect or, if applicable, by providing
Buyer with a credit at Closing in an amount equal to Buyer’s estimated damages pursuant to
clause (ii) above, then Buyer shall be obligated to perform its obligations under this Agreement
(including its obligations with respect to Closing) in accordance with this Agreement
notwithstanding such breach(es).
(iv) If Seller does not cure such breach(es) on or prior to the Closing Date
(including any adjournment) or, if applicable, does not agree to provide such credit to Buyer at
Closing as contemplated by clause (ii) above, then Seller shall notify Buyer in writing of Seller’s
inability to cure such breach(es) or election not to provide Buyer with such credit. In such event,
unless such breach of a representation or warranty constitutes a default by Seller under this
Agreement (in which case Buyer shall have such additional remedies as provided for in Section
13 hereof), Buyer’s sole right and exclusive remedy shall be to terminate this Agreement by
sending written notice thereof to Seller within fifteen (15) Business Days after Buyer’s receipt of
the notice referred to in this clause (iv) (but not later than the Scheduled Closing Date), in which
event (A) this Agreement shall terminate upon the giving of such termination notice, (B)
thereafter neither Buyer or Seller shall have any further rights, obligations or liabilities hereunder
except to the extent that any obligation or liability set forth herein expressly survives the
termination of this Agreement and (C) the Deposit shall be returned to Buyer. If Buyer fails to
give such written termination notice to Seller within the time period described in clause (iv)
above, Buyer shall be deemed to have waived any right or remedy (including any right under this
Agreement to terminate this Agreement) by reason of such breach, unless such breach of a
representation or warranty constitutes a default by Seller under this Agreement (in which case
Buyer shall have such additional remedies as provided for in Section 13 hereof).
Notwithstanding anything to the contrary contained in this Agreement, in no event shall Seller be
liable to Buyer for, nor shall Buyer have a right to terminate this Agreement after the expiration
of the Review period by reason of, any breach of a representation or warranty that is based on
facts contained in any documents or
63
materials that were disclosed in the Data Room prior to the date that is five (5) Business Days
prior to the expiration of the Review Period. This Section 14(e) shall survive the Closing.
SECTION 15.
BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer hereby represents and warrants to Seller solely as to the following matters, each of
which is so warranted to be true and correct as of the Effective Date and shall, as a condition to
Seller’s obligations hereunder, be true and correct in all material respects as of the Closing Date:
(a)
Buyer is, and at the Closing shall be, an entity duly formed, validly existing and in
good standing under the laws of its state of organization. Buyer is an Affiliate of Oak Row
Equities Parent, LLC.
(b)
Buyer does not require any consents or approvals from any third party with
respect to the execution and delivery of this Agreement or with respect to the performance by
Buyer of its obligations hereunder, other than any consents or approvals that have already been
obtained.
(c)
Buyer has all requisite authority and power to execute and deliver this Agreement
and all documents contemplated hereunder and to perform its obligations under this Agreement,
and this Agreement constitutes a legally binding obligation of Buyer, enforceable against Buyer
in accordance with its terms, except as enforcement may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and
(ii) general principles of equity (regardless of whether considered in a proceeding in equity or at
law).
(d)
Buyer’s execution and delivery of this Agreement and the documents and
instruments to be executed and delivered by Buyer on the Closing Date, and the performance by
Buyer of its duties and obligations under this Agreement and such other documents and
instruments in accordance with its and their terms, are consistent with and do not violate the
Organizational Documents of Buyer, or any contract or other instrument to which Buyer is a
party, or any judicial order or judgment or other governmental decree by which Buyer is bound.
(e)
The execution and delivery of this Agreement and of the documents and
instruments required to be executed by Buyer on the Closing Date, and the performance by
Buyer of its obligations under this Agreement and such other documents and instruments, and of
all other acts necessary and appropriate for the consummation of the Closing, have been or as of
the Closing Date shall be duly authorized by all required action of Buyer.
(f)
Buyer is not and is not acting on behalf of (i) an “employee benefit plan” as
defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) a “plan” as defined in
Section 4975 of the Code, (iii) an entity deemed to hold “plan assets” of either of the foregoing
(within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA),
or (iv) a “governmental plan” within the meaning of Section 3(42) of ERISA, and is not subject
to state statutes regulating investments of “governmental plans” that would be violated by the
transactions contemplated in this Agreement.
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(g)
Buyer is not a party to or the subject of any petition for bankruptcy or other
insolvency proceeding.
(h)
Buyer is a REIT Qualified Buyer.
(i)
Buyer (a) does not appear on the Specially Designated Nationals and Blocked
Per-sons List of the Office of Foreign Assets Control of the United States Department of the
Treasury, or any other relevant and applicable regulation or executive order administered by the
Office of Foreign Assets Control of the United States Department of the Treasury, (b) is not a
Person with which a transaction is prohibited by Executive Order 13224, the USA PATRIOT
Act, the Trading with the Enemy Act or the foreign asset control regulations of the United States
Treasury Department, (such as the list of boycotting countries published by the U.S. Department
of Treasury pursuant to Code §999(a)(3)) or by any other list of restricted parties maintained by
the U.S. federal government, in each case as amended from time to time, (c) is not Controlled by
any Person described in the foregoing items (a) or (b), (d) is not a Person having its principal
place of business, or the majority of its business operations (measured by revenues), located in
any country described in the foregoing item (b), (e) is not a Person that has been previously
indicted for or convicted of any violation of criminal laws of the United States of America or of
any of the several states, or that would be a criminal violation if committed within the
jurisdiction of the United States of America or any of the several states, relating to terrorism or
money laundering, including any offense under the criminal laws against terrorism, the criminal
laws against money laundering, the Bank Secrecy Act of 1970, as amended, the Money
Laundering Control Act of 1986, as amended or the USA PATRIOT Act, and (f) is not a Person
that could otherwise cause Seller to be in violation of applicable anti-money laundering,
economic sanctions, anti-bribery, anti-boycott, anti-terrorism laws, rules, regulations, directives
or special measures.
(j)
Neither Buyer nor any of its Affiliates, nor any of their respective partners,
members, shareholders or other equity owners having a “controlling interest” in Buyer (as
defined in Section 287.138(1)(a), Florida Statutes) is, nor will they become, a person or entity
prohibited from owning or acquiring (whether by transfer, devise, purchase, grant or otherwise)
real property in the State of Florida in violation of Florida Statutes, Sections 692.202, 692.2023
and 692.204).
SECTION 16.
Survival, Indemnification and Release
(a)
Survival.
Except as expressly set forth in this Section 16 or otherwise in this Agreement, all
representations, warranties, covenants, liabilities and obligations shall be deemed (x) if the
Closing occurs, to not survive the Closing, or (y) if this Agreement is terminated, not to survive
such termination.
(i)
Survival of Representations and Warranties. If the Closing occurs, then the
representations and warranties of Seller in Sections 14(a), 14(b), 14(c)(x) and 14(c)(xi) , and the
representations of Buyer set forth in Section 15, shall survive the Closing until the expiration of
the applicable statute of limitations (collectively, the “Fundamental Representations”) (except
that the representations and warranties of Seller in Section 14(c)(x) and Section 14(c)(xi) shall
survive Closing until the date which is twelve (12) months after the Closing Date), the Tax
Representations
65
shall survive until the expiration of the applicable statute of limitations, and all other
representations and warranties of Seller in Section 14(c) (excluding Section 14(c)(x) and 14(c)
(xi)) (collectively, the “Property Representations”) shall survive the Closing for a period
commencing on the Closing Date and expiring at 5:00 p.m. (Eastern Time) on the date which is
nine (9) months after the Closing Date (the period any representation or warranty survives
termination or the Closing as set forth in this Section 16(a) is referred to herein as the “Survival
Period”).
(ii)
Survival of Covenants and Obligations. If this Agreement is terminated,
only those covenants and obligations to be performed by Seller or Buyer under this Agreement
which expressly survive the termination of this Agreement shall survive such termination. If the
Closing occurs, then only those covenants and obligations to be performed by Buyer or Seller
under this Agreement which expressly survive the Closing shall survive the Closing.
(iii) Survival of Indemnification. This Section 16 and all other rights and
obligations of defense and indemnification as expressly set forth in this Agreement shall survive
the Closing or termination of this Agreement.
(b)
Indemnification by Seller.
Subject to the limitations set forth in Section 40 hereof and subject to any other express
provision in this Agreement, 1001 Brickell Seller and Yacht Club Seller, joint and severally,
shall indemnify and hold harmless Buyer Indemnitees from and against any Indemnification
Loss incurred by any Buyer Indemnitees to the extent resulting from (i) the breach of any express
representations or warranties of Seller in any of Sections 14(a), 14(b), 14(c) and 14(d) of this
Agreement, (ii) the breach by Seller of any of its covenants or obligations under this Agreement
which expressly survive the Closing or termination of this Agreement (as the case may be), and
(iii) any Seller Liabilities.
(c)
Indemnification by Buyer.
Subject to the limitations set forth in any express provisions in this Agreement, Buyer shall
indemnify and hold harmless Seller Indemnitees from and against any Indemnification Loss
incurred by any Seller Indemnitees to the extent resulting from (i) any breach of any express
representations or warranties of Buyer in Section 15 of this Agreement which expressly survives
the Closing or termination of this Agreement (as the case may be) and (ii) any breach by Buyer
of any of its covenants or obligations under this Agreement which expressly survives the Closing
or termination of this Agreement (as the case may be).
(d)
Limitations on Indemnification Obligations.
(i)
Failure to Provide Notice within Survival Period. Notwithstanding anything
else to the contrary in this Agreement, an Indemnitee which is seeking defense or
indemnification for a breach of any representations or warranties shall be entitled to
indemnification for such breach only if the Indemnitee has given written notice to the Indemnitor
in accordance with Section 16(e)(i) hereof prior to the expiration of the applicable Survival
Period.
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(ii)
Indemnification Limitations. Notwithstanding anything to the contrary in
this Agreement, Seller shall not be required to provide indemnification to the Buyer Indemnitees
pursuant to clause (i) of Section 16(b) hereof to the extent that (1) the aggregate amount of all
Indemnification Losses incurred by the Buyer Indemnitees for which Buyer otherwise would be
entitled to indemnification under clause (i) of Section 16(b) hereof does not exceed the Damages
Threshold, provided, however, if such Indemnification Losses exceeds the Damages Threshold,
then Buyer shall be entitled to indemnification from the first (1st) dollar of Indemnification
Losses (subject to the limitations in clauses (2) and (3) below), or (2) the aggregate amount of all
Indemnification Losses incurred by the Buyer Indemnitees for which Buyer otherwise would be
entitled to indemnification under clause (i) of Section 16(b) hereof relating to Property
Representations exceeds the Maximum Property Rep Liability Amount or (3) the aggregate
amount of all Indemnification Losses incurred by the Buyer Indemnitees for which Buyer
otherwise would be entitled to indemnification under clause (i) of Section 16(b) hereof relating
to Fundamental Representations and Tax Representations exceeds [xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] (the “Maximum Fundamental/Tax Rep Liability
Amount”). For the avoidance of doubt, the Damages Threshold, the Maximum Property Rep
Liability Amount and the Maximum Fundamental/Tax Rep Liability Amount shall not apply to
Indemnification Losses incurred by the Buyer Indemnitees for which Buyer is entitled to
indemnification under clause (ii) or (iii) of Section 16(b) hereof.
(iii)
Failure
to
Provide
Timely
Notice
of
Indemnification
Claim.
Notwithstanding anything to the contrary in this Agreement, an Indemnitee shall not be entitled
to defense or indemnification to the extent the Indemnitee’s failure to promptly notify the
Indemnitor in accordance with Section 16(e) hereof, (x) prejudices the Indemnitor’s ability to
defend against any third party claim on which such Indemnification Claim is based, or (y)
increases the amount of Indemnification Loss incurred in respect of such indemnification
obligation of the Indemnitor.
(iv) Actual Knowledge Prior to Closing. Notwithstanding any provision of this
Agreement to the contrary, Seller shall not have any liability (and Buyer waives its right to assert
any Indemnification Claim) with respect to any of the Seller representations or warranties
contained herein if, prior to the Closing Date, Buyer gains actual knowledge (it being agreed that
Buyer shall not be deemed to have actual knowledge unless a Buyer Knowledge Party had actual
knowledge of the fact in issue prior to Closing (without independent inquiry or investigation) or
if such matter was disclosed in the Data Room on or before the date that is five (5) Business
Days prior to the Closing Date, that renders any of the representations and warranties contained
herein untrue or incorrect and Buyer nevertheless consummates the transaction contemplated by
this Agreement.
(v)
Effect of Insurance or Other Reimbursement. Notwithstanding anything to
the contrary in this Agreement, the amount of any Indemnification Loss for which
indemnification is provided to an Indemnitee under this Section 16 shall be net of any insurance
proceeds received by such Indemnitee in connection with the Indemnification Claim, or any
other third party reimbursement. If such insurance proceeds or reimbursement are realized or
collected by the Indemnitee after the Indemnitor has paid any amount in respect of an
Indemnification Loss to the Indemnitee, the Indemnitee shall reimburse the amount realized or
collected by the Indemnitee up to the amount received from the Indemnitor for such
Indemnification Loss.
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(vi) Negligence or Willful Misconduct of Indemnitee. Notwithstanding anything
to the contrary in this Agreement, (i) a Buyer Indemnitee shall not be entitled to defense or
indemnification to the extent the applicable Indemnification Loss results from the gross
negligence or willful misconduct of, or breach of this Agreement by, any Buyer Indemnitee, and
(ii) a Seller Indemnitee shall not be entitled to defense or indemnification hereof to the extent the
applicable Indemnification Loss results from the gross negligence or willful misconduct of, or
breach of this Agreement by, any Seller Indemnitee.
(vii)
WAIVER
OF
CERTAIN
DAMAGES.
NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR UNDER APPLICABLE
LAW, SELLER (FOR ITSELF AND ALL SELLER INDEMNITEES) AND BUYER (FOR
ITSELF AND ALL BUYER INDEMNITEES) HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVE AND DISCLAIM ALL RIGHTS TO CLAIM OR SEEK ANY
CONSEQUENTIAL, PUNITIVE, EXEMPLARY, STATUTORY OR TREBLE DAMAGES
AND ACKNOWLEDGE AND AGREE THAT THE RIGHTS AND REMEDIES IN THIS
AGREEMENT WILL BE ADEQUATE IN ALL CIRCUMSTANCES FOR ANY CLAIMS
THE PARTIES (OR ANY INDEMNITEE) MIGHT HAVE WITH RESPECT THERETO.
(e)
Indemnification Procedure
(i)
Notice of Indemnification Claim. If any of the Seller Indemnitees or Buyer
Indemnitees (as the case may be) (each, an “Indemnitee”) is expressly entitled to defense or
indemnification under this Agreement (each, an “Indemnification Claim”), the party required to
provide defense or indemnification to such Indemnitee (the “Indemnitor”) shall not be obligated
to defend, indemnify and hold harmless such Indemnitee unless and until such Indemnitee
provides written notice to such Indemnitor (the “Indemnification Notice”). In order to be
effective, any Indemnification Notice must be given (i) with respect to a Third-Party Claim,
within thirty (30) days after such Indemnitee has actual knowledge of such Third-Party Claim
upon which an Indemnification Claim is based and (ii) with respect to any other Indemnification
Claim which does not arise as a result of a Third-Party Claim, within one (1) year after such
Indemnitee has actual knowledge of such Indemnification Claim. With respect to any
Indemnification Claim, the Indemnification Notice shall include in reasonable detail any facts or
circumstances on which such Indemnification Claim together with Indemnitee’s good faith
estimate of actual damages incurred by such Indemnitee with respect to the Indemnification
Claim set forth in the Indemnification Notice. Any litigation or other action brought by the
Indemnitee with respect to any Indemnification Claim must be commenced no later than the
expiration of the applicable statute of limitations with respect to the Fundamental
Representations and the Tax Representations and no later than the expiration of the Survival
Period with respect to the Property Representations, and if not commenced within the applicable
aforementioned time periods, such Indemnitee shall be deemed to have waived its right to
indemnification with respect to such Indemnification Claim(s). For purposes of this Section
16(e), an Indemnitee shall be deemed to have actual knowledge only if (1) with respect to a
Buyer Indemnitee, a Buyer Knowledge Party had actual knowledge of the Indemnification Claim
(without independent inquiry or investigation) and (2) with respect to a Seller Indemnitee, a
Seller Knowledge Party had actual knowledge of the Indemnification Claim (without
independent inquiry or investigation).
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(ii)
Resolution of Indemnification Claim Not Involving Third-Party Claim. If
the Indemnification Claim does not involve a Third-Party Claim and is disputed by the
Indemnitor, the dispute shall be resolved by litigation or other means of alternative dispute
resolution as the parties may agree in writing.
(iii) Resolution of Indemnification Claim Involving Third-Party Claim. If the
Indemnification Claim involves a Third-Party Claim, the Indemnitor shall have the right (but not
the obligation) to assume the defense of such Third-Party Claim, at its cost and expense, and
shall use good faith efforts consistent with prudent business judgment to defend such Third-Party
Claim, provided that (x) the counsel for the Indemnitor who shall conduct the defense of the
Third-Party Claim shall be reasonably satisfactory to the Indemnitee (unless selected by
Indemnitor’s insurance company), (y) the Indemnitee, at its cost and expense, may participate in,
but shall not control, the defense of such Third-Party Claim, and (z) the Indemnitor shall not
enter into any settlement or other agreement which requires any performance by the Indemnitee,
other than the payment of money which shall be paid by the Indemnitor. The Indemnitee shall
not enter into any settlement or other agreement with respect to the Indemnification Claim
without the Indemnitor’s prior written consent, which consent may be withheld in Indemnitor’s
sole discretion. If the Indemnitor elects not to assume the defense of such Third-Party Claim, the
Indemnitee shall have the right to retain the defense of such Third-Party Claim and shall use
good faith efforts consistent with prudent business judgment to defend such Third-Party Claim in
an effective and cost-efficient manner.
(iv) Accrual of Indemnification Obligation. Notwithstanding anything to the
contrary in this Agreement, the Indemnitee shall have no right to indemnification against the
Indemnitor for any Indemnification Claim which (i) does not involve a Third-Party Claim but is
disputed by Indemnitor until such time as such dispute is resolved by written agreement among
the parties or adjudicated in a court of appropriate jurisdiction, or (ii) involves a Third-Party
Claim until such time as such Third-Party Claim is concluded, including any appeals with
respect thereto.
(f)
Exclusive Remedy for Indemnification Loss.
The indemnification provisions in this Section 16 shall be the sole and exclusive remedy of any
Indemnitee with respect to any claim for Indemnification Loss arising from or in connection with
this Agreement.
(g)
This Section 16 shall survive the Closing.
SECTION 17.
NOTICES
Any notice, request or other communication required or otherwise given pursuant to this
Agreement shall be given in writing by (a) personal delivery, or (b) reputable overnight delivery
service with proof of delivery, or (c) email sent to the intended addressee at the address set forth
below, or to such other address or to the attention of such other Person as the addressee shall
have designated by written notice sent in accordance herewith, and shall be deemed to have been
given either at the time of receipt or refusal or, in the case of email, as of the date of transmission
of the email, provided that a copy of such email is also sent not later than the following Business
Day to the intended addressee by the means described in clauses (a) or (b) above unless such
copy of an
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email is waived by the receiving party. Notices may be given by a party’s counsel on behalf of
such party as if such party had given such notice itself. Unless changed in accordance with the
preceding sentences, the addresses for notices given pursuant to this Agreement shall be as
follows:
If to Seller:
[xxxxxxxxxxxxxxxxxxxxxxx]
with a copy to:
[xxxxxxxxxxxxxxxxxxxxxxx]
If to Buyer:
[xxxxxxxxxxxxxxxxxxxxxxx]
with a copy to:
[xxxxxxxxxxxxxxxxxxxxxxx]
And to:
[xxxxxxxxxxxxxxxxxxxxxxx]
If to Title Company:
[xxxxxxxxxxxxxxxxxxxxxxx]
SECTION 18.
TAX MATTERS
(a)
REIT Matters
(i)
For any period ending on or prior to the Closing or earlier termination of this
Agreement, Seller shall cause the REIT to continue to meet the requirements for qualification
and taxation as a Real Estate Investment Trust under the Code and to avoid incurring U.S.
federal income Taxes including under Sections 857(b) or 4981 of the Code (determined, to the
extent that Closing occurs, (i) as if the REIT’s taxable year ended immediately prior to the
Closing, (ii) without regard to the distribution requirement described in Section 857(a)(1) of the
Code with respect to the taxable year of the REIT that includes the Closing Date and ends on
December 31 of such year (the “Close Year”), and (iii) without regard to Buyer’s purchase of the
REIT Interests at the Closing or any action or inaction taken by the REIT, Buyer or their
Affiliates after the Closing), and under any applicable state, local and foreign tax laws or
regulations. Seller shall cooperate with Buyer and the REIT to complete the Real Estate
Investment Trust testing and compliance for the Close Year in a timely manner, including but not
limited to Seller complying with its obligations under Section 18(a)(v) hereof with respect to the
REIT’s issuance of Form 1099-DIV, a copy of which shall be provided to Buyer. Prior to the
Closing Date, the Seller shall promptly notify the Buyer if the Seller becomes aware of any issue
that it believes could materially adversely impact the maintenance of the Real Estate Investment
Trust status of the REIT for the Close Year or prior taxable years, and cooperate and consult in
good faith with the Buyer with respect thereto.
(ii) For the period beginning on the Closing Date and ending on December 31 of
the Close Year (the “REIT Qualification Period”), Buyer and its Affiliates shall (A) cause the
REIT to continue to qualify for taxation as a Real Estate Investment Trust under the Code
(including, if necessary, through the use of any “savings” or “cure” provisions in the Code) for
the REIT Qualification Period, including, without limiting the generality of the preceding portion
of this sentence, (x) with respect to Section 856(a)(5) of the Code, (y) causing the ultimate
beneficial
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ownership of the REIT to be such that it will not cause the REIT to be “closely held” within the
meaning of Section 856(a)(6) and (h) of the Code, and (z) causing the REIT to make
distributions that qualify for the dividends paid deduction set forth in Section 857(b)(2)(B) of the
Code to cause the REIT to satisfy the minimum distribution requirements of Section 857(a) of
the Code for the Close Year, and (B) cause the REIT not to operate a lodging facility or health
care facility (in each case, as defined in Section 856(l)(4) of the Code). Buyer’s covenants under
this Section 18(a)(ii) will continue even if Buyer transfers, directly or indirectly, any of the REIT
Interests after the Closing Date. Buyer will, in connection with any transfer that it makes of any
of the REIT Interests, obtain covenants, representations and warranties, and conduct reasonable
due diligence, sufficient to reasonably conclude that the transferee is a REIT Qualified Buyer
and will maintain the REIT’s status as a Real Estate Investment Trust for the REIT Qualification
Period and all prior taxable years. Prior to the expiration of the REIT Qualification Period,
Buyer shall not (nor shall Buyer allow any of its Affiliates to) (i) cause the REIT to dispose of or
otherwise recognize any gain on all or any portion of the 1001 Brickell Property (including, for
the avoidance of doubt, in any dissolution, conversion, merger, or other taxable liquidation of the
REIT for U.S. federal income Tax purposes or by making an election under Section 338(g) of the
Code for the REIT) or (ii) make or change any entity classification election (including under
Treasury Regulations Section 301.7701-3) with respect to each REIT Subsidiary that has an
effective date during the Close Year or before the expiration of the REIT Qualification Period.
Buyer agrees and covenants that following the Closing it will not designate any distributions
made during the Close Year as capital gain dividends within the meaning of Section 857(b) of
the Code as long as the REIT has not engaged in any transaction that resulted in capital gain in
the Hypothetical Short Taxable Year.
(iii) Buyer shall cause the REIT to mail the shareholder demand letters required
by Treasury Regulation Section 1.857-8 within 30 days after the date on which the Close Year
ends, and shall otherwise comply with the provisions of Treasury Regulation Section 1.857-8.
(iv)
Buyer and Seller shall treat and report the purchase of REIT Interests
hereunder on all Tax Returns and in all Tax Contests and other proceedings (formal or informal,
administrative, judicial or otherwise) involving any Governmental Authority as a purchase and
sale of REIT Interests and not as a purchase of 1001 Brickell Holdings, 1001 Brickell Owner, or
the Property held by 1001 Brickell Owner. Buyer shall not make or permit to be made an
election under Section 338 of the Code (or similar provision under state or local law) with
respect to the purchase of the REIT Interests.
(v)
Seller covenants and agrees that from the date hereof through the Closing, it
will cause the REIT to declare and pay, or be deemed to declare and pay by means of consent
dividends satisfying all requirements of Section 565 of the Code and the Treasury Regulations
and IRS procedures applicable thereto, one or more dividends that, when taken together with any
other dividends paid or so deemed paid by the REIT with respect to the Hypothetical Short
Taxable Year, at least equal the sum of (A) 100% of the REIT’s real estate investment trust
taxable income (as defined in Section 857(b)(2) of the Code but determined without regard to the
REIT’s “net capital gain” within the meaning of Section 857(b)(3) of the Code (“Net Capital
Gain”)) for the Hypothetical Short Taxable Year, and (B) 100% of the Net Capital Gain of the
REIT for the Hypothetical Short Taxable Year. Seller shall either (A) cause the REIT to issue
Form 1099-DIV
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to Seller with respect to any such dividends prior to Closing or (B) cooperate with Buyer to
cause the REIT to issue such Form 1099-DIV to Seller within five (5) days of Closing.
(b)
Tax Returns and Contests.
(i)
Seller shall prepare and duly file or cause to be prepared, and duly filed all
Tax Returns of the REIT, the REIT Subsidiaries, and Yacht Club Owner for Pre-Closing Tax
Periods that are due after the Closing Date (each such Tax Return, a “Seller Prepared Return”).
Seller shall cause all such Seller Prepared Returns to be prepared with elections and
methodologies consistent with those employed by the REIT, the REIT Subsidiaries, and Yacht
Club Owner in previous Tax Returns, as applicable, except as otherwise required by law. All
Seller Prepared Returns filed after the Closing Date shall be submitted to Buyer for approval at
least thirty (30) days prior to the due date (taking into account applicable extensions) for filing of
such Seller Prepared Returns. Buyer shall have the right to access any work papers and other
information of or controlled by Seller relating to such Seller Prepared Returns that reasonably are
necessary for Buyer to perform such review. Seller shall provide to Buyer all information
requested to complete such review within ten (10) Business Days of such request. If Buyer,
within fifteen (15) Business Days after delivery of any such Seller Prepared Returns, notifies
Seller that it objects to any item in such Seller Prepared Return, Buyer and Seller shall attempt in
good faith to resolve the dispute and, if they are unable to do so, any disputed item shall be
resolved (within a reasonable time, taking into account the deadline for filing such Seller
Prepared Returns) by the Tax Dispute Accountant. Upon resolution of all disputed items, the
relevant Seller Prepared Return shall be filed by the REIT on that basis; provided, however, that
if the resolution of all disputed items is not complete at least two (2) Business Days prior to the
due date of such Seller Prepared Return, Seller may file such Seller Prepared Return without
Buyer approval and, shall, to the extent necessary, amend such Seller Prepared Return upon
resolution of all disputed items. The Tax Dispute Accountant’s decision shall be final,
conclusive and binding on the parties, absent fraud or manifest error. The costs, fees and
expenses of the Tax Dispute Accountant shall be borne by the losing party with respect to such
dispute. Without duplication of amounts previously paid or deemed paid to Buyer or its
affiliates, Seller shall pay the full amount of Taxes shown as due on a Seller Prepared Return.
(ii)
Returns to Be Filed and Taxes to Be Paid by Buyer. Buyer shall prepare
and duly file, or cause to be prepared and duly filed, when due all Tax Returns with respect to
the REIT, the REIT Subsidiaries, and the Yacht Club Owner, other than Seller Prepared
Returns, and, subject to Section 18(b)(iv) below, pay or cause to be paid all Taxes shown due on
such Tax Returns. All Tax Returns that are to be prepared and filed by Buyer pursuant to the
preceding sentence and that relate to Taxes for any Straddle Period (a “Straddle Period Return”)
shall be submitted to Seller not later than thirty (30) days prior to the due date for filing of such
Straddle Period Returns. Seller shall have the right to access any work papers and other
information of or controlled by Buyer relating to such Straddle Period Returns that reasonably
are necessary for Seller to perform such review. Buyer shall provide to Seller all information
requested to complete such review within ten (10) Business Days of such request. If Seller,
within fifteen (15) Business Days after delivery of any such Straddle Period Return, notifies
Buyer that Seller objects to any item in such Straddle Period Return, Buyer and Seller shall
attempt in good faith to resolve the dispute and, if they are unable to do so, any disputed item
shall be resolved (within a reasonable
72
time, taking into account the deadline for filing such Straddle Period Returns) by the Tax
Dispute Accountant. Upon resolution of all disputed items, the relevant Straddle Period Return
shall be filed on that basis; provided, however, that if the resolution of all disputed items is not
complete at least two (2) Business Days prior to the due date of such Straddle Period Return,
Buyer may file such Straddle Period Return without Seller’s approval and, shall, to the extent
necessary, amend such Straddle Period Return upon resolution of all disputed items. The Tax
Dispute Accountant’s decision shall be final, conclusive and binding on the parties, absent fraud
or manifest error. The costs, fees and expenses of the Tax Dispute Accountant shall be borne by
the losing party with respect to such dispute. Buyer shall pay the full amount of Taxes shown as
due on a Straddle Period Return; provided that Seller shall, to the extent such Taxes are
attributable to the portion of the Straddle Period ending prior to the Closing Date as determined
in accordance with Section 18(b)(iv), promptly reimburse Buyer for such Taxes, except as
otherwise provided by Section 18(b)(iv).
(iii) Unless otherwise required by applicable law, Buyer shall not (and shall not
cause or permit the REIT any REIT Subsidiary or Yacht Club Owner to) amend, refile or
otherwise modify (or grant an extension of any statute of limitations with respect to) any Tax
Return relating in whole or in part to the REIT, any REIT Subsidiary or Yacht Club Owner with
respect to any period beginning on or before the Closing Date without the prior written consent
of Seller, which shall not be unreasonably withheld, conditioned or delayed.
(iv) Whenever it is necessary to determine the liability for Taxes of the REIT,
any REIT Subsidiary, or Yacht Club Owner for any taxable period beginning on or before and
ending after the Closing Date (a “Straddle Period”), the amount of any Tax based on or
measured by income or receipts of the REIT, any REIT Subsidiary or Yacht Club Owner that is
allocable to the portion of a Straddle Period ending on the Closing Date shall be determined
based on an interim closing of the books as of the close of business on the Closing Date, and the
amount of any other Tax of the REIT, any REIT Subsidiary or Yacht Club Owner that is
allocable to the portion of a Straddle Period ending on the Closing Date shall be deemed to be
the amount of such Tax for the entire Straddle Period multiplied by a fraction, the numerator of
which is the number of days in the portion of the Straddle Period ending on the Closing Date
and the denominator of which is the total number of days in the entire Straddle Period. Seller
shall reimburse the Buyer for all Taxes related to that portion of the Straddle Period on and prior
to the Closing Date, except any Taxes attributable to actions taken or omitted to be taken after
the Closing by Buyer, the REIT, the REIT Subsidiaries, the Yacht Club Owner or their
Affiliates (including any Taxes attributable to the REIT’s failure to qualify as a Real Estate
Investment Trust for the Close Year as a result of a breach by Buyer of its representation in
Section 15.1(h) or its covenants under Section 18(a) and any Taxes payable by the REIT under
Sections 857 or 4981 of the Code (or corresponding provisions of state or local law) for the
Close Year as a result of the REIT’s failure to make sufficient distributions with respect to the
Close Year).
(v)
Buyer shall promptly inform Seller in writing upon receipt by Buyer (or any
of its Affiliates) of any notice from the IRS or other taxing authority of an audit or other dispute
(or administrative or court proceeding relating thereto), examination or consideration of any
notice of any pending or threatened Tax Contest relating to the REIT, any REIT Subsidiary, the
TRS, or Yacht Club Owner for any taxable period (or portion thereof) ending on or prior to
73
the Closing Date without regard to any applicable statute of limitations. Seller shall notify
Buyer in writing upon receipt by Seller or any affiliates of notice of any pending or threatened
Tax Contests, which may materially affect the Tax liabilities of Buyer, the REIT, any REIT
Subsidiary, the TRS, or Yacht Club Owner for any Straddle Period or Post-Closing Tax Period,
or the Real Estate Investment Trust qualification of the REIT.
(vi) The REIT, each REIT Subsidiary and Yacht Club Owner shall have the sole
right to control and represent the REIT’s, each REIT Subsidiary’s and Yacht Club Owner’s
interests, respectively, in any Tax Contest; provided, however, Seller, at its election, may assume
control, at Seller’s expense, of any Tax Contest relating to, or reasonably expected to relate to, (i)
the REIT’s qualification as a Real Estate Investment Trust for the Close Year, any Straddle
Period, or any Pre-Closing Tax Period and/or (ii) for which the REIT’s qualification as a Real
Estate Investment Trust for the Close Year, any Straddle Period, or any Pre-Closing Tax Period
or that reasonably could be expected to adversely affect Seller’s liability under this Agreement
for Taxes or an indemnity related thereto. In such case, Buyer shall continue to have access to
all information concerning the status and decisions regarding any such Tax Contest and no action
shall be taken that may adversely affect the interests of Buyer or any of the REIT, each REIT
Subsidiary and Yacht Club Owner.
(vii) Notwithstanding the foregoing, (1) to the extent the Buyer or its Affiliates, or
the REIT, any REIT Subsidiary or Yacht Club Owner controls any Tax Contest relating to the
Close Year, any Straddle Period, or any Pre-Closing Tax Period, (A) Seller and its
representatives shall have the right, at Seller’s expense, to (i) be kept reasonably informed of the
progress of such Tax Contest, (ii) receive a draft of any written submissions with respect to such
Tax Contest for review and comment (which comments Buyer shall consider in good faith to the
extent they are reasonable and timely provided), and execution drafts and final execution copies
of all such documents and (iii) attend all conferences and meetings with the applicable taxing
authority regarding such Tax Contest solely to the extent such conferences and meetings involve
the REIT, any REIT Subsidiary or Yacht Club Owner, and (B) with respect to any Tax Contest
relating to, or reasonably expected to relate to, the REIT’s qualification as a Real Estate
Investment Trust for the Close Year, any Straddle Period, or any Pre-Closing Tax Period or that
reasonably could be expected to adversely affect Seller’s liability under this Agreement for
Taxes or an indemnity related thereto, none of the Buyer and its Affiliates, the REIT and/or the
REIT Subsidiaries and/or the Yacht Club Owner shall be entitled to settle or otherwise
compromise, either administratively or after the commencement of litigation, such Tax Contest
without the prior written consent of Seller, and (2) to the extent Seller or its Affiliates control any
Tax Contest, (A) Seller shall not be entitled to settle or otherwise compromise, either
administratively or after the commencement of litigation, such Tax Contest, to the extent such
Tax Contest reasonably could be expected to adversely affect the liability for Taxes of Buyer, the
REIT, any REIT Subsidiary, Yacht Club Owner, or any Affiliate thereof, without the prior
written consent of Buyer, and (B) Buyer shall have the right, at Buyer’s expense, to (i) be kept
reasonably informed of the progress of such Tax Contest, (ii) receive a draft of any written
submissions with respect to such Tax Contest for review and comment (which comments Seller
shall consider in good faith to the extent they are reasonable and timely provided), and execution
drafts and final execution copies of all such documents and (iii) attend all conferences and
meetings with the applicable taxing authority regarding such Tax
74
Contest solely to the extent such conferences and meetings involve the REIT, any REIT
Subsidiary or Yacht Club Owner.
(c)
Purchase Price Adjustments. Seller and Buyer hereby shall treat any
apportionments, credits, prorations and other adjustments as provided in this Agreement
(including pursuant to Section 7 hereof), [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] or any payments made under Section 16 hereof as
adjustments to the Purchase Price for U.S. federal and applicable state and local income tax
purposes, except as otherwise required pursuant to a final “determination” within the meaning of
Section 1313(a) of the Code (or a similar determination under applicable state or local law).
(d)
Survival. Notwithstanding anything to the contrary in this Agreement, the
provisions of this Section 18 shall survive the Closing.
SECTION 19.
BROKER
Seller represents and warrants to Buyer that Seller has not engaged or dealt with any
broker or finder in connection with the sale contemplated by this Agreement, except the Broker.
Seller shall pay at the Closing all of the compensation (the “Brokerage Commission”) due to
Broker in the amount set forth in a separate agreement between Seller and Broker. Buyer hereby
represents and warrants to Seller that Buyer has not engaged or dealt with any broker or finder in
connection with the sale contemplated by this Agreement. If the foregoing representations by
either party are untrue, the party whose representation is untrue shall indemnify the other party
against all claims suffered by the indemnified party as a result of the failure of such
representation to be true. This Section 19 shall survive the Closing.
SECTION 20.
TAX CERTIORARI PROCEEDINGS
(a)
Tax Certiorari Proceedings. Seller may have filed or joined, and may hereafter
file, applications for the reduction of the assessed valuation of the Property (or any portion
thereof) for tax years ending prior to the Closing Date, and may have caused or may hereafter
cause tax certiorari proceedings to be instituted to review such assessed valuations for such tax
years. Seller shall have the sole right to prosecute, compromise and/or settle such proceedings
with counsel of its own choosing, and Seller shall be entitled to one hundred percent (100%) of
any refunds, abatements or credits awarded in any such proceedings or as a result of any
compromise or settlement with respect thereto; it being agreed that Buyer shall have no interest
in any such refunds, abatements or credits. To the extent any documents need to be signed by
Owner after Closing with respect to any tax certiorari proceedings for any tax years ending prior
to Closing, then upon request from Seller, Buyer shall cause Owner to execute such documents
reasonably requested by Seller, and Seller shall indemnify Buyer and Owner with respect to any
liabilities with respect thereto. If prior to Closing Seller causes Owner to deposit any sums in
escrow with any taxing authorities in connection with any pending tax certiorari proceedings,
then any refund of such sums after Closing shall be paid solely to Seller.
(b)
Closing Tax Year Contests. Seller shall not have the right to file, maintain,
prosecute, settle, compromise or withdraw any applications for the reduction of the assessed
valuation of the Property, or any certiorari proceedings or other proceedings relating to the
75
determination of the assessed valuation of the Property, with respect to the tax year in which the
Closing occurs or any tax year thereafter without Buyer’s consent, which consent may be granted
or withheld in Buyer’s sole and absolute discretion. With respect to any such proceedings if
approved by Buyer relating to a tax year in which the Closing occurs, any refunds, abatements or
credits awarded in such proceedings, or as a result of any compromise or settlement with respect
thereto, shall be used first to reimburse Seller or Buyer, as applicable, for its reasonable out-of-
pocket costs and expenses (including reasonable attorneys’ fees) actually incurred in connection
with such proceedings, compromise and/or settlement, and the remainder of such refunds,
abatements and credits shall be prorated between Seller and Buyer as of the Cutoff Time. Seller
or Buyer shall promptly pay to the other the amount necessary to effect such proration. If Buyer
receives an abatement or credit for such tax year, Buyer shall promptly pay to Seller the amount
necessary to effect such proration. Buyer shall take such actions as Seller may reasonably
request to ensure that payment of any refunds or abatements to which Seller is entitled to
pursuant to this Section 20(b) are paid to Seller by the applicable taxing authority.
(c)
Cooperation. Buyer and Seller shall reasonably cooperate with the other party
(and shall cause Owner to so cooperate), and execute and deliver (or cause Owner to so execute
and deliver) any documents and instruments reasonably requested by such other party, in
connection with any contest, audit or judicial or administrative proceeding relating to any tax
certiorari contest referred to in Section 20(a) or (b) hereof.
(d)
Survival. This Section 20 shall survive the Closing.
SECTION 21.
DATE FOR PERFORMANCE; TIME OF THE ESSENCE
Any reference in this Agreement to a period of days that does not expressly refer to
Business Days is a reference to a period measured in calendar days. If the time period by which
any right, option or election provided under this Agreement must be exercised, or by which any
act required hereunder must be performed, or by which the Closing must be held, expires on a
day that is not a Business Day or if any other date for an act or event occurs on a day that is not a
Business Day, then such time period or date will be automatically extended to the next following
Business Day. SUBJECT TO ANY APPLICABLE CURE OR ADJOURNMENT RIGHTS
EXPRESSLY PROVIDED FOR HEREIN, TIME SHALL BE OF THE ESSENCE WITH
RESPECT TO ALL DATES, TIMES AND TIME PERIODS PROVIDED IN THIS
AGREEMENT, WHETHER SUCH TIME PERIODS ARE PRIOR TO, ON, AT OR AFTER
THE CLOSING. This Section 21 shall survive the Closing.
SECTION 22.
SEVERABILITY
If any provision or portion of this Agreement is held by any court of competent
jurisdiction to be invalid or unenforceable, such holding will not affect the remainder of this
Agreement, and the remaining provisions shall continue in full force and effect to the same
extent as would have been the case had such invalid or unenforceable provision or portion never
been a part of this Agreement. This Section 22 shall survive the Closing.
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SECTION 23.
SUCCESSORS AND ASSIGNS
The terms “Seller” and “Buyer” as used in this Agreement shall include their respective
successors and permitted assigns.
SECTION 24.
CONSTRUCTION
The use in this Agreement of the words “herein”, “hereunder”, “hereinabove”,
“hereinafter”, and words of similar import shall be deemed to refer to this entire Agreement,
unless expressly stated to the contrary. The use in this Agreement of the words “such as”
“include”, “including” and words of similar import shall be construed as if followed by the
phrase “without limitation” and shall not be deemed to limit the generality of the term or clause
to which it has reference, whether or not non-limiting language is used. This Agreement shall
not be interpreted or construed more strictly against one party or the other merely by virtue of the
fact that it was drafted by counsel to Seller or Buyer, it being hereby acknowledged and agreed
that Seller and Buyer have both contributed materially and substantially to the negotiations and
drafting of this Agreement. Any pronoun referring to Seller, Buyer or a third party shall be read
in such number and gender as the context may require.
Notwithstanding anything to the contrary contained in this Agreement, in all cases
throughout this Agreement the words “Seller shall” or “Seller shall not” (or words of similar
meaning) shall also mean “Seller shall cause Owner (or the applicable Subsidiary)” or “Seller
shall not permit Owner (or the applicable Subsidiary)” to so act or not to so act, as applicable, as
the context may require (and any instance in this Agreement where such words already appear
shall not be deemed or construed to mean that any other instance where such words do not
appear were not intended to be interpreted as provided above). Further, if any pre-Closing acts
or omissions of Owner or any other Subsidiary shall give rise to post-Closing claims by Buyer
under this Agreement, then the parties acknowledge and agree that solely Seller (and not the
Owner or any other Subsidiary) shall be obligated and liable with respect to such post-closing
claim, obligation and/or liability and Seller shall not have the right to implicate Owner or any
Subsidiary or otherwise implead Owner or any Subsidiary with respect such post-closing claim
or liability.
SECTION 25.
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between Seller and Buyer relating to the
Property and supersedes and cancels all prior agreements, letters of intent, expressions of interest
and understandings, whether oral or written, relating to the subject matter hereof, except as
specifically agreed in writing to the contrary, and shall become a binding and enforceable
agreement between Seller and Buyer upon the execution and delivery of this Agreement by all
parties hereto.
SECTION 26.
AMENDMENT
No amendment of or modification to this Agreement of any kind whatsoever shall be
made or claimed by Seller or Buyer, and no notice of any extension (except as provided herein),
change, modification or amendment made or claimed by Seller or Buyer shall have any force or
be of any
77
effect whatsoever, unless the same is in writing and signed by the party against whom
enforcement is sought.
SECTION 27.
APPLICABLE LAW
This Agreement, and all questions of interpretation hereof and all controversies hereunder
shall be construed in accordance with and governed by the laws of the State of Florida (without
reference to principles of conflict of laws).
SECTION 28.
RELATIONSHIP OF THE PARTIES
The relationship between Seller and Buyer is entirely at arms’-length, and nothing
contained in this Agreement shall be construed or interpreted as creating a partnership or joint
venture between Seller and Buyer.
SECTION 29.
INCORPORATION BY REFERENCE; REFERENCES
All documents, instruments, schedules and other matters attached to this Agreement as
exhibits and schedules and referred to in the text of this Agreement are specifically made a part
of this Agreement and incorporated herein by reference. All references in this Agreement to
sections, schedules and exhibits are to the sections, schedules and exhibits of and to this
Agreement unless otherwise expressly noted.
SECTION 30.
CAPTIONS
Captions are used in this Agreement solely for convenience of reference and shall neither
be considered a part of this Agreement nor affect the construction to be given any of its
provisions.
SECTION 31.
COUNTERPARTS
This Agreement or its signature pages may be executed in any number of original
counterparts, all of which evidence only one agreement and only one full and complete copy of
which need be produced for any purpose. A facsimile or other electronic image of a signature
(including a signature by “PDF” or docusign) will have the same legal effect for the purpose of
establishing the execution of this Agreement as an originally drawn signature.
SECTION 32.
WAIVER OF TRIAL BY JURY;
VENUE AND JURISDICTION; LITIGATION COSTS
(a)
Waiver Of Trial By Jury. SELLER AND BUYER HEREBY EXPRESSLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY CLAIM, ACTION, PROCEEDING OR
COUNTERCLAIM BY SELLER OR BUYER AGAINST EACH OTHER ON ANY MATTERS
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.
(b)
Venue. Each of Seller and Buyer hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of and agrees that venue shall be
proper in any Florida State or Federal Court sitting in Miami-Dade county, in any action or
proceeding
78
arising out of or relating to or connected with this Agreement, or for recognition or enforcement
of any judgment. Each of Seller and Buyer hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding shall be heard and determined in such
courts. Each of Seller and Buyer agrees that a final judgment in any such action or proceeding
will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
ANY PARTY ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
INSTITUTED IN ANY FLORIDA STATE OR FEDERAL COURT SITTING IN MIAMI-
DADE COUNTY, AND EACH PARTY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO (1) THE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING AND (2) THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING (INCLUDING ANY OBJECTION OF OR RELATING TO
FORUM NON-CONVENIENS).
(c)
Prevailing Party’s Attorneys’ Fees. In the event that any litigation or any other
action to enforce the provisions of this Agreement, the prevailing party in such litigation or such
action shall be entitled to be reimbursed by the other party for the prevailing party’s reasonable
out-of-pocket costs and expenses (including reasonable counsel fees and court costs).
(d)
Survival. The provisions of this Section 32 shall survive the Closing or any
termination of this Agreement.
SECTION 33.
CONFIDENTIALITY; SOLICITATION
(a)
Except as permitted hereunder, Buyer shall (and shall cause its Affiliates and
Buyer’s Representatives to) maintain in confidence all non-public information concerning the
Property (or any portion thereof) which Seller or its representatives have disclosed or delivered,
or shall hereafter disclose or deliver to Buyer, its Affiliates and/or Buyer’s Representatives
(collectively, the “Confidential Information”). Buyer shall not, without Seller’s prior written
consent (which may be withheld in Seller’s sole and absolute discretion) deliver or disclose any
Confidential Information to any other Person except (1) as may be required or requested by
applicable law, rule, regulation, subpoena, judicial or administrative proceeding or other legal
process or governmental or regulatory authority having jurisdiction over Buyer and/or its
Affiliates and (2) Buyer may disclose such information as is reasonably necessary or required to
be submitted to the applicable Governmental Authorities in connection with Buyer’s
Redevelopment Activities. “Confidential Information” shall not include: (i) information already
in a disclosing party’s possession prior to its receipt thereof from Seller or its representative; (ii)
information which is obtained by a disclosing party from a third person who is not known by
such disclosing party to be prohibited from disclosing such information to it by any contractual,
legal or fiduciary obligation to Seller; (iii) information which is or becomes publicly disclosed
other than as a result of a disclosure by the disclosing party in violation of this Section 33(a); (iv)
information which is required to be disclosed by a court of competent jurisdiction in connection
with any litigation between the parties hereto; or (v) information that was independently
developed by Buyer, its Affiliates or its Representatives without use of or reference to any of the
Confidential Information. Notwithstanding the foregoing, Buyer may disclose and deliver
Confidential Information to its Affiliates and Buyer’s Representatives, provided, however, that
Buyer agrees that it shall notify
79
Buyer’s Representatives of the confidentiality requirements of this Section 33(a) with respect to
the Confidential Information promptly after receipt thereof and shall direct Buyer’s
Representatives to keep the Confidential Information in confidence in accordance with this
Section 33(a). Buyer shall be responsible for any breach of this Section 33(a) by any of Buyer’s
Representatives. Buyer shall not use, or permit its Affiliates and/or Buyer’s Representatives to
use, any of the Confidential Information for any purpose other than to evaluate, negotiate and/or
consummate, as the case may be, the transaction described herein, the Property, the Interests, the
1001 Brickell Companies and Yacht Club Owner. This Section 33(a) shall not survive the
Closing (if any) but shall survive the termination of this Agreement.
(b)
Following the Closing (if any), Seller and its Affiliates shall (and shall instruct
their respective attorneys, consultants, accountants, architects, engineers, contractors, agents,
representatives and other qualified professionals) (collectively, the “Seller/Representative
Parties”) to maintain in confidence all non-public information concerning the Property (or any
portion thereof), the Interests, the 1001 Brickell Companies and Yacht Club Owner (collectively,
the “Post-Closing Confidential Information”); provided that Seller and its Affiliates may disclose
such Post-Closing Confidential Information to any Seller/Representative Parties. Seller shall
not, without Buyer’s prior written consent (which consent shall not be unreasonably withheld)
deliver or disclose any Confidential Information to any other Person except as may be required
or requested by applicable law (including any federal or state securities laws or regulations), rule,
regulation, subpoena, judicial or administrative proceeding or other legal process or
governmental or regulatory authority having jurisdiction over Seller and/or its Affiliates. “Post-
Closing Confidential Information” shall not include: (i) information which is obtained by a
disclosing party from a third person who is not known by such disclosing party to be prohibited
from disclosing such information to it by any contractual, legal or fiduciary obligation to Seller;
(ii) information which is or becomes publicly disclosed other than as a result of a disclosure by
the disclosing party in violation of this Section 33(b); or (iii) information which is required to be
disclosed by a court of competent jurisdiction in connection with any litigation between the
parties hereto; or (iv) information that was independently developed by Seller or the
Seller/Representative Parties without use of or reference to any of the Post-Closing Confidential
Information. Notwithstanding the foregoing, Seller may disclose and deliver Post-Closing
Confidential Information to its Affiliates and Seller/Representative Parties, provided, however,
that Seller agrees that it shall notify the Seller/Representative Parties of the confidentiality
requirements of this Section 33(b) with respect to the Post-Closing Confidential Information
promptly after receipt thereof and shall direct the Seller/Representative Parties to keep the Post-
Closing Confidential Information in confidence in accordance with this Section 33(b). Seller
shall be responsible for any breach of this Section 33(b) by any of the Seller/Representative
Parties. Seller shall not use, or permit its Affiliates and/or the Seller/Representative Parties to
use, any of the Post-Closing Confidential Information for any purpose other than to wind down
its business as it relates to the ownership and sale of the Interests. Notwithstanding anything
contained in this Agreement to the contrary, nothing contained in this Section 33 (or elsewhere in
this Agreement) shall prevent or limit the right of Seller and its Affiliates from making any
governmental filing or disclosure that Seller or any of its Affiliates is required or otherwise elects
to make under applicable law, rule or regulation, including, without limitation, any U.S.
Securities Exchange and Commission filings and disclosures (even if such filing or disclosure is
made publicly available). The provisions of this Section 33(b) shall survive the Closing.
80
(c)
If this Agreement is terminated pursuant to the terms hereof, then, upon written
request by Seller, Buyer shall return, and shall cause all Buyer’s Representatives to return, all
copies of the Confidential Information to Seller within ten (10) Business Days after such written
request; provided, however, that Buyer and Buyer’s Representatives shall only be required to
return or destroy such Confidential Information to the extent such return or destruction (i) is not
prohibited by law, rule, regulation, by court of competent jurisdiction or by a governmental,
supervisory or regulatory body, (ii) is not prohibited by Buyer’s or Buyer’s Representatives’
internal policies, and (iii) is reasonably practicable, with respect solely to electronic data, given
the limitations on the permanent destruction of electronic data located on information technology
systems. The provisions of this Section 33(c) shall not survive the Closing (if any) but shall
survive the termination of this Agreement.
(d)
Notwithstanding anything to the contrary in this Agreement but subject to the
terms of this Section 33(d), (1) Seller and/or its Affiliates shall, within four (4) Business Days
after the expiration of the Review Period (the “SEC Filing Date”), make its Form 8-K filing and
disclosure with the U.S. Securities Exchange and Commission, (2) at any time after the SEC
Filing Date, Buyer shall have the exclusive right, until the later of January 10, 2025 and seven
(7) Business Days following the SEC Filing Date (the “Initial Public Disclosure Deadline”), to
issue any press release or other similar public communication, strategic disclosure, or
announcement or otherwise make investor presentations (any such press release, public
communication or investor presentation contemplated by this Section 33(d) being referred to
herein as a “Public Disclosure”) with respect to material facts and terms of the transaction
contemplated by this Agreement (including, without limitation, the Purchase Price, the Deposit
and the Closing Date terms) without the prior written consent of Seller and without any such
Public Disclosure by Seller, and (3) at any time after the Initial Public Disclosure Deadline, each
of Seller and Buyer shall have the right to issue Public Disclosures in accordance with this
Section 33(d) without the prior written consent of the other party, it being expressly understood
that other than with respect to Seller’s filing and disclosure obligations in the foregoing clause
(1), neither Buyer nor Seller shall be permitted to issue Public Disclosures prior to the SEC
Filing Date. Any such Public Disclosure shall not (i) provide any commentary on either of Seller
or Buyer (or any Affiliates of the foregoing), (ii) disparage, diminish or otherwise provide
negative commentary on the status of the real estate market in the metro Miami area, or (iii)
provide subjective commentary on the Purchase Price. The provisions of this Section 33(d) shall
survive the Closing.
(e)
Seller, its broker and each of their affiliates shall not accept, solicit, pursue,
negotiate, make or entertain any offer or expression of interest to or from any person or entity
(other than Buyer) with respect to the direct or indirect purchase, sale, lease, recapitalization or
other transfer of rights related to all or any portion of the Interests, the Property, the 1001
Brickell Companies or Yacht Club Owner.
(f)
Notwithstanding anything contained in this Section 33 to the contrary, Seller and
its Affiliates may, at any time (including prior to Closing), disclose Post-Closing Confidential
Information to one or more parties that have expressed an interest in buying all or any part of the
Seller Financing or any interest therein, including participations, notes, or other instruments
evidencing whole or componentized interests in the Seller Financing or any part thereof.
81
SECTION 34.
NO THIRD PARTY BENEFICIARY
The provisions of this Agreement and of the documents to be executed and delivered at
the Closing are and will be for the benefit of Seller and Buyer only and are not for the benefit of
any third party (including Title Company), and accordingly no third party shall have the right to
enforce the provisions of this Agreement or of the documents to be executed and delivered at the
Closing.
SECTION 35.
EXCULPATION
Notwithstanding anything to the contrary contained in this Agreement, (a) no Seller
Exculpated Party shall have any personal obligation or liability hereunder, and Buyer shall not
seek to assert any claim or enforce any of Buyer’s rights hereunder against any of the Seller
Exculpated Parties and (b) no Buyer Exculpated Party shall have any personal obligation or
liability hereunder, and Seller shall not seek to assert any claim or enforce any of Seller’s rights
hereunder against any of the Buyer Exculpated Parties. This Section 35 shall survive the Closing
or any termination of this Agreement.
SECTION 36.
NO RECORDATION
No party shall record this Agreement or any memorandum, notice or affidavit hereof, or
any other similar document. If Buyer ever records or attempts to record this Agreement or a
memorandum, notice or affidavit hereof, or any other similar document, then notwithstanding
anything herein to the contrary, the recordation or attempt at recordation shall constitute a default
by Buyer and, in addition to the other remedies provided for in this Agreement and under
applicable law, Seller shall have the express right to terminate this Agreement by filing a notice
of termination in any office in which the memorandum, notice, affidavit, or other document was
recorded. This Section 36 shall survive any termination of this Agreement.
SECTION 37.
FURTHER ASSURANCES
Seller and Buyer agree that they will each take such steps and execute such documents as
may be reasonably required by the other party or parties to carry out the intent and purpose of
this Agreement.
SECTION 38.
WAIVER
The failure to enforce any particular provision of this Agreement on any particular
occasion shall not be deemed a waiver by any party of any of its rights hereunder, nor shall it be
deemed to be a waiver of subsequent or continuing breaches of that provision, unless such
waiver be expressed in a writing signed by the party to be bound.
SECTION 39.
SELLER FINANCING
As a material inducement to Buyer entering into this Agreement, Buyer shall have the
right, upon written revocable notice given to Seller not less than sixty (60) days prior to the then
Scheduled Closing Date, to obtain financing from Seller or its Affiliate at Closing (the “Seller
Financing Option”) upon and subject to the terms and conditions set forth on Schedule 19 (the
82
“Seller Financing”). In any such notice, Buyer shall set forth the principal amount and allocation
of the Seller Financing, provided the principal amount shall not exceed the maximum principal
amount pursuant to and as set forth on Schedule 19. If Buyer timely exercises the Seller
Financing Option as aforesaid, then (i) Buyer and Seller shall proceed to finalize the Definitive
Documents (as defined on Schedule 19) prior to Closing, (ii) it shall be a condition to Buyer’s
obligation to close that Seller provide the Seller Financing pursuant to Definitive Documents on
the terms set forth on Schedule 19 and (iii) provided the closing occurs with the simultaneous
consummation of the Seller Financing, the Purchase Price shall be increased to Five Hundred
Forty Million and No/100 Dollars ($540,000,000.00). The Seller Financing Option shall be
deemed waived by Buyer if Buyer fails to timely notify Seller of its exercise of the Seller
Financing Option as aforesaid. For the avoidance of doubt, Buyer shall have the right at any time
to waive the Seller Financing Option, including, without limitation, by revoking in writing a
previously delivered notice exercising same, and proceed to Closing in accordance with this
Agreement without the Seller Financing (provided, however, that at Closing, Buyer shall
reimburse Seller for any reasonable attorneys’ fees, costs and expenses incurred by Seller prior
to receipt of such revocation in connection with the preparation and negotiation of the Definitive
Documents (as defined in Schedule 19)).
SECTION 40.
DISCLAIMERS AND RELEASE
(a)
No Reliance on Documents. Except as expressly stated in this Agreement or in
any of the Closing Documents, Seller makes no representation or warranty as to the truth,
accuracy or completeness of any materials, data or information delivered by Seller or Owner to
Buyer in connection with the transactions described in this Agreement. Buyer acknowledges and
agrees that all materials, data and information delivered by Seller or Owner to Buyer in
connection with the transactions described in this Agreement are provided to Buyer as a
convenience only, and that any reliance on or use of such materials, data or information by Buyer
shall be at the sole risk of Buyer. Without limiting the generality of the foregoing provisions, but
except as expressly state in this Agreement or in any of the Closing Documents, Buyer
acknowledges and agrees that (i) any environmental or other report of any nature or kind with
respect to the Property which is delivered by Seller or Owner to Buyer shall be for general
informational purposes only, (ii) Buyer shall not have any right to rely on any such report
delivered by Seller or Owner to Buyer, but rather will rely on its own inspections and
investigations of the Property and any reports commissioned by Buyer, and (iii) neither Seller
nor Owner, nor any Affiliate of Seller or Owner, nor the person or entity who prepared any such
report delivered by Seller or Owner to Buyer, shall have any liability to Buyer for any inaccuracy
in or omission from any such report.
(b)
Disclaimers. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT OR
IN ANY OF THE CLOSING DOCUMENTS, IT IS UNDERSTOOD AND AGREED THAT
SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES
OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED,
WITH RESPECT TO THE PROPERTY, INCLUDING ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR
PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING
HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE
COMPLIANCE OF THE PROPERTY WITH LAWS, THE TRUTH, ACCURACY OR
COMPLETENESS OF THE
83
DUE DILIGENCE MATERIALS OR ANY OTHER INFORMATION PROVIDED BY OR ON
BEHALF OF SELLER TO BUYER, OR ANY OTHER MATTER OR THING REGARDING
THE PROPERTY. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS
AGREEMENT OR IN ANY OF THE CLOSING DOCUMENTS, BUYER WAIVES, AND
SELLER IS RELIEVED FROM, ANY OBLIGATION OR DUTY THAT SELLER MIGHT
OTHERWISE
HAVE
TO
DISCLOSE
ANY
CONDITION,
INCLUDING
AN
ENVIRONMENTAL CONDITION, RELATING TO THE PROPERTY. EXCEPT AS
OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT OR IN ANY OF THE
CLOSING DOCUMENTS, BUYER ACKNOWLEDGES AND AGREES THAT UPON THE
CLOSING SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL
ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS”. EXCEPT AS
OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT OR IN ANY OF THE
CLOSING DOCUMENTS, BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND
SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED
WARRANTIES,
GUARANTIES,
STATEMENTS,
REPRESENTATIONS
OR
INFORMATION PERTAINING TO THE PROPERTY (INCLUDING INFORMATION
PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY OR ON BEHALF OF SELLER, ANY DIRECT OR INDIRECT OWNER OF
SELLER, MANAGER OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS EXPRESSLY SET
FORTH IN THIS AGREEMENT. BUYER REPRESENTS TO SELLER THAT BUYER HAS
CONDUCTED,
OR
WILL
CONDUCT
PRIOR
TO
THE
CLOSING,
SUCH
INVESTIGATIONS
OF
THE
PROPERTY,
INCLUDING
THE
PHYSICAL
AND
ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY TO
SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE
OR NONEXISTENCE, OR REMEDIAL ACTION TO BE TAKEN WITH RESPECT TO, ANY
HAZARDOUS MATERIALS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM
THE PROPERTY, AND WILL RELY SOLELY UPON BUYER’S OWN INVESTIGATIONS
AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR
ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER (IF ANY) AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE CLOSING
DOCUMENTS. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT
OR IN ANY OF THE CLOSING DOCUMENTS, UPON THE OCCURRENCE OF THE
CLOSING, BUYER HEREBY ACKNOWLEDGES THE RISK THAT ADVERSE MATTERS,
INCLUDING
CONSTRUCTION
DEFECTS
AND
ADVERSE
PHYSICAL
AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER’S
INVESTIGATIONS, AND BUYER, UPON THE OCCURRENCE OF THE CLOSING, SHALL
BE DEEMED TO HAVE RELEASED, ACQUITTED AND DISCHARGED SELLER AND
THE SELLER EXCULPATED PARTIES FROM AND AGAINST, AND SHALL BE
DEEMED TO HAVE IRREVOCABLY WAIVED AND RELINQUISHED, ANY AND ALL
CLAIMS THAT BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER OR
ANY OF THE SELLER EXCULPATED PARTIES AT ANY TIME BY REASON OF OR
ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR
PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING
ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS,
EVENTS, CIRCUMSTANCES
84
OR MATTERS REGARDING THE PROPERTY. BUYER AGREES THAT IF ANY
CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS MATERIALS OR OTHER
ENVIRONMENTAL CONDITIONS ON ANY OF THE PROPERTY IS REQUIRED AFTER
THE CLOSING DATE, BUYER SHALL HAVE NO CLAIM AGAINST SELLER FOR SUCH
CLEANUP, REMOVAL OR REMEDIATION.
(c)
Release. WITHOUT LIMITING THE PROVISIONS OF SECTION 40(a) OR
40(b) HEREOF AND NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT (OTHER THAN AS EXPRESSLY SET FORTH IN
THIS SECTION 40(c)), BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES,
SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER
DISCHARGES SELLER AND THE SELLER EXCULPATED PARTIES FROM ANY AND
ALL CLAIMS THAT BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR
RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN
THE DESIGN OR CONSTRUCTION OF THE PROPERTY (OR ANY PORTION THEREOF)
WHETHER AS A RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER
CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS,
AFFECTING THE PROPERTY (OR ANY PORTION THEREOF) WHETHER AS A RESULT
OF NEGLIGENCE OR OTHERWISE, INCLUDING ANY CLAIM FOR INDEMNIFICATION
OR CONTRIBUTION ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY ACT (42 U.S.C. SECTION 9601, ET SEQ.)
OR ANY OTHER FEDERAL, STATE OR LOCAL STATUTE, RULE OR ORDINANCE
RELATING TO LIABILITY OF PROPERTY OWNERS FOR ENVIRONMENTAL
MATTERS, WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE,
DURING, OR AFTER SELLER’S PERIOD AS OWNER OF THE PROPERTY (OR ANY
PORTION THEREOF) AND WHETHER BASED ON THEORIES OF INDEMNIFICATION,
CONTRIBUTION OR OTHERWISE. THE RELEASE SET FORTH IN THIS SECTION 40(c)
SPECIFICALLY INCLUDES ANY CLAIMS UNDER ANY ENVIRONMENTAL LAWS OF
ANY GOVERNMENTAL AUTHORITY, OR UNDER THE AMERICANS WITH
DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM
TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR
GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS
OF WHETHER THEY ARE IN EXISTENCE ON THE EFFECTIVE DATE. BUYER
ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT
LEGAL COUNSEL OF BUYER’S SELECTION AND BUYER IS GRANTING THIS
RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER’S
COUNSEL. NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, THE
RELEASE SET FORTH IN THIS SECTION 40(c) DOES NOT APPLY TO THE
REPRESENTATIONS OR WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS
AGREEMENT OR ANY INDEMNITY, COVENANT OR OTHER OBLIGATION
EXPRESSLY MADE BY SELLER IN THIS AGREEMENT OR ANY DOCUMENT
DELIVERED BY SELLER AT CLOSING (INCLUDING, WITHOUT LIMITATION, ANY
CLOSING DOCUMENTS); IT BEING ACKNOWLEDGED AND AGREED THAT BUYER
DOES NOT WAIVE ITS RIGHTS, IF ANY, TO RECOVER FROM, AND DOES NOT
RELEASE OR DISCHARGE OR COVENANT NOT TO SUE SELLER OR ANY
APPLICABLE RELEASEES FOR OR WITH RESPECT TO ANY BREACH OF SELLER’S
85
REPRESENTATIONS, WARRANTIES, INDEMNITIES, COVENANTS OR OTHER
OBLIGATIONS SET FORTH IN THIS AGREEMENT AND WHICH SURVIVE CLOSING
OR THE CLOSING DOCUMENTS. BUYER ACKNOWLEDGES THAT BUYER HAS
CAREFULLY REVIEWED THIS SECTION 40(c) AND DISCUSSED ITS SIGNIFICANCE
WITH BUYER’S LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SECTION
40(c) ARE A MATERIAL PART OF THIS AGREEMENT.
(d)
Effect and Survival of Disclaimers. Seller and Buyer acknowledge that the
negotiated amount of the Purchase Price has taken into account that the Interests are being sold
subject to the provisions of this Section 40. The provisions of this Section 40 shall survive the
Closing.
[NO FURTHER TEXT ON THIS PAGE]
Signature Page to interests Purchase and Sale Agreement
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
Effective Date.
BUYER:
BRICKELL BAY PROPERTY OWNER LLC, a
Delaware limited liability company
By:
Name:
Title:
[SIGNATURES CONTINUED ON FOLLOWING PAGES]
Signature Page to Interests Purchase and Sale Agreement
1001 BRICKELL SELLER:
AHOTB HOLDING, LLC,
a Delaware limited liability company
By:
Name:
Title:
YACHT CLUB SELLER:
AIMCO OP L.P.,
a Delaware limited partnership
By:
Name:
Title:
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
ESCROW AGENT HAS EXECUTED THIS AGREEMENT TO ACKNOWLEDGE ITS
AGREEMENT TO HOLD THE DEPOSIT IN ACCORDANCE WITH THE TERMS SET
FORTH IN SCHEDULE 4.
COMMONWEALTH LAND TITLE INSURANCE
COMPANY
By: __________________________________
Name:
Title:
Exhibit 19.1
1
STATEMENT OF POLICY ON INSIDER TRADING
The following sets forth the Insider Trading Policy of Apartment Investment and
Management Company (“Aimco” or the “Company”). This policy covers trading of securities of
Aimco, Aimco OP L.P., entities in which Aimco directly or indirectly owns an interest or acts as a
general partner, as well as the securities of other companies with which Aimco does business or is in
negotiations. This policy covers all directors and all teammates, regardless of position. Aimco has
adopted this policy in order to ensure compliance with the law and to avoid even the appearance of
improper conduct by anyone associated with Aimco. We have all worked hard to establish Aimco’s
reputation for integrity and ethical conduct, and we are all responsible for preserving and enhancing this
reputation.
The restrictions in this policy apply not just to directors, officers and teammates, but also to their
spouses, minor children, adult family members sharing the same household and others living in their
household who may gain access to or become aware of material non-public information regarding Aimco,
as well as any other person or entity over whom the officer, director or teammate exercises substantial
influence or control over his, her or its securities trading decisions, and any trust or other estate in which
an officer, director or teammate has a substantial beneficial interest or as to which he or she serves as
trustee or in a similar fiduciary capacity (“Related Insiders”). The Company may also determine that
other persons should be subject to this policy, such as contractors or consultants who have access to
material nonpublic information. Persons subject to this policy are individually responsible for complying
with this policy and ensuring the compliance of any Related Insiders whose transactions are subject to this
policy. You should make your family and household members aware of the need to confer with you
before they trade in Aimco securities, and you should treat all such transactions for the purposes of this
policy and applicable securities laws as if the transactions were for your own account.
In all cases, the responsibility for determining whether an individual is in possession of material
nonpublic information rests with that individual, and any action on the part of the Company or any other
employee pursuant to this policy (or otherwise) does not in any way constitute legal advice or insulate an
individual from liability under applicable securities laws.
Please read this policy carefully. Contact the Legal Department – Jennifer Johnson, General Counsel,
at 983-888-0440 -- if at any time you have questions about this policy or its application to a particular
situation or if you plan to trade in Aimco securities but are unsure about whether you are able to do so.
I.
You May Not Trade When You Have Material Non-Public Information
The Federal securities laws and Aimco policy strictly prohibit any teammate, officer or director
of Aimco from buying, selling or engaging in any other transaction related to any securities of a company
while such person has material non-public information (commonly referred to as “inside information”)
relating to that company. The term “securities” refers to what is more commonly called “stock” and
includes equity securities (such as Aimco common or preferred stock – whether obtained in a market
transaction or by a stock grant from Aimco – and partnership units in Aimco OP L.P. (also known as “OP
Units”)), convertible securities, options, bonds and derivatives.
A.
When Information is Material
Under Company policy and United States laws, information is material if there is a
substantial likelihood that a reasonable investor would consider the information important in determining
Exhibit 19.1
2
whether to trade in a security; or the information, if made public, likely would affect the market price of a
company’s securities.
Information may be material even if it relates to future, speculative or contingent events
and even if it is significant only when considered in combination with publicly available information.
Material information can be positive or negative.
Depending on the facts and circumstances, information that could be considered material
includes, but is not limited to, the following:
•
earnings announcements, projections or guidance, or changes to previously released
announcements, projections or guidance;
•
annual or quarterly financial results;
•
possible acquisitions, divestitures or joint ventures;
•
expansion or curtailment of operations and business disruptions;
•
significant business developments;
•
the gain or loss of major contracts;
•
a cybersecurity incident or risk that may adversely impact the Company’s business,
reputation or share value;
•
write-downs and additions to reserves for bad debts;
•
major litigation, investigations or government actions;
•
a pending or proposed merger, acquisition, tender offer, joint venture, restructuring,
recapitalization or change in assets;
•
changes in auditors or auditor notification that the Company may no longer rely on an
audit report;
•
events regarding securities, including changes to the rights of securityholders, a public or
private offering of additional securities, stock splits, issuances, dividend increases or
decreases and redemptions;
•
changes in analyst recommendations or debt ratings;
•
extraordinary borrowing or other financing transactions out of the ordinary course;
•
liquidity problems; and
•
extraordinary management changes.
“Material information” cannot be defined precisely, because there are many gray areas
and varying circumstances. Although you may not have information about Aimco or another company
that you consider material, Federal regulators and others may conclude that the information you have is
material, and anyone scrutinizing your transactions will be doing so with the benefit of hindsight. To
protect yourself and Aimco, when doubt exists, you should presume that the information is material and
seek the guidance of the Legal Department.
B.
When Information is Non-Public
Information is considered to be non-public until it has been publicly disseminated and
sufficient time has passed for the securities markets to digest the information. Information is not
necessarily public merely because it has been discussed in the press or on social media, which sometimes
reports rumors. You should presume that information is non-public unless you can point to its official
release by Aimco in at least one of the following ways:
•
a public filing with the Securities and Exchange Commission;
•
the issuance of a press release; or
Exhibit 19.1
3
•
meetings with members of the press or the public.
You may not attempt to “beat the market” by trading simultaneously with, or shortly
after, the release of material information. Aimco policy requires that you wait at least two full trading
days after the announcement of material information before trading. For example, if Aimco issues a press
release in the middle of the day on Monday (after the NYSE opened), you would not be able to trade until
Thursday morning. If Aimco issues a press release at 8 a.m. New York time, on Monday (before the
NYSE opened), you would be able to trade on Wednesday morning. If Aimco issues a press release at 5
p.m. New York time, on Monday (after the NYSE closed), you would be able to trade on Thursday
morning.
C.
Restrictions on Trading
1.
You May Not Trade While You Have Material Non-Public Information. No
teammate, officer or director, or other person or entity subject to this policy, may buy, sell or
engage in any other transaction related to Aimco securities while such person has material non-
public information regarding Aimco. This prohibition extends not only to transactions involving
Aimco securities (including securities issued by Aimco, Aimco OP L.P. and other entities in
which Aimco owns an interest or acts as a general partner), but also to transactions involving the
securities of another company when you learn material non-public information about that
company by virtue of your position with Aimco (such as a company with which Aimco is
considering entering into a transaction) or otherwise.
2. “Restricted Persons” May Trade Only After Receiving the Prior Approval of the
Legal Department.
If you are:
•
a member of the Board of Directors;
•
an executive officer;
•
an officer;
•
a teammate in the legal, finance, accounting, transactions, or development groups; or
•
a teammate working in Aimco’s Denver or Washington, D.C. headquarters,
then you (and your applicable family and household members) are subject to heightened scrutiny and are
referred to as a “Restricted Person.” The Legal Department may also identify as “Restricted Persons”
other persons who do not fall within the categories above and will notify such persons in writing. Even
though you may not have material, non-public information, others at Aimco may have such information.
If you bought, sold, engaged in other transactions related to Aimco securities, or made recommendations
regarding Aimco securities when someone else had material, non-public information, that information
could be attributed to you. Except as otherwise specifically provided in this policy, Restricted Persons
must receive the approval of the Legal Department before entering into any transaction in Aimco
securities. In the absence of special circumstances approved by the Legal Department, Restricted
Persons generally will be permitted to trade in Aimco securities only during the period beginning two full
trading days following the public release of Aimco’s quarterly and annual financial results and ending on
the last day of the last month of any fiscal quarter. Regardless of this guideline, you may not trade if
you are in possession of material non-public information. You also may not trade if the Legal
Department issues a “no-trade” directive to you.
In addition, many Restricted Persons (members of the Board of Directors and
executive officers) are also subject to additional restrictions under Federal securities laws, which are
Exhibit 19.1
4
described in the Policy Statement on Trading in Company Securities for Executive Officers and Directors,
which is distributed to each person subject to such restrictions. Additional copies of the memorandum are
available from the Legal Department upon request. Any questions regarding these special rules and
requirements should be directed to the Legal Department.
3. Limited Exceptions. There are very limited exceptions to the prohibition against
trading while in possession of inside information. It does not matter that the transactions in question may
have been planned or committed to before you received non-public material information, regardless of the
economic loss that you may believe you might suffer as a consequence of not trading and regardless of
how or why you received the non-public material information. The only exceptions to this policy
(including the pre-clearance requirements) are as follows:
•
The exercise of a stock option granted under any stock-based incentive plan when no
stock is sold to fund the exercise price or related taxes (other than a tax withholding right
pursuant to which the Company withholds shares subject to an option to satisfy tax
withholding requirements). Note, however, that, this policy does apply to engaging in a
“cashless” exercise—the simultaneous sale through a broker of some or all of the shares
acquired through the exercise of an option.
•
The vesting of restricted stock or the settlement of restricted stock units, or the exercise
of a tax withholding right pursuant to which you elect to have the Company withhold
shares of stock to satisfy tax withholding requirements upon the vesting of any restricted
stock or settlement of any restricted stock units. Note, however, that the policy does not
apply to any market sale of restricted stock or sale of Company common stock received
upon the settlement of restricted stock units.
•
Purchases pursuant to any existing election under Aimco’s 401(k) plan or any other plan
under which teammates may purchase stock pursuant to a standing election. Note,
however, that new elections and changes in elections to increase or decrease the amount
of your contributions to the fund, fund-switching transactions, borrowings against your
account, or pre-paying a loan if it will result in allocation of loan proceeds to the Aimco
stock fund are subject to the policy and may only take place at a time when you are
otherwise able to trade securities of the Company under this policy and must otherwise
comply with this policy (including Section 5).
•
Purchases of Aimco stock in the Employee Stock Purchase Plan resulting from periodic
payroll contributions to the plan under an election made at the time of enrollment in the
plan. The policy also does not apply to purchases of Aimco securities resulting from
lump sum contributions to the plan, provided that you elected to participate by lump sum
payment at the beginning of the applicable enrollment period. Note, however, that the
policy does apply to an election to participate in the plan for any enrollment period,
changes in payroll contributions and to sales of Aimco stock purchased under the plan.
•
Any transaction made pursuant to a pre-arranged trading plan (“Trading Plan”) or a blind
trust (“Blind Trust”) established in compliance with SEC Rule 10b5-1. You may
establish or modify a Trading Plan or Blind Trust only during periods when you are
allowed to trade under this policy and you may establish, modify or terminate a Trading
Plan or Blind Trust only with the prior approval of the Legal Department. Directors and
officers (collectively, “Section 16 Insiders”) subject to Section 16 of the Securities
Exchange Act of 1934 (the “Exchange Act”) should be aware that the Company will be
required to make quarterly disclosures regarding all Rule 10b5-1 Plans entered into,
amended or terminated by Section 16 Insiders and to include the material terms of such
plans, other than pricing information.
Exhibit 19.1
5
•
Any other purchase of Aimco securities directly from the Company or sales of Aimco
securities directly to the Company with the approval by the general counsel of the
Company.
4. Gifts. You should never use a gift of securities to evade the prohibitions against using
material non-public information in a securities transaction. Although gifts are not automatically subject
to the trading window restrictions noted in Section 2, above, you should be careful to avoid gifts if you
have material non-public information. In addition, gifts to charitable institutions that intend to sell the
shares immediately upon receipt should not be made at any time that you possess material non-public
information. In order to assess the potential insider trading issues related to gifts, Restricted Persons must
contact the Legal Department before making a gift of Aimco securities.
5. Margin Accounts and Pledges. Restricted Persons are prohibited from pledging
Aimco securities as collateral for a loan or holding Aimco securities in a margin account. A pledge of
securities (including the establishment of a margin account or pledge agreement) may expose the pledgor
to insider trading liability if he or she obtains the loan while in possession of material non-public
information and then defaults, leaving the lender with insufficient coverage. Additionally, a margin call
or foreclosure resulting in a sale of securities that occurs when the pledgor is in possession of material
non-public information may subject the pledgor to insider trading liability. Because of this danger,
Aimco discourages all persons subject to this policy from pledging Aimco securities as collateral for a
loan or holding Aimco securities in a margin account. Entering into a pledge agreement or holding
Aimco securities in a margin account should be viewed as a transaction subject to the terms of the policy
and shall require preclearance by the Legal Department. In order to obtain preclearance to pledge Aimco
securities or hold them in a margin account, you must clearly demonstrate the financial capacity to repay
the loan without resorting to the pledged securities, you may only pledge securities that are shares held in
excess of Aimco’s stock ownership guidelines (if applicable to you), and the operative agreement for your
pledge or margin account must require that the counterparty resort to the pledged securities only after
seeking repayment from your other identified sources of financial capacity, or provide you with notice
and an opportunity to use other collateral before resorting to the pledged securities. In such event, you
must seek to use such alternative sources unless you obtain preclearance from the Legal Department for
the sale of the pledged securities to occur, and the sale may only occur during an open window.
6. Hedging Transactions. You may not engage (directly or indirectly) in hedging
transactions with respect to Company securities, or otherwise engage in transactions that hedge or offset,
or are designed to hedge or offset, any decrease in the market value of Company securities. Hedging
transactions include (but are not limited to) collars, equity swaps, exchange funds and prepaid variable
forward sale contracts with respect to Aimco securities. Hedging transactions may allow a director,
officer or other teammate to continue to own Company securities, but without the full risks and rewards
of ownership. This may lead to the director, officer or other teammate no longer having the same
objectives as the Company’s other shareholders.
7. Publicly-Traded Options. Given the relatively short term of many publicly-traded
options, transactions in certain types of options may create the appearance that a director, officer, or
teammate is trading based on material nonpublic information and focus a director’s, officer’s or other
teammate’s attention on short-term performance at the expense of the Company’s long-term objectives.
You may trade in options, warrants, puts and calls (or similar instruments) in Aimco securities provided
that the instrument cannot by its terms be exercised in less than six months. You may not trade in any
options, warrants, puts or calls (or similar instruments) on Aimco’s securities that are exercisable within
six months of your trade.
Exhibit 19.1
6
8. Short Sales. You may not engage in short sales of Aimco securities. A short sale has
occurred if the seller: (a) does not own the securities sold; or (b) does own the securities sold, but does not
deliver them within 20 days or place them in the mail within 5 days of the sale. Short sales may reduce a
seller’s incentive to seek to improve Aimco’s performance, and often have the potential to signal to the
market that the seller lacks confidence in Aimco’s prospects.
9. Short Term Trading. If you purchase Company securities, you are strongly
discouraged from selling any Company securities of the same class (which includes any other securities
that are convertible or exchangeable into such class) during the six months following the purchase (or
vice versa), except to cover taxes related to the vesting of restricted stock or the settlement of restricted
stock units. Short-term trading of Company securities may be distracting to the person and may unduly
focus the person on the Company’s short-term stock market performance instead of the Company’s long-
term business objectives.
9. Standing and Limit Orders. You may not place standing or limit orders on Company
securities, unless executed as part of an approved Trading Plan or Blind Trust discussed in section 3 of
this Policy. Standing and limit orders create heightened risks for insider trading violations because there is
no control over the timing of purchases or sales that result from standing instructions to a broker, and as a
result the broker could execute a transaction when you possess material nonpublic information.
10.
Post-Termination Transactions. If an individual is in possession of material
nonpublic information when his or her service terminates, that individual may not trade in Aimco
securities until that information has become public or is no longer material. In addition, Restricted
Persons may continue to be subject to the legal requirements described in the Policy Statement on Trading
in Company Securities for Executive Officers and Directors, in accordance with applicable law.
D.
No Tipping of Material Non-Public Information to Others
In addition to trading while in possession of material nonpublic information, it is also
illegal and a violation of this Policy, as well as the Company’s Policy on Confidentiality of
Information, to provide such information to another (“tipping”) who may trade or to advise another to
trade on the basis of such information. This Policy applies regardless of whether the person or entity who
receives the information, the “tippee,” is related to you and regardless of whether you receive any
monetary benefit from the tippee. Both the tipper (the person who gives the material non-public
information) and the tippee (the person who receives the material non-public information) can be held
liable under the securities laws in such situations. To avoid even the appearance of impropriety, it is
wise to refrain from making recommendations about buying or selling the securities of Aimco or
other entities with which Aimco has a relationship.
E.
Liability and Consequences
Federal law imposes heavy penalties on those who buy, sell or engage in other
transactions related to a company’s securities while such person has inside information about that
company. Federal law also imposes heavy penalties on those who pass along the inside information to
others who use it to buy, sell or engage in other transactions related to a company’s securities. Potential
penalties include:
•
civil penalties of up to three times the amount of profit gained or loss avoided as a result
of the unlawful action;
•
a criminal fine of up to $5 million (no matter how small the profit);
Exhibit 19.1
7
•
a jail term of up to 20 years; and
•
private suits for damages.
In addition, Aimco and any supervisor of a teammate who trades with or tips inside
information may face “controlling person” liability of:
•
civil penalties of up to the greater of $1 million or three times the amount of profit gained
or loss avoided as a result of the unlawful action;
•
a criminal penalty of up to $25 million for Aimco and up to $5 million for the individual
supervisor(s); and
•
private suits for damages.
Teammates, officers and directors who violate this policy may be subject to
discipline by Aimco, up to and including termination of employment. Finally, in addition to the
above consequences, severe, and possibly irreparable, damage to Aimco’s reputation can result from
trading on, tipping or other improper use of material non-public information.
II. Safeguarding Confidential Information
If material information relating to Aimco or its business is considered nonpublic, such
information must be kept in strict confidence and should be discussed only with persons who have a
“need to know” the information for a legitimate business purpose. The utmost care must be exercised at
all times in order to protect Aimco’s confidential information. The following practices should be followed
to help prevent the misuse of confidential information:
•
Avoid discussing confidential information in places where you may be overheard by
people who do not have a valid need to know such information, such as on elevators, in
restaurants and on airplanes.
•
Avoid discussing confidential information on cellular phones and speaker phones in
locations where you may be overheard. Do not discuss such information with relatives or
social acquaintances.
•
Do not give your computer or other account IDs and passwords to any other person.
Password protect computers and log off when they are not in use.
•
Always put confidential documents away when not in use and, based upon the sensitivity
of the material, keep such documents in a locked desk or office. Do not leave documents
containing confidential information where persons who do not have a need to know the
content of the documents may see them.
•
Be aware that the internet and other external electronic mail carriers are not secure
environments for the transmission of confidential information.
•
Comply with the specific terms of any confidentiality agreements of which you are
aware.
•
Upon termination of your employment, you must return to Aimco all physical (including
electronic) copies of confidential information as well as all other material embodied in
any physical or electronic form that is based on or derived from such information,
without retaining any copies.
•
You may not bring the confidential information of any former employer to Aimco.
Exhibit 19.1
8
III. Providing Information About Aimco
A.
Responding to Requests for Information
You may receive questions concerning various activities of Aimco. Such inquiries can
come from the media, securities analysts and others regarding Aimco’s business, rumors, trading activity,
current and future prospects and plans, acquisition or divestiture activities and other important
information. Only individuals specifically authorized to do so by Aimco may answer questions about or
disclose information concerning Aimco. Under no circumstances should you attempt to handle these
inquiries without prior authorization. Refer all such inquiries to your supervisor, who will direct the
inquiry to the proper officer.
B.
Regulation FD
Aimco is committed to fair disclosure to investors in compliance with all applicable
securities laws and regulations, including SEC Regulation FD. Regulation FD prohibits public companies
from selectively disclosing material nonpublic information to securities analysts, broker-dealers, other
securities market professionals and stockholders who may trade on the basis of the information
(“Securities Professionals”). Whenever a company (or person acting on its behalf) discloses material
nonpublic information to Securities Professionals, under Regulation FD, the company must
simultaneously make public disclosure of the information in question. If Aimco learns that it has
unintentionally disclosed material nonpublic information, it must make the information public within 24
hours. For a discussion of what types of information are likely to be deemed material, see Section I.A. of
this policy above entitled, “When Information is Material.”
To avoid violation of Regulation FD, Aimco must strictly adhere to disciplined
procedures and recordkeeping with respect to formal and informal contacts with Securities Professionals.
If possible, the Chief Financial Officer (or the CFO’s designee), should be included in all contacts with
Securities Professionals. If the CFO (or the CFO’s designee, such as the head of Investor Relations) is not
included in the contact, then the CFO or the CFO’s designee must be briefed on the substance of any
discussions within two hours after any such contact occurs.
IV. Reporting Violations, Complying with Law and Policy, and Seeking Advice
You should refer suspected violations of this policy to the Legal Department. If you receive
material non-public information that you are not authorized to receive or that you do not legitimately need
to know to perform your job or if you receive information and are unsure if it is material non-public
information, you should not share the information. Instead, you should immediately contact the Legal
Department. Consulting your colleagues may only worsen the problem.
The responsibility for protecting Aimco’s reputation rests with each of us. You should become
familiar with and must conduct yourself strictly in compliance with all applicable securities laws and
regulations and Aimco’s policies and guidelines pertaining to them. If you have any questions about this
policy, please contact the Legal Department immediately.
Exhibit 19.1
A-1
POLICY STATEMENT ON TRADING IN COMPANY SECURITIES
FOR EXECUTIVE OFFICERS AND DIRECTORS
I.
Introduction
This Policy Statement on Trading in Company Securities for Executive Officers and Directors (the
“Addendum”) explains certain reporting requirements and procedures which apply to all directors and
certain executive officers of Apartment Investment and Management Company (“Aimco” or the
“Company”), and is in addition to and supplements the Aimco Statement of Policy on Insider Trading.
Please note that this policy applies to all Aimco securities which you hold or may acquire in the future.
Please read this Addendum carefully. When you have completed your review, please sign the
attached acknowledgment form and return it to the Legal Department.
II. Reporting and Form Filing Requirements
Under Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), Directors and
certain executive officers (the Section 16 Officers) of Aimco must file forms with the SEC when they
engage in certain transactions involving Aimco equity securities. In this context, in addition to basic
traditional equity interests such as common stock, Aimco “equity securities” also include any securities
that are exchangeable for or convertible into, or that derive their value from, an Aimco equity security.
These other securities are known as derivative securities, and include options, restricted share units,
warrants, convertible securities, and stock appreciation rights.
Form 3: Initial Beneficial Ownership Statement. A person who becomes a Director or Section
16 Officer of Aimco must file a Form 3 within ten days of becoming a Director or Section 16 Officer,
even if the Director or Section 16 Officer is not an owner of Aimco equity securities at the time. The
Form 3 must disclose the Director’s or Section 16 Officer’s ownership of any Aimco equity securities the
Director or Section 16 Officer owns immediately prior to assuming office.
Form 4: Changes of Beneficial Ownership Statement. As long as a person remains a Director
or Section 16 Officer, and for up to six months after a person no longer holds such a position with Aimco,
a Form 4 must be filed before 10:00 p.m. Eastern on the second business day following the day that there
is a change in the number of Aimco equity securities held from that previously reported to the SEC.
There are exceptions to this requirement for gifts and a very limited class of employee benefit plan
transactions.
Form 5: Annual Beneficial Ownership Statement. A Form 5 must be filed with the SEC by any
individual who served as a Director or Section 16 Officer of Aimco during any part of Aimco’s fiscal year
to report: (1) all reportable transactions in Aimco equity securities that were specifically eligible for
deferred reporting on Form 5; (2) all transactions that should have been reported during the last fiscal year
but were not; and (3) with respect to an individual’s first Form 5, all transactions which should have been
reported but were not for the last two fiscal years.
A Form 5 need not be filed if all transactions otherwise reportable have been previously reported.
If required, Form 5 must be filed within 45 days after the end of Aimco’s fiscal year, which is February
14, or the first business day thereafter. Common types of transactions reportable on Form 5 include gifts
and unreported transactions of less than $10,000 in any six month period, either of which may be reported
on a voluntary basis on any Form 4 filed before the Form 5 is due.
Exhibit 19.1
A-2
Indirect Ownership
The reports described above must also reflect any indirect ownership by Directors and Section 16
Officers, including all holdings and transactions by Related Insiders. This includes changes in ownership
by immediate family members living in the Director’s or Section 16 Officer’s household and any other
person or entity over whom the individual exercises influence or control over his, her or its securities
trading decisions. For this purpose, “immediate family” includes a spouse, children, stepchildren,
grandchildren, parents, grandparents, stepparents and siblings, including in-laws and adoptive
relationships.
Any questions concerning whether a particular transaction will necessitate filing of one of
these Forms, or how or when they should be completed should be asked of the Legal Department,
or, if you prefer, your individual legal counsel. Aimco must disclose in its Annual Report on Form
10-K and in its Proxy Statement any delinquent filings of Forms 3, 4 or 5 by Directors and Section 16
Officers, and must post on its website, by the end of the business day after filing with the SEC, any
Forms 3, 4 and 5 relating to Aimco securities.
Reporting Exemptions for Certain Employee Benefit Plan Transactions
Rule 16b-3 under the Exchange Act provides exemptions for Director and Section 16 Officer
reporting of certain employee benefit plan events on Forms 4 and 5, including certain routine non-
volitional transactions under tax-conditioned thrift, stock purchase and excess benefit plans.
A transaction that results only in a change in the form of a person’s beneficial ownership is also
exempt from reporting. An exempt “change in the form of beneficial ownership” would include, for
example, a distribution of benefit plan securities to an insider participant where the securities were
previously attributable to the insider. Exercises or conversions of derivative securities would not,
however, be considered mere changes in beneficial ownership and would be reportable.
The vesting of most stock options, restricted stock and stock appreciation rights is also not subject
to the reporting requirements, although related share withholding transactions, if any, would give rise to
Form 4 reporting obligations.
III. Short-Swing Trading Profits and Short Sales
Short-Swing Trading Profits
In order to discourage Directors and Officers from profiting through short-term trading
transactions in Aimco equity securities, Section 16(b) of the Exchange Act requires that any “short-swing
profits” be disgorged to Aimco. (This is in addition to the Form reporting requirements described above.)
“Short-swing profits” are profits, whether real or notional, that result from any purchase and sale,
or sale and purchase of Aimco equity securities within a six-month period, unless there is an applicable
exemption for either transaction. It is important to note that this rule applies to any matched transactions
in Aimco securities (including derivative securities), not only a purchase and sale or sale and purchase of
the same shares, or even of the same class of securities. Furthermore, pursuant to the SEC’s rules, profit
is determined so as to maximize the amount that the Director or Section 16 Officer must disgorge, and
this amount may not be offset by any losses realized. “Short-swing profits” may exceed economic profits.
Exhibit 19.1
A-3
Short-swing Exemptions for Certain Reinvestment and Employee Benefit Plan Transactions
As indicated, to come within the short-swing rules, a purchase and sale (or sale and purchase)
within any period of less than six months are matched to determine whether a director or officer has
realized profit subject to the short-swing profit rule described above, but Rule 16b-3 creates an exemption
for, or permits the Company’s board of directors or a qualifying committee to exempt, certain transactions
between (i) a director or officer and (ii) the Company or certain benefit plans sponsored by the Company.
Under this Rule certain transactions involving acquisitions of equity securities under employee
benefit plans are not counted as “purchases” for short-swing purposes, provided that the benefit plan
meets various statutory requirements.
Aimco’s 2015 Stock Award and Incentive Plan meets these requirements, and therefore an ordinary
course acquisition of equity securities under it generally speaking is not treated as a “purchase” subject to
the short-swing profit rule purposes.
IV. Limitations and Requirements on Resales of the Company’s Securities
Under the Securities Act, Directors and certain Officers who are affiliates1 of Aimco who wish to
sell Aimco securities generally must comply with the requirements of Rule 144 or be forced to register
the securities under the Securities Act. “Securities” under Rule 144 (unlike under Section 16) are broadly
defined to include all securities, not just equity securities. Therefore, the Rule 144 requirements apply not
only to common and preferred stock, but also to bonds, debentures and any other form of security.
Affiliates and others who seek to sell securities acquired directly from the Company or a Company
affiliate in a series of transactions not involving any public offering may avail themselves of the safe
harbor of Rule 144 by complying with the provisions applicable to resales of “restricted securities”
(which apply, for affiliates, in addition to, and in conjunction with, the provisions of that Rule applicable
to resales by affiliates). Also, the safe harbor afforded by this rule is available whether or not the
securities to be resold were previously registered under the Securities Act (except that the minimum
holding period required to satisfy the safe harbor shall apply only to securities which were not registered
under the Securities Act).
The following summarizes relevant provisions of Rule 144 as they apply to resales by Directors
and Officers seeking to take advantage of the safe harbor:
1.
Current public information. There must be adequate current public information available
regarding Aimco. This requirement is satisfied only if Aimco has filed all reports required by the
Exchange Act during the twelve months preceding the sale.
2.
Manner of sale.2 The sale of Aimco shares by a Director or Officer must be made in one of
the following manners:
1
Rule 144 under the Securities Act defines “affiliate” of an issuer as “a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer.”
2
The manner of sale requirements apply only to equity securities. Debt securities are not subject to any manner
of sale requirements.
Exhibit 19.1
A-4
a.
in an open market transaction through a broker at the prevailing market price for
no more than the usual and customary brokerage commission;
b.
to a market maker at the price held out by the market maker; or
c.
in a riskless principal transaction in which trades are executed at the same price,
exclusive of any explicitly disclosed markup or markdown, commission
equivalent or other fee, and where the transaction is permitted to be reported as
riskless under the rules of a self-regulatory organization.3
Furthermore, the broker may not solicit or arrange for the solicitation of customers to purchase
the shares. In addition, your broker likely has its own Rule 144 procedures (and must be involved in
transmitting Form 144 (see item 4 below)), so it is important to speak with your broker prior to any sale.
Even if your stock certificates do not contain any restrictive legends, you should inform your
broker that you may be considered an affiliate of Aimco.
3.
Number of shares which may be sold.
Equity Securities:
The amount of equity securities that a Director or Officer may sell in a three-month period is
limited to the greater of:
a.
one percent of the outstanding shares of the same class of the Company, or
b.
the average weekly reported trading volume in the four calendar weeks preceding
the transactions.
Debt Securities:
The amount of debt securities that a Director or Officer may sell in a three-month period is
limited to the greater of:
a.
the average weekly reported trading volume in the four calendar weeks preceding
the sale, or
b.
ten (10) percent of the principal amount of the tranche of debt securities (or ten
(10) percent of the class of non-participatory preferred stock).
4.
Notice of proposed sale. If the amount of securities proposed to be sold by a Director or
Officer during any three-month period exceeds 5,000 shares or has an aggregate sale price in excess of
$50,000, the Officer or Director must file a notice of sale with the SEC on Form 144 prior to, or
concurrently with, the placing of the order to sell securities.
3
A riskless principal transaction is a transaction in which a broker or dealer (i) after having received a
customer’s order to buy a security, purchases the security as principal in the market to satisfy the order to buy or (ii)
after having received a customer’s order to sell a security, sells the security as principal to the market to satisfy the
order to sell.
Exhibit 19.1
A-5
5.
Holding Periods. Any Aimco securities acquired directly or indirectly from Aimco in a
transaction that was not registered with the SEC under the Securities Act (restricted securities) must be
held for six months prior to reselling such securities. There is no statutory minimum holding period for
securities which were registered under the Securities Act or acquired in an open-market transaction.
In certain situations (e.g., securities acquired through stock dividends, splits or conversions),
“tacking” is permitted, that is, the new securities will be deemed to have been acquired at the same time
as the original securities.
V. Penalties for Violating the Securities Laws and Company Policy
The seriousness of securities law violations is reflected in the penalties such violations carry. A
Director’s resignation may be sought, or an Officer will be subject to possible Company disciplinary
action up to and including termination of employment. In addition, both Aimco itself and individual
Directors, Officers or teammates may be subjected to both criminal and civil liability. These violations
may also create negative publicity for Aimco.
VI. Questions
Because of the technical nature of some aspects of the federal securities laws, all Directors and
Officers should review this material carefully and contact the Legal Department if at any time (i) you
have questions about this policy or its application to a particular situation; or (ii) you plan to trade in
Aimco securities, but are unsure as to whether the transaction might be in conflict with the securities laws
and/or this Company policy.
Exhibit 21.1
APARTMENT INVESTMENT AND MANAGEMENT COMPANY ENTITIES
As of 12/31/2024
Entity
Jurisdiction
1001 Brickell Bay Drive, LLC
Delaware
1001 Brickell Holdings, LLC
Delaware
1001 Brickell Owner, LLC
Delaware
1001 Brickell US, LLC
Delaware
1691-1695 2ND Avenue, LLC
Delaware
2200 GRACE OWNER, LLC
Delaware
234-236 East 88th, LLC
Delaware
450 NE 9th Holding LLC
Delaware
450 NE 9th Owner LLC
Delaware
510 34th LLC
Delaware
550 NE 9th Holding LLC
Delaware
550 NE 9th Owner LLC
Delaware
560 NE 34TH St Holdco, LLC
Delaware
560 NE 34TH St Holdings JV, LLC
Delaware
560 NE 34TH ST, LLC
Delaware
901 N Federal Holding LLC
Delaware
901 N Federal Owner LLC
Delaware
AA PURSUIT VENTURE, LLC
Delaware
AF Hotel Parcel Lessee, LLC
Delaware
AF Hotel Parcel Lessor, LLC
Delaware
AF Hotel Parcel Opportunity Zone Business, LP
Delaware
AHOTB 555 NE HOLDCO LLC
Delaware
AHOTB 555 NE, LLC
Delaware
AHOTB Holding, LLC
Delaware
AHOTB REIT Corp
Delaware
AIMCO 173 East 90th Street, LLC
Delaware
AIMCO 237 Ninth Avenue, LLC
Delaware
AIMCO BEITEL HOLDINGS LLC
Delaware
AIMCO BROWARD BOULEVARD I LLC
Delaware
AIMCO BROWARD BOULEVARD II LLC
Delaware
AIMCO Casa Del Mar TIC, LLC
Delaware
AIMCO Casa Del Norte GP, LLC
Delaware
Aimco Development Company, LLC
Delaware
AIMCO ELM CREEK TOWNHOMES FOUR, LLC
Delaware
Aimco Elm Creek Townhomes Three, LLC
Delaware
AIMCO ELM CREEK, L.P.
Delaware
AIMCO ESPLANADE AVENUE APARTMENTS, LLC
Delaware
AIMCO Hermosa Terrace GP, LLC
Delaware
AIMCO Hermosa Terrace LP, LLC
Delaware
Exhibit 21.1
2
AIMCO Hillmeade, LLC
Delaware
AIMCO Hyde Park Tower, L.L.C.
Delaware
AIMCO INVESTMENT COMPANY, LLC
Delaware
Aimco JO Intermediate Holdings, LLC
Delaware
Aimco JO TRS Holdings, LLC
Delaware
AIMCO La Jolla Terrace GP, LLC
Delaware
AIMCO La Jolla Terrace LP, LLC
Delaware
AIMCO Milan, LLC
Delaware
Aimco OP GP, LLC
Delaware
Aimco OP L.P.
Delaware
Aimco Park and 12th, LLC
Delaware
AIMCO Pathfinder Village Apartments GP, LLC
Delaware
Aimco Pathfinder Village Apartments, L.P.
Delaware
Aimco REIT Sub, LLC
Delaware
AIMCO ROYAL CREST – NASHUA, L.L.C
Delaware
AIMCO STRATHMORE SQUARE GP PHASE I, LLC
Delaware
AIMCO STRATHMORE SQUARE GP PHASE II, LLC
Delaware
AIMCO STRATHMORE SQUARE LP PHASE I, LLC
Delaware
AIMCO STRATHMORE SQUARE LP PHASE II, LLC
Delaware
AIMCO Warwick, L.L.C.
Delaware
AIMCO WEXFORD VILLAGE II, L.L.C.
Delaware
Aimco Wexford Village, L.L.C.
Delaware
AIMCO Yacht Club at Brickell, LLC
Delaware
AIMCO Yorktown, L.P.
Delaware
AIVUP JV Holdings Member, LLC
Delaware
Ambassador GP Holdings, LLC
Delaware
AmReal Corporation
South Carolina
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Maryland
AUP JV Holdings, LLC
Delaware
AUP JV Member, LLC
Delaware
BENSON HOTEL OPERATIONS, LLC
Delaware
BIOSCIENCE FOUR, LLC
Delaware
Brickell Bay Miami REIT Corp.
Delaware
Brickell Bay Tower Inc.
Delaware
Brickell Bay Tower Ltd
Bahamas
Campus GP Holdings, LLC
Delaware
Casa Del Norte a Limited Partnership
California
CCIP Plantation Gardens, L.L.C.
Delaware
Church Street Associates Limited Partnership
Illinois
EDGEWATER PHASE 2 HOLDINGS, LLC
Delaware
EDGEWATER PHASE 3 HOLDINGS, LLC
Delaware
FITZSIMONS PHASE FOUR, LLC
Delaware
HERMOSA TERRACE A LIMITED PARTNERSHIP
California
James-Oxford Limited Partnership
Maryland
Exhibit 21.1
3
K-A 200 and 520 Broward JV LLC
Delaware
K-A 300 Broward JV LLC
Delaware
LA Canyon Terrace QRS, Inc.
Delaware
LA Indian Oaks QRS, Inc.
Delaware
LA JOLLA TERRACE, A LIMITED PARTNERSHIP
California
M & P Development Company
Pennsylvania
NARDWARE PROPERTIES LLC
Delaware
National Corporation for Housing Partnerships
District of Columbia
New GP Holdings, LLC
Delaware
New J-O GP Holdings, LLC
Delaware
NHP Partners Two Limited Partnership
Delaware
NP Bank Lofts Associates, L.P.
Colorado
Real Estate Technology Ventures, II, L.P.
Delaware
Real Estate Technology Ventures, L.P.
Delaware
RET Ventures SPV 1, L.P.
Delaware
Royal Crest Estates (Marlboro), L.L.C.
Delaware
Silversmith Road, LLC
Delaware
St. George Villas Limited Partnership
South Carolina
STRATHMORE SQUARE JV 1, LLC
Delaware
STRATHMORE SQUARE JV 2, LLC
Delaware
STRATHMORE SQUARE SERVICES JV 1, LLC
Delaware
The National Housing Partnership
District of Columbia
TIBURON LESSEE, LLC
Delaware
Upton Place East LLC
Delaware
Upton Place Holdings, LLC
Delaware
Upton Place JV LLC
Delaware
Upton Place West LLC
Delaware
Waterford Village, L.L.C.
Delaware
Williamsburg Limited Partnership
Illinois
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated February 24, 2025, with respect to the consolidated financial statements included in
the Annual Report of Apartment Investment and Management Company on Form 10-K for the year ended
December 31, 2024. We consent to the incorporation by reference of said reports in the Registration Statements of
Apartment Investment and Management Company on Forms S-3 (Form S-3 (No. 333-20755), Form S-3 (No. 333-
69121), Form S-3 (No. 333-36531), Form S-3 (No. 333-50742), Form S-3 (No. 333-64460), Form S-3 (No. 333-
92743), Form S-3 (No. 333-71002), Form S-3 (No. 333-101735), Form S-3 (No. 333-17431), Form S-3 (No. 333-
77067), Form S-3 (No. 333-31718), Form S-3 (No. 333-52808), Form S-3 (No. 333-73162), Form S-3 (No. 333-
47201), Form S-3ASR (No. 333-236779), Form S-3 (No.333-36537), Form S-3 (No. 333-81689), Form S-3 (No.
333-85844), Form S-3 (No. 333-08997), Form S-3 (No. 333-75109), Form S-3 (No. 333-77257), Form S-3 (No.
333-130735), Form S-3 (No. 333-150342), Form S-3 (No. 333-828), Form S-3 (No. 333-4546), Form S-3/A (No.
333-86200), and on Forms S-8 (Form S-8 (No. 333-142466), Form S-8 (No.333-207826), Form S-8 (No. 333-
225037), Form S-8 (No. 333-269084), Form S-8 (No. 333-207828)).
/s/ GRANT THORNTON LLP
Denver, Colorado
February 24, 2025
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements listed below and in the related
Prospectuses of our report dated February 26, 2024 (except for Note 14, as to which the date is February 24, 2025),
with respect to the consolidated financial statements of Apartment Investment and Management Company included
in this Annual Report (Form 10-K) of Apartment Investment and Management Company for the year ended
December 31, 2024.
Form S-3 (No. 333-20755)
Form S-3 (No. 333-81689)
Form S-3 (No. 333-69121)
Form S-3 (No. 333-85844)
Form S-3 (No. 333-36531)
Form S-3 (No. 333-08997)
Form S-3 (No. 333-50742)
Form S-3 (No. 333-75109)
Form S-3 (No. 333-64460)
Form S-3 (No. 333-77257)
Form S-3 (No. 333-92743)
Form S-8 (No. 333-142466)
Form S-3 (No. 333-71002)
Form S-8 (No. 333-207826)
Form S-3 (No. 333-101735)
Form S-3 (No. 333-130735)
Form S-3 (No. 333-17431)
Form S-3 (No. 333-150342)
Form S-3 (No. 333-77067)
Form S-8 (No. 333-225037)
Form S-3 (No. 333-31718)
Form S-8 (No. 333-269084)
Form S-3 (No. 333-52808)
Form S-8 (No. 333-207828)
Form S-3 (No. 333-73162)
Form S-3 (No. 333-828)
Form S-3 (No. 333-47201)
Form S-3 (No. 333-4546)
Form S-3ASR (No. 333-236779)
Form S-3/A (No. 333-86200)
Form S-3 (No. 333-36537)
/s/ Ernst and Young LLP
Denver, Colorado
February 24, 2025
Exhibit 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
I, Wes Powell, certify that:
1.
I have reviewed this annual report on Form 10-K of Apartment Investment and Management Company;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 24, 2025
/s/ Wes Powell
Wes Powell
Director, President and Chief Executive
Officer
Exhibit 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
I, H. Lynn C. Stanfield, certify that:
1.
I have reviewed this annual report on Form 10-K of Apartment Investment and Management Company;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 24, 2025
/s/ H. Lynn C. Stanfield
H. Lynn C. Stanfield
Executive Vice President and Chief Financial
Officer
Exhibit 31.3
CHIEF EXECUTIVE OFFICER CERTIFICATION
I, Wes Powell, certify that:
1.
I have reviewed this annual report on Form 10-K of Aimco OP L.P.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 24, 2025
/s/ Wes Powell
Wes Powell
Director, President and Chief Executive Officer
Exhibit 31.4
CHIEF FINANCIAL OFFICER CERTIFICATION
I, H. Lynn C. Stanfield, certify that:
1.
I have reviewed this annual report on Form 10-K of Aimco OP L.P.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 24, 2025
/s/ H. Lynn C. Stanfield
H. Lynn C. Stanfield
Executive Vice President and Chief Financial
Officer
Exhibit 32.1
Certification of CEO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Apartment Investment and Management Company (the “Company”) on Form 10-K for
the period ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my
knowledge, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Wes Powell
Wes Powell
Director, President and Chief Executive Officer
February 24, 2025
Exhibit 32.2
Certification of CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Apartment Investment and Management Company (the “Company”) on Form 10-K for
the period ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my
knowledge, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ H. Lynn C. Stanfield
H. Lynn C. Stanfield
Executive Vice President and Chief Financial Officer
February 24, 2025
Exhibit 32.3
Certification of CEO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Aimco OP L.P. (the “Partnership”) on Form 10-K for the period ended December 31,
2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Partnership.
/s/ Wes Powell
Wes Powell
Director, President and Chief Executive Officer
February 24, 2025
Exhibit 32.4
Certification of CFO Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Aimco OP L.P. (the “Partnership”) on Form 10-K for the period ended December 31,
2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Partnership.
/s/ H. Lynn C. Stanfield
H. Lynn C. Stanfield
Executive Vice President and Chief Financial Officer
February 24, 2025