Business Segments

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Business Segments

Note 10 — Business Segments

We have two segments: Same Store and Other Real Estate. Our Same Store segment includes communities that are owned and managed by AIR and had reached a stabilized level of operations. Our Other Real Estate segment includes five properties acquired in 2021, four properties acquired in 2022, four properties previously leased to Aimco, and three communities we expect to sell or lease to a third party, but do not yet meet the criteria to be classified as held for sale

Our chief operating decision maker (“CODM”) uses proportionate property net operating income (“NOI”) to assess the operating performance of our communities. Proportionate property NOI reflects our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues in accordance with GAAP.

As of September 30, 2022, our Same Store segment included 58 apartment communities with 20,730 apartment homes and our Other Real Estate segment included 16 apartment communities with 4,556 apartment homes. As of September 30, 2022, we had six apartment communities with 1,314 homes that were classified as held for sale.

The following tables present the total revenues, property operating expenses, proportionate property net operating income (loss), and income (loss) before income tax (expense) benefit of our segments on a proportionate basis. To reflect how the CODM evaluates the

business, prior period segment information has been recast to conform with our reportable segment composition as of September 30, 2022 (in thousands):

	Same Store		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended September 30, 2022:
Total revenues	$	139,107	$	30,258	$	20,725	$	10,781		$	200,871
Property operating expenses		35,632		10,606		10,562		14,450			71,250
Other operating expenses not allocated to segments (3)		—		—		—		103,049			103,049
Total operating expenses		35,632		10,606		10,562		117,499			174,299
Proportionate property net operating income (loss)		103,475		19,652		10,163		(106,718	)		26,572
Other items included in income before income tax expense (4)		—		—		—		(23,130	)		(23,130	)
Income (loss) before income tax expense	$	103,475	$	19,652	$	10,163	$	(129,848	)	$	3,442

	Same Store		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Nine months ended September 30, 2022:
Total revenues	$	402,756	$	62,371	$	60,153	$	40,569		$	565,849
Property operating expenses		105,570		23,486		30,064		39,153			198,273
Other operating expenses not allocated to segments (3)		—		—		—		279,126			279,126
Total operating expenses		105,570		23,486		30,064		318,279			477,399
Proportionate property net operating income (loss)		297,186		38,885		30,089		(277,710	)		88,450
Other items included in income before income tax expense (4)		—		—		—		528,955			528,955
Income before income tax expense	$	297,186	$	38,885	$	30,089	$	251,245		$	617,405

	Same Store		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended September 30, 2021:
Total revenues	$	134,102	$	5,558	$	20,608	$	31,509		$	191,777
Property operating expenses		36,883		2,963		10,604		23,475			73,925
Other operating expenses not allocated to segments (3)		—		—		—		90,812			90,812
Total operating expenses		36,883		2,963		10,604		114,287			164,737
Proportionate property net operating income (loss)		97,219		2,595		10,004		(82,778	)		27,040
Other items included in income (loss) before income tax benefit (4)		—		—		—		(16,644	)		(16,644	)
Income (loss) before income tax benefit	$	97,219	$	2,595	$	10,004	$	(99,422	)	$	10,396

	Same Store		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Nine months ended September 30, 2021:
Total revenues	$	386,998	$	8,562	$	58,904	$	92,059		$	546,523
Property operating expenses		109,299		5,351		30,091		58,559			203,300
Other operating expenses not allocated to segments (3)		—		—		—		256,909			256,909
Total operating expenses		109,299		5,351		30,091		315,468			460,209
Proportionate property net operating income (loss)		277,699		3,211		28,813		(223,409	)		86,314
Other items included in income (loss) before income tax expense (4)		—		—		—		(5,445	)		(5,445	)
Income (loss) before income tax expense	$	277,699	$	3,211	$	28,813	$	(228,854	)	$	80,869

(1)Represents adjustments for third-party share of unconsolidated apartment communities and the noncontrolling interests in consolidated real estate partnerships’ share of the results of communities in our segments, which are included in the related consolidated amounts but excluded from proportionate property NOI for our segment evaluation. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP. Effective in 2022, corporate and amounts not allocated to segments includes the depreciation of capitalized costs of non-real estate assets.

(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 revenues, which are not part of our segment performance measure and 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)Includes depreciation and amortization, general and administrative expenses, and other expenses, net, and may also include provision for real estate impairment loss and write-offs of deferred leasing commissions, which are not included in our measure of segment performance.

(4)Includes gain on dispositions of real estate and derecognition of leased properties, interest income, interest expense, loss from unconsolidated real estate partnerships, and loss on extinguishment of debt.

The assets of our segments and the consolidated assets not allocated to our segments were as follows (in thousands):

	September 30, 2022		December 31, 2021
Same Store	$	3,861,337	$	3,824,277
Other Real Estate		2,077,214		787,534
Corporate and other assets (1)		783,902		1,828,549
Total consolidated assets	$	6,722,453	$	6,440,360

(1)Includes the assets not allocated to our segments including: (i) corporate assets; (ii) the mezzanine loan investment where the rights and obligations of ownership have been assigned to Aimco; and (iii) sold properties, or properties classified as held for sale as of September 30, 2022. Corporate and other assets as of December 31, 2021, also includes the note receivable from Aimco, which was repaid in 2022, and the lease receivable related to properties leased to Aimco, which was canceled during the third quarter of 2022.

For the nine months ended September 30, 2022 and 2021, capital additions related to our segments were as follows (in thousands):

	2022		2021
Same Store	$	114,679	$	97,294
Other Real Estate		30,459		13,588
Total capital additions	$	145,138	$	110,882