Real Estate Dispositions

6 Months Ended

Jun. 30, 2011

NOTE 3 — Real Estate Dispositions

Real Estate Dispositions (Discontinued Operations)

We are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such properties meet the criteria to be classified as held for sale, including whether such properties are expected to be sold within 12 months. Additionally, certain properties that do not meet all of the criteria to be classified as held for sale at the balance sheet date may nevertheless be sold and included in discontinued operations in the subsequent 12 months; thus, the number of properties that may be sold during the subsequent 12 months could exceed the number classified as held for sale. At June 30, 2011 and December 31, 2010, we had two and 29 properties, with an aggregate of 710 and 4,750 units, respectively, classified as held for sale. Amounts classified as held for sale in the accompanying condensed consolidated balance sheets are as follows (in thousands):


	June 30,		December 31,
	2011		2010
Real estate, net	$	23,137	$	146,805
Other assets		576		2,071

Assets held for sale	$	23,713	$	148,876


Property debt	$	23,951	$	112,034
Other liabilities		226		1,255

Liabilities related to assets held for sale	$	24,177	$	113,289

During the six months ended June, 2011 and 2010, we sold or disposed of 27 properties and 23 properties with an aggregate of 4,040 units and 3,547 units, respectively. During the year ended December 31, 2010, we disposed of 51 consolidated properties with an aggregate of 8,189 units. For the three and six months ended June 30, 2011 and 2010, discontinued operations includes the results of operations for the periods prior to the date of disposition for all properties disposed of and for properties classified as held for sale as of June 30, 2011.

The following is a summary of the components of income from discontinued operations and the related amounts of income from discontinued operations attributable to Aimco and to noncontrolling interests for the three and six months ended June 30, 2011 and 2010 (in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Rental and other property revenues	$	4,019		$	21,695		$	11,538		$	47,639
Property operating expenses		(2,169	)		(9,590	)		(6,288	)		(25,910	)
Depreciation and amortization		(1,647	)		(6,311	)		(4,065	)		(12,839	)
Provision for operating real estate impairment losses		(2,452	)		(895	)		(6,307	)		(8,121	)

Operating (loss) income		(2,249	)		4,899			(5,122	)		769
Interest income		262			101			314			183
Interest expense		(1,009	)		(3,881	)		(2,602	)		(8,308	)

(Loss) income before gain on dispositions of real estate and income tax		(2,996	)		1,119			(7,410	)		(7,356	)
Gain on dispositions of real estate		19,716			26,982			27,434			53,321
Income tax (expense) benefit		(251	)		(5	)		(421	)		1,063

Income from discontinued operations, net	$	16,469		$	28,096		$	19,603		$	47,028


(Income) loss from discontinued operations attributable to:
Noncontrolling interests in consolidated real estate partnerships	$	(7,196	)	$	(6,383	)	$	(5,943	)	$	(16,241	)
Noncontrolling interests in Aimco Operating Partnership		(653	)		(1,455	)		(945	)		(2,064	)

Total noncontrolling interests		(7,849	)		(7,838	)		(6,888	)		(18,305	)

Income from discontinued operations attributable to Aimco	$	8,620		$	20,258		$	12,715		$	28,723

Gain on dispositions of real estate is reported net of incremental direct costs incurred in connection with the transactions, including any prepayment penalties incurred upon repayment of property loans collateralized by the properties being sold. Such prepayment penalties totaled $4.8 million and $5.0 million for the three and six months ended June 30, 2011, respectively, and $2.6 million and $3.2 million for the three and six months ended June 30, 2010, respectively. We classify interest expense related to property debt within discontinued operations when the related real estate asset is sold or classified as held for sale.

In connection with properties sold or classified as held for sale during the three and six months ended June 30, 2011, we allocated $0.9 million and $1.7 million, respectively, of goodwill related to our conventional and affordable segments to the carrying amounts of the properties sold or classified as held for sale. Of these amounts, $0.7 million and $1.2 million, respectively, were recognized as a reduction of gain on dispositions of real estate and $0.2 million and $0.5 million, respectively, were recognized as an adjustment of impairment losses during the three and six months ended June 30, 2011. In connection with properties sold or classified as held for sale during the three and six months ended June 30, 2010, we allocated $1.5 million and $2.8 million, respectively, of goodwill related to our conventional and affordable segments to the carrying amounts of the properties sold or classified as held for sale. Of these amounts, $1.4 million and $2.6 million, respectively, were treated as a reduction of gain on dispositions of real estate and $0.1 million and $0.2 million, respectively, were treated as an adjustment of impairment losses during the three and six months ended June 30, 2010. The amounts of goodwill allocated to these properties were based on the relative fair values of the properties sold or classified as held for sale and the retained portions of the reporting units to which the goodwill was allocated.