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Apartment Income REIT Corp. - Quarter Report: 2023 September (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
Form 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to
Commission File Number: 1-39686 (Apartment Income REIT Corp.)
Commission File Number: 0-24497 (Apartment Income REIT, L.P.)
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APARTMENT INCOME REIT CORP.
APARTMENT INCOME REIT, L.P.
(Exact name of registrant as specified in its charter)
Maryland (Apartment Income REIT Corp.)
84-1299717
Delaware (Apartment Income REIT, L.P.)
84-1275621
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
4582 South Ulster Street, Suite 1700
Denver, Colorado
80237
(Address of principal executive offices)(Zip Code)
(303) 757-8101
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A Common Stock (Apartment Income REIT Corp.)AIRCNew York Stock Exchange
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 Income REIT Corp.: Yes x No o
Apartment Income REIT, L.P.: Yes x No o
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 Income REIT Corp.: Yes x No o
Apartment Income REIT, L.P.: Yes x No o
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 Income REIT Corp.:
Apartment Income REIT, L.P.:
Large accelerated filerxAccelerated fileroLarge accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyoNon-accelerated fileroSmaller reporting companyo
Emerging growth companyoEmerging growth companyo
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 Income REIT Corp.:
o 
Apartment Income REIT, L.P.:
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Apartment Income REIT Corp.: Yes o No x
Apartment Income REIT, L.P.: Yes o No x
The number of shares of Apartment Income REIT Corp. Class A Common Stock outstanding as of November 1, 2023: 146,992,711

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EXPLANATORY NOTE
This filing combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 2023, of Apartment Income REIT Corp. (“AIR”), Apartment Income REIT, L.P. (“AIR Operating Partnership”), and their consolidated subsidiaries. The AIR Operating Partnership’s condensed consolidated financial statements include the accounts of the AIR Operating Partnership and its consolidated subsidiaries. Except as the context otherwise requires, “we,” “our,” and “us” refer to AIR, the AIR Operating Partnership, and their consolidated subsidiaries, collectively.
AIR is a self-administered and self-managed real estate investment trust (“REIT”). AIR Operating Partnership owns all of the assets and owes all of the liabilities of the AIR enterprise and manages the daily operations of AIR’s business. AIR owns, through its wholly-owned subsidiaries, the general partner interest and special limited partner interest in the AIR Operating Partnership.
As of September 30, 2023, AIR owned approximately 91.2% of the legal interest and 93.6% of the economic interest in the common partnership units of the AIR Operating Partnership, respectively. The remaining 8.8% legal interest is owned by third parties. A portion of the 8.8% owned by third parties is subject to vesting. If the vesting requirements are not met, the 8.8% ownership will be reduced to no less than 6.4%. The legal ownership percentage is based on the outstanding Class A Common Stock of AIR (“Common Stock”) and common OP Units (as defined below), including unvested restricted stock and unvested LTIP units. The economic ownership percentage includes any unvested restricted stock and unvested LTIP units to the extent they are considered participating securities, as defined by accounting principles generally accepted in the United States (“GAAP”). As the sole general partner of the AIR Operating Partnership, AIR has exclusive control of the AIR Operating Partnership’s day-to-day management.
As stated above, the AIR Operating Partnership holds all of AIR’s assets and manages the daily operations of AIR’s business. Pursuant to the AIR Operating Partnership agreement, AIR is required to contribute to the AIR Operating Partnership all proceeds from the offerings of its securities. In exchange for the contribution of such proceeds, AIR receives additional interests in the AIR Operating Partnership with terms substantially similar to the stock issued by AIR.
We believe combining the periodic reports of AIR and the AIR 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 AIR and the AIR Operating Partnership; and
•We save time and cost through the preparation of a single combined report rather than two separate reports.
We operate AIR and the AIR Operating Partnership as one enterprise, the management of AIR directs the management and operations of the AIR Operating Partnership, and the members of the Board of Directors of AIR are identical to those of the AIR Operating Partnership’s general partner.
We believe it is important to understand the few differences between AIR and the AIR Operating Partnership in the context of how AIR and the AIR Operating Partnership operate as a consolidated company. AIR has no assets or liabilities other than its investment in the AIR Operating Partnership, which is held directly and indirectly through certain intermediate holding companies (in which all of the common stock is owned by AIR). Also, AIR is a corporation that issues publicly traded equity from time to time, whereas the AIR Operating Partnership is a partnership that has no publicly traded equity. Except for the net proceeds from stock offerings by AIR, which are contributed to the AIR Operating Partnership in exchange for additional limited partnership interests with terms substantially similar to the stock sold in the offering, the AIR Operating Partnership generates all remaining capital required by its business. These sources include the AIR 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 apartment communities.
Equity, partners’ capital, and noncontrolling interests are the main areas of difference between the condensed consolidated financial statements of AIR and those of the AIR Operating Partnership. Interests in the AIR Operating Partnership held by entities other than AIR, which we refer to as OP Units, are classified within partners’ capital in the AIR Operating Partnership’s financial statements and as noncontrolling interests in AIR’s financial statements.
To help investors understand the differences between AIR and the AIR Operating Partnership, this report provides separate condensed consolidated financial statements for AIR and the AIR Operating Partnership; a single set of condensed

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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 I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for AIR and the AIR Operating Partnership in order to establish that the requisite certifications have been made and that AIR and the AIR 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.

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APARTMENT INCOME REIT CORP.
APARTMENT INCOME REIT, L.P.
TABLE OF CONTENTS
FORM 10-Q
Page
 

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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APARTMENT INCOME REIT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30, 2023December 31, 2022
ASSETS
Buildings and improvements$6,290,960 $6,784,965 
Land1,285,398 1,291,429 
Total real estate7,576,358 8,076,394 
Accumulated depreciation(2,173,273)(2,449,883)
Net real estate5,403,085 5,626,511 
Cash and cash equivalents106,630 95,797 
Restricted cash27,540 205,608 
Goodwill32,286 32,286 
Investment in unconsolidated real estate partnerships352,096 41,860 
Other assets, net477,612 549,821 
Total assets$6,399,249 $6,551,883 
LIABILITIES AND EQUITY
Non-recourse property debt, net$2,231,238 $1,985,430 
Term loans, net473,486 796,713 
Revolving credit facility borrowings25,750 462,000 
Unsecured notes payable, net397,760 397,486 
Total indebtedness3,128,234 3,641,629 
Accrued liabilities and other483,147 513,805 
Total liabilities3,611,381 4,155,434 
Commitments and contingencies (Note 7)
Preferred noncontrolling interests in AIR Operating Partnership77,140 77,143 
Equity:
Perpetual Preferred Stock2,000 2,000 
Common Stock, $0.01 par value, 1,021,175,000 shares authorized at September 30, 2023 and December 31, 2022, and 146,973,055 and 149,086,548 shares issued/outstanding at September 30, 2023 and December 31, 2022, respectively
1,470 1,491 
Additional paid-in capital3,355,316 3,436,635 
Accumulated other comprehensive income24,794 43,562 
Distributions in excess of earnings(876,116)(1,327,271)
Total AIR equity2,507,464 2,156,417 
Noncontrolling interests in consolidated real estate partnerships(83,110)(78,785)
Common noncontrolling interests in AIR Operating Partnership286,374 241,674 
Total equity2,710,728 2,319,306 
Total liabilities, preferred noncontrolling interests in AIR Operating Partnership, and equity$6,399,249 $6,551,883 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Rental and other property revenues$194,244 $198,413 $616,659 $558,686 
Other revenues3,063 2,458 7,018 7,163 
Total revenues197,307 200,871 623,677 565,849 
EXPENSES
Property operating expenses58,076 64,009 190,122 176,679 
Property management expenses7,899 7,241 23,318 21,594 
Depreciation and amortization79,023 90,445 263,949 253,650 
General and administrative expenses5,663 7,663 18,866 19,593 
Other expenses, net8,110 4,941 14,434 5,883 
158,771 174,299 510,689 477,399 
Interest income2,918 9,613 6,133 48,746 
Interest expense(22,888)(32,656)(96,629)(80,790)
Loss on extinguishment of debt— — (2,008)(23,636)
Gain on dispositions and impairments of real estate692,861 — 675,534 587,609 
Gain on derivative instruments, net14,070 — 23,322 — 
Loss from unconsolidated real estate partnerships(10,390)(87)(12,267)(2,974)
Income before income tax expense715,107 3,442 707,073 617,405 
Income tax expense(4,595)(46)(5,911)(966)
Net income 710,512 3,396 701,162 616,439 
Noncontrolling interests:
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships(2,525)102 (3,894)285 
Net income attributable to preferred noncontrolling interests in AIR Operating Partnership(1,570)(1,602)(4,710)(4,807)
Net income attributable to common noncontrolling interests in AIR Operating Partnership(42,386)(137)(41,245)(37,053)
Net income attributable to noncontrolling interests(46,481)(1,637)(49,849)(41,575)
Net income attributable to AIR664,031 1,759 651,313 574,864 
Net income attributable to AIR preferred stockholders(44)(43)(129)(128)
Net (income) loss attributable to participating securities(391)44 (484)(373)
Net income attributable to AIR common stockholders$663,596 $1,760 $650,700 $574,363 
Net income attributable to AIR common stockholders per share – basic$4.50 $0.01 $4.39 $3.69 
Net income attributable to AIR common stockholders per share – diluted$4.43 $0.01 $4.35 $3.68 
Weighted-average common shares outstanding – basic147,474153,811148,372155,488
Weighted-average common shares outstanding – diluted150,045154,057150,692157,440
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Net income $710,512 $3,396 $701,162 $616,439 
Unrealized (loss) gain on derivative instruments, net(2,236)34,209 2,955 47,141 
Reclassification of interest rate derivative (gain) loss to net income (loss)(14,186)731 (23,704)2,720 
Comprehensive income 694,090 38,336 680,413 666,300 
Comprehensive income attributable to noncontrolling interests(44,608)(4,379)(47,868)(45,488)
Comprehensive income attributable to AIR$649,482 $33,957 $632,545 $620,812 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended September 30, 2023 and 2022
(In thousands, except share data)
(Unaudited)
Perpetual Preferred StockCommon StockAdditional 
Paid-
in Capital		Accumulated
Other
Comprehensive
Income (Loss)		Distributions
 in Excess 
of Earnings		Total AIR
Equity		Noncontrolling Interests in Consolidated Real Estate Partnerships Common Noncontrolling Interests in AIR Operating PartnershipTotal
Equity
Shares
Issued		AmountShares
Issued		Amount
Balances at June 30, 202220$2,000 154,187,241$1,542 $3,636,906 $13,750 $(1,521,749)$2,132,449 $(70,609)$226,985 $2,288,825 
Redemption of AIR Operating Partnership units—— —— — — — — — (3,178)(3,178)
Repurchase of Common Stock, net—— (1,195,690)(12)(46,699)— — (46,711)— — (46,711)
Amortization of share-based compensation cost—— —— 878 — — 878 — 943 1,821 
Effect of changes in ownership of consolidated entities—— —— (2,140)— — (2,140)— 2,140 — 
Purchase of noncontrolling interests in consolidated real estate partnerships—— —— (5,529)— — (5,529)120 — (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — — — — — 529 — 529 
Change in accumulated other comprehensive income —— —— — 32,198 — 32,198 — 2,742 34,940 
Net income (loss)—— —— — — 1,759 1,759 (102)137 1,794 
Common Stock dividends—— —— — — (69,377)(69,377)— — (69,377)
Distributions to noncontrolling interests—— —— — — — — (6,226)(4,472)(10,698)
Other, net— — 1,897— (305)— (42)(347)88 (235)(494)
Balances at September 30, 202220$2,000 152,993,448$1,530 $3,583,111 $45,948 $(1,589,409)$2,043,180 $(76,200)$225,062 $2,192,042 
Balances at June 30, 202320$2,000 149,223,526$1,492 $3,430,731 $39,343 $(1,474,101)$1,999,465 $(80,087)$249,512 $2,168,890 
Redemption of AIR Operating Partnership units—— —— — — — — — (1,745)(1,745)
Repurchase of Common Stock, net—— (2,249,800)(22)(77,760)— — (77,782)— — (77,782)
Amortization of share-based compensation cost—— —— 816 — — 816 — 1,155 1,971 
Effect of changes in ownership of consolidated entities—— —— 1,446 — — 1,446 (1,397)1,070 1,119 
Contributions from noncontrolling interests in consolidated real estate partnerships—— —— — — — — 718 — 718 
Change in accumulated other comprehensive loss—— —— — (14,549)— (14,549)— (1,873)(16,422)
Net income—— —— — — 664,031 664,031 2,525 42,386 708,942 
Common Stock dividends—— —— — — (66,002)(66,002)— — (66,002)
Distributions to noncontrolling interests—— —— — — — — (4,851)(4,134)(8,985)
Other, net—— (671)— 83 — (44)39 (18)3 24 
Balances at September 30, 202320$2,000 146,973,055$1,470 $3,355,316 $24,794 $(876,116)$2,507,464 $(83,110)$286,374 $2,710,728 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Nine Months Ended September 30, 2023 and 2022
(In thousands, except share data)
(Unaudited)

Perpetual Preferred StockCommon StockAdditional 
Paid-
in Capital		Accumulated
Other
Comprehensive
Income (Loss)		Distributions
 in Excess 
of Earnings		Total AIR
Equity		Noncontrolling Interests in Consolidated Real Estate Partnerships Common Noncontrolling Interests in AIR Operating PartnershipTotal
Equity
Shares
Issued		AmountShares
Issued		Amount
Balances at December 31, 2021145 $2,129 156,998,367 $1,570 $3,763,105 $— $(1,953,779)$1,813,025 $(70,883)$197,013 $1,939,155 
Redemption of AIR Operating Partnership units— — — — — — — — — (7,423)(7,423)
Repurchase of Common Stock, net— — (4,107,451)(41)(171,670)— — (171,711)— — (171,711)
Amortization of share-based compensation cost— — — — 3,519 — — 3,519 — 2,753 6,272 
Effect of changes in ownership of consolidated entities— — — — (5,404)— — (5,404)— 5,404 — 
Purchase of noncontrolling interests in consolidated real estate partnerships— — — — (5,529)— — (5,529)120 — (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — — — — — 8,337 — 8,337 
Change in accumulated other comprehensive income— — — — — 45,948 — 45,948 — 3,913 49,861 
Net income (loss)— — — — — — 574,864 574,864 (285)37,053 611,632 
Common Stock dividends—— —— — — (210,361)(210,361)— — (210,361)
Distributions to noncontrolling interests— — — — — — — — (13,561)(13,408)(26,969)
Other, net(125)(129)102,532 1 (910)— (133)(1,171)72 (243)(1,342)
Balances at September 30, 202220 $2,000 152,993,448 $1,530 $3,583,111 $45,948 $(1,589,409)$2,043,180 $(76,200)$225,062 $2,192,042 
 
Balances at December 31, 202220 $2,000 149,086,548 $1,491 $3,436,635 $43,562 $(1,327,271)$2,156,417 $(78,785)$241,674 $2,319,306 
Issuance of AIR Operating Partnership units— — — — — — — — — 22,383 22,383 
Redemption of AIR Operating Partnership units— — — — — — — — — (17,559)(17,559)
Repurchase of Common Stock, net— — (2,249,800)(22)(77,760)— — (77,782)— — (77,782)
Amortization of share-based compensation cost— — — — 3,607 — — 3,607 — 3,465 7,072 
Effect of changes in ownership of consolidated entities— — — — (7,840)— — (7,840)(1,397)10,356 1,119 
Purchase of noncontrolling interests in consolidated real estate partnerships— — — — 479 — — 479 (1,996)— (1,517)
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — — — — — 5,235 — 5,235 
Change in accumulated other comprehensive loss— — — — — (18,768)— (18,768)— (1,981)(20,749)
Net income——————651,313 651,313 3,894 41,245 696,452 
Common Stock dividends— — — — — — (200,142)(200,142)— — (200,142)
Distributions to noncontrolling interests— — — — — — — — (9,908)(13,212)(23,120)
Other, net— — 136,307 1 195 — (16)180 (153)3 30 
Balances at September 30, 202320 $2,000 146,973,055 $1,470 $3,355,316 $24,794 $(876,116)$2,507,464 $(83,110)$286,374 $2,710,728 

See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$701,162 $616,439 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization263,949 253,650 
Gain on dispositions and impairments of real estate(675,534)(587,609)
Loss on extinguishment of debt2,008 23,636 
Income tax expense5,911 966 
Other, net4,308 6,890 
Net changes in operating assets and operating liabilities(55)37,484 
Net cash provided by operating activities 301,749 351,456 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate(339,696)(858,815)
Capital expenditures(140,855)(151,115)
Contribution to unconsolidated joint ventures(51,836)—
Proceeds from dispositions of real estate52,066759,227
Distributions from unconsolidated joint ventures207,137—
Proceeds from repayment of note receivable—534,127
Other investing activities, net3,194 (30,500)
Net cash (used in) provided by investing activities(269,990)252,924 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt(111,699)(361,056)
Proceeds from non-recourse property debt1,005,920 — 
Repayment of term loan(325,000)(350,000)
Net (repayments of) borrowings on revolving credit facility(436,250)176,205 
Proceeds from the issuance of unsecured notes payable— 400,000 
Repurchases of Common Stock(77,782)(171,711)
Payment of dividends to holders of Common Stock(200,137)(210,377)
Payment of distributions to noncontrolling interests(23,524)(18,262)
Other financing activities, net(30,522)(47,294)
Net cash used in financing activities(198,994)(582,495)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(167,235)21,885 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD301,405 92,761 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$134,170 $114,646 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, 2023December 31, 2022
ASSETS
Buildings and improvements$6,290,960 $6,784,965 
Land1,285,398 1,291,429 
Total real estate7,576,358 8,076,394 
Accumulated depreciation(2,173,273)(2,449,883)
Net real estate5,403,085 5,626,511 
Cash and cash equivalents106,630 95,797 
Restricted cash27,540 205,608 
Goodwill32,286 32,286 
Investment in unconsolidated real estate partnerships352,096 41,860 
Other assets, net477,612 549,821 
Total assets$6,399,249 $6,551,883 
LIABILITIES AND PARTNERS’ CAPITAL
Non-recourse property debt, net$2,231,238 $1,985,430 
Term loans, net473,486 796,713 
Revolving credit facility borrowings25,750 462,000 
Unsecured notes payable, net397,760 397,486 
Total indebtedness3,128,234 3,641,629 
Accrued liabilities and other483,147 513,805 
Total liabilities3,611,381 4,155,434 
Commitments and contingencies (Note 7)
Redeemable preferred units77,140 77,143 
Partners’ capital:
Preferred units2,000 2,000 
General Partner and Special Limited Partner2,505,464 2,154,417 
Limited Partners286,374 241,674 
Partners’ capital attributable to the AIR Operating Partnership2,793,838 2,398,091 
Noncontrolling interests in consolidated real estate partnerships(83,110)(78,785)
Total partners’ capital2,710,728 2,319,306 
Total liabilities, redeemable preferred units, and partners’ capital$6,399,249 $6,551,883 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
(Unaudited)
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
REVENUES
Rental and other property revenues$194,244 $198,413 $616,659 $558,686 
Other revenues3,063 2,458 7,018 7,163 
Total revenues197,307 200,871 623,677 565,849 
EXPENSES
Property operating expenses58,076 64,009 190,122 176,679 
Property management expenses7,8997,24123,31821,594
Depreciation and amortization79,023 90,445 263,949 253,650 
General and administrative expenses5,663 7,663 18,866 19,593 
Other expenses, net8,110 4,941 14,434 5,883 
158,771 174,299 510,689 477,399 
Interest income2,918 9,613 6,133 48,746 
Interest expense(22,888)(32,656)(96,629)(80,790)
Loss on extinguishment of debt— — (2,008)(23,636)
Gain on dispositions and impairments of real estate692,861 — 675,534 587,609 
Gain on derivative instruments, net14,070 — 23,322 — 
Loss from unconsolidated real estate partnerships(10,390)(87)(12,267)(2,974)
Income before income tax expense715,107 3,442 707,073 617,405 
Income tax expense(4,595)(46)(5,911)(966)
Net income 710,512 3,396 701,162 616,439 
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships(2,525)102(3,894)285
Net income attributable to the AIR Operating Partnership707,9873,498697,268616,724
Net income attributable to the AIR Operating Partnership's preferred unitholders(1,614)(1,645)(4,839)(4,935)
Net (income) loss attributable to participating securities(391)44(484)(373)
Net income attributable to the AIR Operating Partnership’s common unitholders$705,982 $1,897 $691,945 $611,416 
Net income attributable to the AIR Operating Partnership common unitholders per unit – basic$4.49 $0.01 $4.38 $3.69 
Net income attributable to the AIR Operating Partnership common unitholders per unit – diluted$4.42 $0.01 $4.34 $3.68 
Weighted-average common units outstanding – basic157,366163,866158,138165,578
Weighted-average common units outstanding – diluted159,937164,112160,458167,529
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Net income $710,512 $3,396 $701,162 $616,439 
Unrealized (loss) gain on derivative instruments, net(2,236)34,209 2,955 47,141 
Reclassification of interest rate derivative (gain) loss to net income (loss)(14,186)731 (23,704)2,720 
Comprehensive income 694,090 38,336 680,413 666,300 
Comprehensive (income) loss attributable to noncontrolling interests(2,525)102 (3,894)285 
Comprehensive income attributable to the AIR Operating Partnership$691,565 $38,438 $676,519 $666,585 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the Three Months Ended September 30, 2023 and 2022
(In thousands)
(Unaudited)
Preferred UnitsGeneral Partner
and Special
Limited Partner		Limited
Partners		Partners' Capital Attributable to the AIR Operating PartnershipNoncontrolling Interests in Consolidated Real Estate PartnershipsTotal
Partners'
Capital
Balances at June 30, 2022$2,000 $2,130,449 $226,985 $2,359,434 $(70,609)$2,288,825 
Redemption of common partnership units— — (3,178)(3,178)— (3,178)
Repurchase of common partnership units— (46,711)— (46,711)— (46,711)
Amortization of share-based compensation cost— 878 943 1,821 — 1,821 
Effect of changes in ownership of consolidated entities— (2,140)2,140 — — — 
Purchase of noncontrolling interests in consolidated real estate partnerships— (5,529)— (5,529)120 (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — 529 529 
Change in accumulated other comprehensive income — 32,198 2,742 34,940 — 34,940 
Net income (loss)— 1,759 137 1,896 (102)1,794 
Distributions to common unitholders— (69,377)(4,472)(73,849)— (73,849)
Distributions to noncontrolling interests— — — — (6,226)(6,226)
Other, net— (347)(235)(582)88 (494)
Balances at September 30, 2022$2,000 $2,041,180 $225,062 $2,268,242 $(76,200)$2,192,042 
Balances at June 30, 2023$2,000 $1,997,465 $249,512 $2,248,977 $(80,087)$2,168,890 
Redemption of common partnership units— — (1,745)(1,745)— (1,745)
Repurchase of common partnership units— (77,782)— (77,782)— (77,782)
Amortization of share-based compensation cost— 816 1,155 1,971 — 1,971 
Effect of changes in ownership of consolidated entities— 1,446 1,070 2,516 (1,397)1,119 
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — 718 718 
Change in accumulated other comprehensive loss— (14,549)(1,873)(16,422)— (16,422)
Net income— 664,031 42,386 706,417 2,525 708,942 
Distributions to common unitholders— (66,002)(4,134)(70,136)— (70,136)
Distributions to noncontrolling interests— — — — (4,851)(4,851)
Other, net— 39 3 42 (18)24 
Balances at September 30, 2023$2,000 $2,505,464 $286,374 $2,793,838 $(83,110)$2,710,728 
See notes to the condensed consolidated financial statements.


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APARTMENT INCOME REIT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
For the Nine Months Ended September 30, 2023 and 2022
(In thousands)
(Unaudited)

Preferred UnitsGeneral Partner
and Special
Limited Partner		Limited
Partners		Partners' Capital Attributable to the AIR Operating PartnershipNoncontrolling Interests in Consolidated Real Estate PartnershipsTotal
Partners'
Capital
Balances at December 31, 2021$2,129 $1,810,896 $197,013 $2,010,038 $(70,883)$1,939,155 
Redemption of common partnership units— — (7,423)(7,423)— (7,423)
Repurchase of common partnership units— (171,711)— (171,711)— (171,711)
Amortization of share-based compensation cost— 3,519 2,753 6,272 — 6,272 
Effect of changes in ownership of consolidated entities— (5,404)5,404 — — — 
Purchase of noncontrolling interests in consolidated real estate partnerships— (5,529)— (5,529)120 (5,409)
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — 8,337 8,337 
Change in accumulated other comprehensive income— 45,948 3,913 49,861 — 49,861 
Net income (loss)— 574,864 37,053 611,917 (285)611,632 
Distributions to common unitholders— (210,361)(13,408)(223,769)— (223,769)
Distributions to noncontrolling interests— — — — (13,561)(13,561)
Other, net(129)(1,042)(243)(1,414)72 (1,342)
Balances at September 30, 2022$2,000 $2,041,180 $225,062 $2,268,242 $(76,200)$2,192,042 
Balances at December 31, 2022$2,000 $2,154,417 $241,674 $2,398,091 $(78,785)$2,319,306 
Issuance of AIR Operating Partnership units— — 22,383 22,383 — 22,383 
Redemption of common partnership units— — (17,559)(17,559)— (17,559)
Repurchase of common partnership units— (77,782)— (77,782)— (77,782)
Amortization of share-based compensation cost— 3,607 3,465 7,072 — 7,072 
Effect of changes in ownership of consolidated entities— (7,840)10,356 2,516 (1,397)1,119 
Purchase of noncontrolling interests in consolidated real estate partnerships— 479 — 479 (1,996)(1,517)
Contributions from noncontrolling interests in consolidated real estate partnerships— — — — 5,235 5,235 
Change in accumulated other comprehensive loss— (18,768)(1,981)(20,749)— (20,749)
Net income— 651,313 41,245 692,558 3,894 696,452 
Distributions to common unitholders—(200,142)(13,212)(213,354)— (213,354)
Distributions to noncontrolling interests— — — — (9,908)(9,908)
Other, net— 180 3 183 (153)30 
Balances at September 30, 2023$2,000 $2,505,464 $286,374 $2,793,838 $(83,110)$2,710,728 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$701,162 $616,439 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization263,949 253,650 
Gain on dispositions and impairments of real estate(675,534)(587,609)
Loss on extinguishment of debt2,008 23,636 
Income tax expense5,911 966 
Other, net4,308 6,890 
Net changes in operating assets and operating liabilities(55)37,484 
Net cash provided by operating activities 301,749 351,456 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of real estate(339,696)(858,815)
Capital expenditures(140,855)(151,115)
Contribution to unconsolidated joint ventures(51,836)— 
Proceeds from dispositions of real estate52,066 759,227 
Distributions from unconsolidated joint ventures207,137 — 
Proceeds from repayment of note receivable— 534,127 
Other investing activities, net3,194 (30,500)
Net cash (used in) provided by investing activities(269,990)252,924 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on non-recourse property debt(111,699)(361,056)
Proceeds from non-recourse property debt1,005,920 — 
Repayment of term loan(325,000)(350,000)
Net (repayments of) borrowings on revolving credit facility(436,250)176,205 
Proceeds from the issuance of unsecured notes payable— 400,000 
Repurchases of common partnership units held by General Partner and Special Limited Partner(77,782)(171,711)
Payment of distributions to General Partner and Special Limited Partner(200,137)(210,377)
Payment of distributions to Limited Partners(13,591)(13,439)
Payment of distributions to noncontrolling interests(9,933)(4,823)
Other financing activities, net(30,522)(47,294)
Net cash used in financing activities(198,994)(582,495)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(167,235)21,885 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD301,405 92,761 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$134,170 $114,646 
See notes to the condensed consolidated financial statements.

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APARTMENT INCOME REIT CORP.
APARTMENT INCOME REIT, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
Note 1 — Basis of Presentation and Organization
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of Apartment Income REIT Corp. (“AIR”), Apartment Income REIT, L.P. (“AIR Operating Partnership”), and their consolidated subsidiaries. The AIR Operating Partnership’s condensed consolidated financial statements include the accounts of the AIR Operating Partnership and its consolidated subsidiaries. All significant intercompany balances and transactions 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. Interests in the AIR Operating Partnership that are held by limited partners other than AIR are reflected in AIR’s accompanying condensed consolidated balance sheets as noncontrolling interests in the AIR Operating Partnership. Interests in partnerships consolidated by the AIR Operating Partnership that are held by third parties are reflected in AIR’s and AIR Operating Partnership’s accompanying condensed consolidated balance sheets as noncontrolling interests in consolidated real estate partnerships.
Except as the context otherwise requires, “we,” “our,” and “us” refer to AIR, the AIR Operating Partnership, and their consolidated subsidiaries, collectively.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.
The condensed consolidated balance sheets of AIR, the AIR Operating Partnership, and their consolidated subsidiaries as of December 31, 2022, have been derived from their respective audited financial statements at that date, but do not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022. Except where indicated, the footnotes refer to AIR, the AIR Operating Partnership and their consolidated subsidiaries, collectively.
Reclassifications
Certain prior period balances in the condensed consolidated balance sheets, statements of operations, and statements of cash flows have been combined or reclassified to conform to current period presentation pursuant to Rule 10-01(a)(2) of Regulation S-X of the SEC. These changes had no impact on net income (loss), cash flows, assets and liabilities, equity or partners’ capital previously reported.
Organization and Business
AIR is a self-administered and self-managed REIT. AIR owns, through its wholly-owned subsidiaries, the general partner interest and special limited partner interest in AIR Operating Partnership. AIR Operating Partnership conducts all of the business of AIR, which is focused on the ownership of stabilized multi-family properties located in top markets including eight important geographic concentrations: Boston; Philadelphia; Washington, D.C.; Miami; Denver; the San Francisco Bay Area; Los Angeles; and San Diego.
We own and operate a portfolio of stabilized apartment communities, diversified by both geography and price point, in 10 states and the District of Columbia. As of September 30, 2023, our portfolio included 75 apartment

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communities with 26,623 apartment homes, in which we held an average ownership of approximately 81%. We also have one land parcel and one indirect land interest that we lease to third parties.
Interests in the AIR Operating Partnership that are held by limited partners other than AIR are referred to as OP Units. OP Units include common partnership units, which we refer to as common OP Units, as well as preferred partnership units, which we refer to as preferred OP Units. As of September 30, 2023, after elimination of units held by consolidated subsidiaries, the AIR Operating Partnership had 156,840,617 common OP Units outstanding. As of September 30, 2023, AIR owned 146,973,055 of the common OP Units of the AIR Operating Partnership and AIR had an equal number of shares of its Class A Common Stock outstanding, which we refer to as Common Stock. AIR’s ownership of the total common OP Units outstanding represents a 91.2% legal interest in the AIR Operating Partnership and a 93.6% economic interest.
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation
We consolidate variable interest entities (“VIEs”), 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. As of September 30, 2023 and December 31, 2022, AIR consolidated five and seven VIEs, respectively, including the AIR Operating Partnership.
Redeemable Preferred OP Units
The AIR Operating Partnership has various classes of preferred OP Units. Each class of preferred OP Units is currently redeemable at the holders’ option. The AIR Operating Partnership, at its sole discretion, may settle such redemption requests in cash or cause AIR to issue shares of its Common Stock with a value equal to the redemption price. The preferred OP Units are therefore presented within temporary equity in AIR’s condensed consolidated balance sheets and within temporary partners’ capital in the AIR Operating Partnership’s condensed consolidated balance sheets.
The following table presents a rollforward of the AIR Operating Partnership’s preferred OP Units’ redemption value (in thousands):
Balance at January 1, 2023$77,143 
Preferred distributions(4,710)
Redemption of preferred units and other(3)
Net income allocated to preferred units4,710 
Balance at September 30, 2023$77,140 
The AIR Operating Partnership has outstanding various classes of redeemable preferred OP Units. As of September 30, 2023 and December 31, 2022, the AIR Operating Partnership had 2,846,524 and 2,846,574 redeemable preferred OP Units issued and outstanding, respectively. Distributions per annum range from 1.92% to 8.75% per class and $0.48 to $8.00 per unit, respectively.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the condensed consolidated financial statements and accompanying notes thereto. Actual results could differ from those estimates.
Note 3 — Significant Transactions
Apartment Community Acquisitions
During the three months ended September 30, 2023, we acquired one apartment community located in Raleigh, North Carolina and one apartment community located in Durham, North Carolina. During the nine months ended September 30, 2023, we acquired one additional apartment community located in South Florida with 495 apartment homes

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and 29,000 square feet of commercial space. Summarized information regarding these acquisitions is set forth in the table below (dollars in thousands):
Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
Number of apartment communities2 3 
Number of apartment homes620 1,115 
Purchase price$154,500 $452,500 
Capitalized transaction costs1,270 6,739 
Total consideration (1)$155,770 $459,239 
Land$19,226 $118,564 
Building and improvements130,937 318,364 
Intangible assets (2)5,768 17,845 
Mark-to-market on debt assumed— 7,370 
Below-market lease liabilities (2)(161)(2,904)
Total consideration (1)$155,770 $459,239 
(1)Total consideration for the apartment community acquisition in South Florida includes $101.2 million of debt assumed and the issuance of $22.4 million in common OP Units.
(2)Intangible assets and below-market lease liabilities for the South Florida apartment community acquisition have a weighted-average term of 1.4 years and 0.5 years, respectively. Intangible assets and below-market lease liabilities for the North Carolina apartment community acquisitions have a weighted-average term of 0.5 years.
Apartment Community Dispositions
During the three months ended September 30, 2023, we sold one apartment community with 195 apartment homes included in our Other Real Estate segment for net proceeds of $19.9 million which approximates its carrying value. During the nine months ended September 30, 2023, we sold three apartment communities with 257 apartment homes included in our Other Real Estate segment for net proceeds of $52.1 million which approximates their carrying value.
During the three months ended September 30, 2022, we did not sell any apartment communities. During the nine months ended September 30, 2022, we sold 12 apartment communities with 2,050 homes, 10 of which were included in our Same Store segment and two included in our Other Real Estate segment, for a gain on disposition of $587.6 million.
At the end of each reporting period, we evaluate whether any communities meet the criteria to be classified as held for sale. As of September 30, 2023, no communities were classified as held for sale.
Impairment
Impairments are rare; however, in exiting the New York market, we impaired three properties in 2023 as further described below. Real estate and other long-lived assets to be held and used are individually evaluated for impairment when conditions exist that may indicate the carrying amount of a long-lived asset may not be recoverable. Impairment indicators include significant fluctuations in rental and other property revenues less property operating expenses, occupancy changes, significant near-term lease expirations, current and historical cash flow losses, rental rates, and if applicable, a comparison of an asset’s carrying value to its estimated fair value. Upon determination that an impairment has occurred, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community.
During the three months ended September 30, 2023, we did not recognize any impairment losses. During the nine months ended September 30, 2023, we evaluated the expected hold period of three apartment communities in our Other Real Estate reporting segment. Given management's assessment of the likelihood of the sale of these assets, which occurred during the nine months ended September 30, 2023, we reduced the carrying value of three properties to their estimated fair value and recognized a non-cash impairment loss on real estate of $23.6 million. As of September 30, 2023, the three impaired properties have been sold.

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During the three and nine months ended September 30, 2022, we did not recognize any impairment losses.
Share Repurchases
During the three months ended September 30, 2023, AIR repurchased 2.2 million shares for $77.8 million, at an average price of $34.57 per share. As of September 30, 2023, we are authorized by the AIR Board of Directors to repurchase an additional $105.5 million of shares. We consider share buybacks as part of a balanced investment program.
Joint Venture Transactions
In the third quarter of 2023, we formed an unconsolidated joint venture with a global institutional investor (the "Core JV") and in the second quarter of 2023, we formed an unconsolidated joint venture (the "Value-Add JV") with a global asset manager. Please see Note 6 for discussion regarding our joint venture transactions.
Note 4 — Leases
Tenant Lessor Arrangements
The majority of lease payments we receive from our residents are fixed. We receive variable payments from our residents primarily for utility reimbursements. Our total lease income was comprised of the following amounts for all operating leases (in thousands):
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Fixed lease income$179,069 $184,509 $572,123 $522,074 
Variable lease income14,502 13,141 43,043 35,165 
Total lease income$193,571 $197,650 $615,166 $557,239 
Generally, our residential leases do not provide extension options and, as of September 30, 2023, have an average remaining term of 10.8 months. In general, our commercial leases have options to extend for a certain period of time at the tenant’s option. As of September 30, 2023, future minimum annual rental payments we are contractually obligated to receive under residential and commercial leases, excluding such extension options, are as follows (in thousands):
2023 (remaining)$164,948 
2024379,399 
202569,870 
202611,740 
202710,218 
Thereafter36,463 
Total$672,638 

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Note 5 — Debt
The following table summarizes our total indebtedness (in thousands):
September 30, 2023December 31, 2022
Secured debt:
Fixed-rate property debt due May 2025 to January 2055 (1)
$2,244,776 $1,906,151 
Variable-rate property debt— 88,500 
Total non-recourse property debt2,244,776 1,994,651 
Debt issuance costs, net of accumulated amortization(13,538)(9,221)
Total non-recourse property debt, net$2,231,238 $1,985,430 
Unsecured debt:
Term loans due December 2024 to April 2026 (2) $475,000 $800,000 
Revolving credit facility borrowings due April 2025 (3)25,750 462,000 
4.58% Notes payable due June 2027
100,000 100,000 
4.77% Notes payable due June 2029
100,000 100,000 
4.84% Notes payable due June 2032
200,000 200,000 
Total unsecured debt900,750 1,662,000 
Debt issuance costs, net of accumulated amortization(3,754)(5,801)
Total unsecured debt, net$896,996 $1,656,199 
Total indebtedness$3,128,234 $3,641,629 
(1)In the first quarter of 2023, AIR borrowed $320 million using 10-year fixed rate financing, bearing interest at 4.9%. Proceeds were used to refinance a floating rate loan and reduce borrowings by $230 million on our revolving credit facility. The stated rates on our fixed-rate property debt are between 2.7% to 5.7%.
(2)The term loans bear interest at a one-month Term Secured Overnight Financing Rate (“SOFR”) plus 1.00% and a SOFR adjustment of 10-basis points, based on our current credit rating. As of September 30, 2023, the weighted-average interest rate for our term loans before consideration of in place interest rate swaps was 6.4%. As of September 30, 2023, $350 million of our term loans are fixed via interest rate swaps at a weighted-average interest rate of 4.3%. The blended weighted-average interest rate for our $475 million term loans, after consideration of in place interest rate swaps, is 4.9%. The term loans mature on the following schedule: $125 million matures on December 15, 2024, with a one-year extension option; $150 million matures on December 15, 2025; and $200 million matures on April 14, 2026. As of September 30, 2023, the weighted-average remaining term of the term loans was 2.3 years.
(3)As of September 30, 2023, we had capacity to borrow up to $970.0 million under our revolving credit facility after consideration of undrawn letters of credit. The revolving credit facility bears interest at a one-month Term SOFR plus 0.89%, based on our current credit rating, and a SOFR adjustment of 10-basis points. As of September 30, 2023, the weighted-average interest rate for our revolving credit facility was 6.3%.
During the three months ended September 30, 2023, AIR refinanced our $325 million of term loans with fixed rate property debt to lock in rates for debt with longer maturities. The amount included full repayment of $150 million of our term loans with a maturity of December 15, 2023 and partial repayment of $175 million of term loans with a maturity of December 15, 2024. In conjunction with the prepayment, AIR accelerated recognition of $0.8 million of associated debt issuance costs, which is included in interest expense in our condensed consolidated statements of operations.
In advance of a joint venture closing during the period, AIR placed $611.4 million in new fixed-rate property debt related to nine properties, which was subsequently contributed to the Core JV. Additionally, one property with $33.0 million in fixed-rate property debt was also contributed to the Core JV, for a total of $644.4 million of debt contributed. As the Core JV is unconsolidated, this fixed-rate property debt is excluded from our condensed consolidated balance sheet as of September 30, 2023.
In April 2023, we established a secured credit facility that provides for up to $1 billion of committed property level financing, on an as needed basis. The facility has minimal upfront costs, a 15-year term, and provides AIR the opportunity to place up to 10-year non-recourse property debt financing. Pricing can be fixed rate or variable rate at AIR's choice and is based on the Fannie Mae grid. As of September 30, 2023, and after consideration of the secured credit facility, our share of cash and cash equivalents, and our share of restricted cash, total liquidity is approximately $2.1 billion.

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Under our credit agreement and unsecured notes payable, we have agreed to maintain certain financial covenants, as well as other covenants customary for similar credit arrangements. The financial covenants we are required to maintain include a maximum leverage ratio of no greater than 0.60 to 1.00; a fixed charge coverage ratio of no less than 1.50 to 1.00, a maximum secured indebtedness to total assets ratio of no greater than 0.40 to 1.00, a maximum unsecured leverage ratio no greater than 0.60 to 1.00, and a minimum unsecured interest coverage ratio no less than 1.50 to 1.00.
Note 6 — Investment in Joint Ventures
Joint Venture Transactions
In the third quarter of 2023, we formed the Core JV by contributing 10 properties included in our Same Store reporting segment located in Philadelphia, Washington, D.C. area, Denver area, Oceanside, and Kendall. The Core JV, in which we retain a 53% interest, closed with respect to (i) eight of the properties in July 2023, (ii) one property in August 2023, and (iii) one property in September 2023. The 10 properties, with a total fair value of $1.1 billion and a carrying value of $373.3 million, were contributed to the Core JV subject to $644.4 million of non-recourse property debt, which represents a non-cash financing activity during the period. In advance of the joint venture closing, AIR placed $611.4 million in new non-recourse property debt, which was subsequently contributed to the joint venture. As a result of the transaction, AIR received $201.9 million in cash and recognized a gain of $698.8 million, including the measurement of the fair value of our interest in the Core JV during the three months ended September 30, 2023. AIR will earn various fees for providing property management, construction, and corporate services to the joint venture.
Additionally, during the third quarter of 2023, AIR and our joint venture partner increased the investment in the Core JV to fund the joint venture's acquisition of an eleventh property, a 456-unit property located in Bethesda, Maryland. The Core JV funded the acquisition with $155.0 million in new debt, and capital contributions to the joint venture of $95.0 million, for a purchase price of $250.0 million.
In addition, during the second quarter of 2023, we formed the Value-Add JV by contributing the Huntington Gateway property, a 443-unit property located in Virginia. AIR is the general partner and retains legal ownership of 30%, and AIR will receive 50% of the net cash flows from operations, and various fees for providing property management, construction, and corporate services to the joint venture. We recognized a gain of $0.5 million during the nine months ended September 30, 2023 in connection with this transaction.
Unconsolidated Joint Ventures
As of September 30, 2023, AIR has equity investments in three significant unconsolidated joint ventures: the Core JV, the Value-Add JV, and the Virginia JV (collectively, the "Joint Venture Entities"). We account for these joint ventures utilizing the equity method of accounting and our ownership interests meet the definition of a VIE. However, we are not the primary beneficiary and do not consolidate these entities.
Virginia JVValue-Add JV (1)Core JV
Initial formation dateOctober 2021June 2023July 2023
AIR Ownership20%30%53%
Outside Entities Ownership80%70%47%
Number of Apartment Communities3111
Apartment Units1,7484433,549
(1)A global asset manager acquired a 70% legal ownership in the Huntington Gateway property, but AIR will receive 50% of the net cash flows from operations, and various fees for providing property management, construction, and corporate services to the joint venture.

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The carrying value of AIR's investment in each joint venture is included in investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets. AIR's exposure to the obligations of the VIEs is limited to the carrying value of the limited partnership interests and AIR's interest of the joint ventures' guarantor non-recourse liabilities. The following table summarizes certain relevant information with respect to our investments in unconsolidated joint ventures (in thousands):
September 30, 2023
Virginia JVValue-Add JVCore JV
Total Third-Party Debt$395,000 $94,105 $799,164 
AIR's Investment In Balance (1)$18,198 $29,341 $272,957 
(1)AIR's investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets includes $31.6 million related to two immaterial unconsolidated investments and certain basis differences.
December 31, 2022
Virginia JVValue-Add JVCore JV
Total Third-Party Debt$395,000 — — 
AIR's Investment In Balance (1)$20,660 — — 
(1)AIR's investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets includes $21.2 million related to two immaterial unconsolidated investments.
The Company recognizes earnings or losses from our investments in unconsolidated joint ventures consisting of our proportionate share of the net earnings or losses of the joint ventures. In addition, we earn various fees for providing property management, construction, and corporate services to the Joint Venture Entities. The table below presents earnings or losses attributable to our investments in unconsolidated joint ventures, which is included in loss from unconsolidated real estate partnerships in our combined condensed consolidated statements of operations (in thousands):
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Virginia JV$(1,113)$(87)$(3,004)$(2,974)
Core JV(7,930)— (7,930)— 
Value-Add JV(1,347)— (1,333)— 
Total$(10,390)$(87)$(12,267)$(2,974)

Note 7 — Commitments and Contingencies
Legal Matters
In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our condensed consolidated financial condition, results of operations, or cash flows.
Environmental
Various federal, state, and local laws subject apartment community 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 of an apartment community. 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 apartment communities as well as the ability to sell or finance such apartment communities. In addition, governmental agencies may bring claims for costs associated with investigation and remediation actions. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur or for personal injury, disease, disability, or other infirmities related to the alleged presence of hazardous materials. In addition to potential environmental liabilities or costs associated with our current apartment communities, we may also be responsible for such liabilities or costs associated with communities we acquire or manage in the future or apartment communities we no longer own or operate.

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We have determined that our legal obligations to remove or remediate certain potentially hazardous materials may be conditional asset retirement obligations (“AROs”), as defined by GAAP. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or apartment community casualty, we believe that the fair value of our AROs cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. AROs that are reasonably estimable as of September 30, 2023, are immaterial to our condensed consolidated financial statements.
Note 8 — Earnings and Dividends per Share and per Unit
Reconciliations of the numerator and denominator in the calculations of basic and diluted earnings per share and per unit are as follows (in thousands, except per share and per unit data):
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Earnings per share
Numerator:
Basic net income attributable to AIR common stockholders$663,596 $1,760 $650,700 $574,363 
Effect of dilutive instruments1,570 — 4,710 4,807 
Dilutive net income attributable to AIR common stockholders$665,166 $1,760 $655,410 $579,170 
Denominator – shares:
Basic weighted-average common shares outstanding147,474 153,811 148,372 155,488 
Dilutive common share equivalents outstanding2,571 246 2,320 1,952 
Dilutive weighted-average common shares outstanding150,045 154,057 150,692 157,440 
Earnings per share – basic $4.50 $0.01 $4.39 $3.69 
Earnings per share – diluted$4.43 $0.01 $4.35 $3.68 
Earnings per unit
Numerator:
Basic net income attributable to the AIR Operating Partnership’s common unitholders$705,982 $1,897 $691,945 $611,416 
Effect of dilutive instruments1,570 — 4,710 4,935 
Dilutive net income attributable to the AIR Operating Partnership’s common unitholders$707,552 $1,897 $696,655 $616,351 
Denominator – units:
Basic weighted-average common units outstanding157,366 163,866 158,138 165,578 
Dilutive common unit equivalents outstanding2,571 246 2,320 1,951 
Dilutive weighted-average common units outstanding159,937 164,112 160,458 167,529 
Earnings per unit – basic $4.49 $0.01 $4.38 $3.69 
Earnings per unit – diluted$4.42 $0.01 $4.34 $3.68 
For the three and nine months ended September 30, 2023 and 2022, dividends and distributions paid per share of Common Stock and per common unit were $0.45 and $1.35, respectively.
The number of common share equivalent securities excluded from the diluted earnings per share calculation was approximately 4.0 million and 3.4 million for the three and nine months ended September 30, 2023, respectively. The number of common share equivalent securities excluded from the diluted earnings per share calculation was approximately 1.9 million for the three months ended September 30, 2022. There were no anti-dilutive securities for the nine months

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ended September 30, 2022. These securities, which include preferred OP Units redeemable for Common Stock for the comparable period in 2022, were excluded from the earnings per share calculation as they were anti-dilutive.
Note 9 — Fair Value Measurements
We estimate the fair value of certain assets and liabilities using pricing models that rely on observable market information, including contractual terms, market prices, and interest rate yield curves. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value, as described below:
•Level 1 – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
•Level 2 – Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
Recurring Fair Value Measurements
The following table summarizes investments measured at fair value on a recurring basis, which are presented in other assets, net, and accrued liabilities and other in our condensed consolidated balance sheets (in thousands):
As of September 30, 2023As of December 31, 2022
Total Fair ValueLevel 1Level 2Level 3Total Fair ValueLevel 1Level 2Level 3
Interest rate option (1)$— $— $— $— $53,481 $— $53,481 $— 
Interest rate swaps - pay-fixed, receive floating$29,898 $— $29,898 $— $32,222 $— $32,222 $— 
Interest rate swaps - pay-floating, receive fixed$(3,035)$— $(3,035)$— $— $— $— $— 
Interest rate swaps - forward starting$3,333 $— $3,333 $— $— $— $— $— 
Treasury rate locks$— $— $— $— $319 $— $319 $— 
(1)During the second quarter of 2023, the interest rate swap option asset and offsetting liability associated with the Parkmerced mezzanine investment was settled, resulting in equal decreases in other assets, net and accrued liabilities and other in the condensed consolidated balance sheets.
Financial Assets and Liabilities Not Measured at Fair Value
We believe that the carrying value of the consolidated amounts of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximated their estimated fair value as of September 30, 2023 and December 31, 2022, due to their relatively short-term nature and high probability of realization. The carrying value of our revolving credit facility and term loans, which we classify as Level 2 in the GAAP fair value hierarchy, approximated their estimated fair value as of September 30, 2023 and December 31, 2022, as they bear interest at floating rates which approximate market rates.
We classify the fair value of our non-recourse property debt, unsecured notes payable, seller financing notes receivable, and preferred equity investment within Level 2 of the GAAP fair value hierarchy, as summarized in the following table (in thousands):
As of September 30, 2023As of December 31, 2022
Carrying ValueFair ValueCarrying ValueFair Value
Non-recourse property debt$2,244,776 $1,938,885 $1,994,651 $1,753,222 
Unsecured notes payable$400,000 $363,609 $400,000 $371,368 
Seller financing note receivable, net (1)$32,246 $30,723 $31,611 $32,286 
Preferred equity investment (2)$22,398 $22,486 $— $— 
(1)During the year ended December 31, 2022, we provided $40.0 million of seller financing as partial consideration for the sale of our New England portfolio. The contractual interest rate on the note is 4.5%. The difference between the stated rate and the market interest rate as of

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the date of sale resulted in a discount recorded of $8.5 million. The seller financing note and related discount are included in other assets, net in our condensed consolidated balance sheets.
(2)In conjunction with the Value-Add JV transaction, AIR received a preferred equity investment within the joint venture. The contractual interest rate on the preferred equity investment is 7.25%. The difference between the stated rate and the effective interest rate as of the date of the transaction resulted in a discount recorded of $5.9 million. The preferred equity investment and related discount are included in investment in unconsolidated real estate partnerships in our condensed consolidated balance sheets.
Note 10 — Derivative Financial Instruments and Hedging Activities
Risk Management Objective of Using Derivatives
Our objectives in using interest rate derivatives are to add predictability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps and treasury locks as part of our interest rate management strategy. Interest rate swaps primarily involve the receipt of variable-rate and fixed-rate amounts from a counterparty in exchange for us making fixed-rate or variable-rate payments over the life of the agreements without exchange of the underlying notional amounts.
Changes in fair value of derivatives designated as cash flow hedges are recognized in accumulated other comprehensive income and subsequently reclassified into earnings as an increase or decrease to interest expense. During the three and nine months ended September 30, 2023, we reclassified gains of $14.2 million and $23.7 million out of accumulated other comprehensive income into interest expense, respectively, inclusive of the Company's acceleration of the reclassification of amounts in accumulated other comprehensive income given that certain hedged forecasted transactions are not expected to occur. During the third quarter of 2023, the Company accelerated a gain of $11.5 million into earnings due to the early payoff of the hedged term loans previously designated. During the three and nine months ended September 30, 2022, we reclassified losses of $0.7 million and $2.7 million out of accumulated other comprehensive income, net into interest expense, respectively. As of September 30, 2023, we estimate that during the next 12 months, we will reclassify into earnings approximately $7.4 million of the unrealized gain in accumulated other comprehensive income.
Changes in fair value of derivatives not designated in a hedge relationship, or economic hedges, are recognized in gain on derivative instruments, net, in our condensed consolidated statements of operations once realized. During the three and nine months ended September 30, 2023, we recorded gains of $14.1 million and $23.3 million, respectively. During the three and nine months ended September 30, 2022, no amounts were recognized related to derivatives not designated in a hedge relationship.
During the second quarter of 2023, we de-designated $830 million of notional value pay-fixed, receive-floating interest rate swaps. As a result, the accumulated unrealized gains at time of de-designation of $29.5 million was expected to be reclassified into earnings over the remaining term of the forecasted transactions. During the three months ended September 30, 2023, $2.6 million of this balance was reclassified out of accumulated other comprehensive income into interest expense, and $11.5 million was accelerated into gain on derivative instruments, net, as described above. The remaining balance of $15.4 million is included within accumulated other comprehensive income as of September 30, 2023 and will be reclassified into earnings over the remaining term of the forecasted transaction.
During the three months ended September 30, 2023, we terminated six interest rate swap positions not designated as hedging instruments. Three of the terminated instruments were pay-floating, receive-fixed interest rate swaps with a notional value of $230 million, and three were offsetting pay-fixed, receive-floating interest rate swaps with a notional value of $230 million. Upon termination, AIR received $11.1 million in cash.
As of September 30, 2023, AIR had a notional value of $600 million of pay-fixed, receive-floating interest rate swaps that are not designated as hedging instruments, and a notional value of $50 million of forward starting interest rate swaps that are not designated as hedging instruments. These derivative instruments are partially offset by a notional value of $250 million of pay-floating, receive-fixed interest rate swaps that are not designated as hedging instruments. Accordingly, the changes in the fair value of these derivatives are recognized in gain on derivative instruments, net, in our condensed consolidated statements of operations. As a result of the $250 million of pay-floating, receive-fixed interest rate swaps that are not designated as hedging instruments, we expect to receive monthly fixed interest income representing the spread between the offsetting pay-fixed and receive-fixed legs of our interest rate swap positions over a weighted-average term of 2.6 years.

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Subsequent to September 30, 2023, AIR entered into a notional value $125 million pay-fixed, receive-floating interest rate swap, which economically hedges the remaining $125 million of variable-rate term loans, which results in the $475 million in term loans having an effective interest rate of 4.3%.
The following table summarizes our derivative financial instruments (dollars in thousands):
As of September 30, 2023
Number ofAggregate NotionalDerivative Assets
(included in Other Assets, net)		Derivative Liabilities
(included in Accrued Liabilities and Other)
InstrumentsAmountFair Value
Derivatives not designated as hedging instruments:
Interest rate swap, floating to fixed7$600,000 $29,898 $— 
Interest rate swap, fixed to floating3$250,000 $— $(3,035)
Interest rate swap, forward starting1$50,000 $3,333 $— 
As of December 31, 2022
Number ofAggregate NotionalDerivative Assets
(included in Other Assets, net)		Derivative Liabilities
(included in Accrued Liabilities and Other)
InstrumentsAmountFair Value
Derivatives designated as hedging instruments:
Treasury rate locks1$100,000 $319 $— 
Interest rate swaps, floating to fixed10$830,000 $32,222 $— 
Note 11 — Variable Interest Entities
Consolidated Entities
AIR consolidates the AIR Operating Partnership, a VIE of which AIR is the primary beneficiary. AIR, through the AIR Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Substantially all of the assets and liabilities of AIR are those of the AIR Operating Partnership.
The AIR Operating Partnership consolidates (i) three VIEs that own interests in one or more apartment communities and are typically structured to generate a return for their partners through the operation and ultimate sale of the communities and (ii) one VIE related to a lessor entity that owns an interest in a property leased to a third party. The AIR Operating Partnership is the primary beneficiary in the limited partnerships in which it is the sole decision maker and has a substantial economic interest.
The table below summarizes apartment community information regarding VIEs consolidated by the AIR Operating Partnership:
September 30, 2023 (1)December 31, 2022
VIEs with interests in apartment communities35
Apartment communities owned by VIEs1416
Apartment homes in communities owned by VIEs4,8665,369
(1)During the nine months ended September 30, 2023, the number of our VIEs with interests in apartment communities decreased due to our Core JV partner's acquisition of an indirect 47% interest through the Core JV in one consolidated limited partnership with 175 apartment homes, and our purchase of the remaining non-controlling interest in a consolidated limited partnership with 328 apartment homes, which was subsequently contributed to the Core JV during the third quarter.
Assets of the AIR Operating Partnership’s consolidated VIEs must first be used to settle the liabilities of such consolidated VIEs. These consolidated VIEs’ creditors do not have recourse to the general credit of the AIR Operating

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Partnership. Assets and liabilities of VIEs, excluding those of the AIR Operating Partnership, are summarized in the table below (in thousands):
September 30, 2023December 31, 2022
ASSETS:
Net real estate$1,024,555 $1,066,482 
Cash and cash equivalents$42,133 $54,319 
Restricted cash$1,970 $2,378 
Other assets, net$21,216 $20,944 
LIABILITIES:
Non-recourse property debt, net$1,200,279 $1,212,065 
Accrued liabilities and other$40,007 $35,365 
Unconsolidated Entities
We have an interest in a partnership that owns Parkmerced Apartments, which meets the definition of a VIE. However, we are not the primary beneficiary and do not consolidate this partnership. As of September 30, 2023 and December 31, 2022, the investment balance of $158.3 million and $158.7 million, respectively, is included in other assets, net, in our condensed consolidated balance sheets. Subsequent to the December 2020 separation, all risks and rewards of ownership are retained by the third party; however, as legal transfer has not occurred, there is an equal and offsetting liability included in accrued liabilities and other in our condensed consolidated balance sheets. Accordingly, there is no net effect on AIR’s stockholders’ equity or the AIR Operating Partnership’s partners’ capital.
Please see Note 6 for further discussion regarding our unconsolidated joint ventures.
Note 12 — 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 have reached a stabilized level of operations. Our Other Real Estate segment includes four properties acquired in 2022, four properties previously leased to Aimco, and four properties acquired in 2023.
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, 2023, our Same Store segment included 63 apartment communities with 22,794 apartment homes and our Other Real Estate segment included 12 apartment communities with 3,829 apartment homes.
The following tables present the total revenues, property operating expenses, proportionate property net operating income (loss), and income (loss) before income tax expense of our segments on a proportionate basis, excluding amounts related to communities sold. 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, 2023 (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, 2023:
Total revenues$151,619 $29,543 $11,981 $4,164 $197,307 
Property operating expenses 40,353 8,158 9,076 489 58,076 
Other operating expenses not allocated to segments (3)— — — 100,695 100,695 
Total operating expenses40,353 8,158 9,076 101,184 158,771 
Proportionate property net operating income (loss)111,266 21,385 2,905 (97,020)38,536 
Other items included in income before income tax expense (4)— — — 676,571 676,571 
 Income before income tax expense$111,266 $21,385 $2,905 $579,551 $715,107 

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Same
Store		Other
Real Estate		Proportionate
and Other
Adjustments (1)		Corporate and
Amounts Not
Allocated to
Segments (2)		Consolidated
Nine months ended September 30, 2023:
Total revenues$445,881 $86,104 $80,124 $11,568 $623,677 
Property operating expenses 117,014 28,010 37,850 7,248 190,122 
Other operating expenses not allocated to segments (3)— — — 320,567 320,567 
Total operating expenses117,014 28,010 37,850 327,815 510,689 
Proportionate property net operating income (loss)328,867 58,094 42,274 (316,247)112,988 
Other items included in income before income tax expense (4)— — — 594,085 594,085 
Income before income tax expense$328,867 $58,094 $42,274 $277,838 $707,073 
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$142,009 $14,025 $32,402 $12,435 $200,871 
Property operating expenses 37,349 4,783 13,468 8,409 64,009 
Other operating expenses not allocated to segments (3)— — — 110,290 110,290 
Total operating expenses37,349 4,783 13,468 118,699 174,299 
Proportionate property net operating income (loss)104,660 9,242 18,934 (106,264)26,572 
Other items included in income before income tax expense (4)— — — (23,130)(23,130)
 Income (loss) before income tax expense$104,660 $9,242 $18,934 $(129,394)$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$411,052 $16,437 $93,187 $45,173 $565,849 
Property operating expenses 111,316 5,799 38,559 21,005 176,679 
Other operating expenses not allocated to segments (3)— — — 300,720 300,720 
Total operating expenses111,316 5,799 38,559 321,725 477,399 
Proportionate property net operating income (loss)299,736 10,638 54,628 (276,552)88,450 
Other items included in income before income tax expense (4)— — — 528,955 528,955 
Income from before income tax expense$299,736 $10,638 $54,628 $252,403 $617,405 
(1)Represents adjustments to: (i) include AIR’s proportionate share of the results of unconsolidated apartment communities, which is excluded in the related consolidated amounts, and (ii) exclude the noncontrolling interests in consolidated real estate partnerships’ proportionate share of the results of communities, which is included in the related consolidated amounts. 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.
(2)Includes: (i) the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any, (ii) property management revenues, which are not part of our segment performance measure, 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, and (iii) the depreciation of capitalized costs of non-real estate assets.
(3)Includes depreciation and amortization, general and administrative expenses, and other expenses, net, and may also include write-offs of deferred leasing commissions, which are not included in our measure of segment performance.
(4)Includes interest income, interest expense, loss on extinguishment of debt, gain on dispositions of real estate, provision for impairment loss, and loss from unconsolidated real estate partnerships.

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The assets of our segments and the consolidated assets not allocated to our segments were as follows (in thousands):
September 30, 2023December 31, 2022
Same Store$4,119,544 $4,610,356 
Other Real Estate1,575,415 1,211,136 
Corporate and other assets (1)704,290 730,391 
Total consolidated assets$6,399,249 $6,551,883 
(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) properties sold or classified as held for sale.
For the nine months ended September 30, 2023 and 2022, capital additions related to our segments were as follows (in thousands):
20232022
Same Store$114,844 $109,768 
Other Real Estate 13,530 1,422 
Total capital additions$128,374 $111,190 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. This Quarterly Report on Form 10-Q contains information that is forward-looking within the meaning of the federal securities laws, including, without limitation, statements regarding: the payment of dividends and distributions in the future; our ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding consumer demand, growth in revenue and strength of other performance metrics and models; the effect of acquisitions and dispositions; expectations regarding acquisitions as well as sales and the formation of joint ventures and the use of proceeds thereof; the availability and cost of corporate debt; our ability to comply with debt covenants; and risks related to the provision of property management services to third parties and our ability to collect property management and asset management related fees.
These forward-looking statements are based on management’s current expectations, estimates and assumptions and subject to risks and uncertainties, that could cause actual results to differ materially from such forward-looking statements, including, but not limited to: real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including inflation, the pace of job growth, the level of unemployment, and recession; the amount, location, and quality of competitive new housing supply, which may be impacted by global supply chain disruptions; the timing and effects of acquisitions and dispositions; changes in operating costs, including energy costs; negative economic conditions in our geographies of operation; loss of key personnel; AIR’s ability to maintain current or meet projected occupancy, rental rate and property operating results; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; financing risks, including interest rate changes and the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by AIR. Other risks and uncertainties are described in this Quarterly Report on Form 10-Q, as well as the section entitled “Risk Factors” in Item 1A of AIR’s and AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent filings with the SEC.
In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and depends on our ability to meet the various requirements imposed by the Code, through actual operating results, distribution levels and diversity of stock ownership.
These forward-looking statements reflect management’s judgment as of this date, and we assume no obligation to revise or update them to reflect future events or circumstances.
Certain financial and operating measures found herein and used by management are not defined under GAAP. These measures are defined and reconciled to the most directly comparable GAAP measures under the Non-GAAP Measures heading and include: NAREIT Funds from Operations, Pro forma Funds from Operations, Run-Rate Funds from Operations, Run-Rate Adjusted Funds from Operations, and the measures used to compute our leverage ratios.
Executive Overview
We created AIR to be the most efficient and effective way to invest in U.S. multi-family real estate, due to our simplified business model, diversified portfolio of stabilized apartment communities, and low leverage. The Board of Directors has set the following strategic objectives:
•Pursue a simple, efficient, and predictable business model with a low-risk premium.
•Maintain a high quality and diversified portfolio of stabilized multi-family properties.
•Continuously improve our best-in-class property operations platform, the “AIR Edge,” to generate above-market organic growth.
•Maintain an efficient cost structure to keep net general and administrative expenses less than or equal to 15-basis points of gross asset value.
•Maintain a flexible, low levered balance sheet with access to public debt markets.
•Enhance portfolio quality through a disciplined approach to capital allocation, targeting accretive opportunities on a leverage neutral basis.

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•Form private capital partnerships as a source of equity capital for accretive growth.
•Continue our commitment to corporate responsibility with transparent and measurable goals.
We own and operate a portfolio of stabilized apartment communities, diversified by both geography and price point, in 10 states and the District of Columbia. As of September 30, 2023, our portfolio included 75 apartment communities with 26,623 apartment homes, in which we held an average ownership of approximately 81%. We also have one land parcel and one indirect land interest that we lease to third parties.
Our business is organized around four areas of strategic focus: operational excellence; portfolio management; balance sheet; and team and culture. The results from the execution of our strategy are further described in the sections that follow.
Operational Excellence
In the third quarter of 2023, Pro forma FFO increased 10.3% year-over-year as a result of same store revenue growth of 6.8% which drove higher net operating income of 6.3%, primarily driven by an increase of 5.6% in residential rents.
Portfolio Performance
Approximately 20% of AIR’s capital is invested in acquisitions made since 2021. Acquisition properties experience a rate of NOI growth during the first few years of AIR management that is much higher than the same store portfolio rate. Two-thirds of these investments were made prior to July 2022; therefore, comparative information is available. These properties' year-over-year NOI growth was up 17.4%, increasing year-over-year NOI growth rate of the total Acquisition and Same Store portfolios by 170 basis points to 7.2%.
Third Quarter 2023 Paired Trades
As previously announced, AIR contributed 10 properties to the Core JV, retaining a 53% interest. In exchange for the 47% interest sold, AIR received $505 million of gross consideration. AIR also completed its strategic exit from New York City through the sale of a property for $21 million in gross proceeds.
In turn, AIR improved its portfolio through reinvesting $287 million in three new properties. In comparison to the property interests sold, the acquired properties:
•have 11% higher average rents at $2,751 per month;
•were constructed in the last two years (in contrast to 26 years for the interests sold); and
•require annual capital replacement spending that is $2,600 per unit lower than the interests sold.
AIR used the remaining proceeds to:
•repurchase 2.2 million shares for $77.8 million (reflecting an average price of $34.57 per share, and a forward NOI yield of approximately 6.3%).
•reduce leverage, with an average interest cost of 6.1%, by approximately $161 million.
Balance Sheet and Liquidity
During the third quarter of 2023, AIR refinanced $154 million of borrowings on AIR's revolving credit facility and $325 million of term loans maturing in 2023 and 2024, with new fixed rate property debt. The new debt has a weighted-average life of 5.3 years and a weighted-average interest rate of 5.2%; 30-basis points greater than the short-term debt repaid.
Today, AIR has:
•Near-term exposure to rising interest rates limited to:
▪$79 million on our share of the Virginia JV debt due to the maturity in January 2024 of the in-place interest rate cap; plus
▪$26 million on our revolving credit facility
•No debt maturities until the second quarter of 2025;
•Available liquidity of $2.1 billion;

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•$5.3 billion of properties unencumbered by non-recourse debt; and
•Limited refunding risk with the ability to fund all maturities through 2027 from cash on hand, and a 10-year commitment to make $1 billion of property loans with up to 10-year maturities.
At year-end, AIR anticipates Net Leverage to Adjusted EBITDAre to be below 6.0x; consistent with its target range of 5.0x to 6.0x. As of September 30, 2023, AIR's leverage is temporarily elevated due to the timing of third quarter acquisitions.
Dividend and Equity Capital Markets
On October 30, 2023, the AIR Board of Directors declared a quarterly cash dividend of $0.45 per share of Common Stock, payable on November 30, 2023 to shareholders of record on November 17, 2023. In setting the 2023 dividend rate, the Board of Directors targeted a 75% payout ratio of Pro forma FFO, in 2023 equivalent to approximately 86% of Run-Rate AFFO.
Team and Culture
Our team and culture are keys to our success. We have a relentless focus on productivity and innovation. We continuously seek to reduce costs through the use of additional automation and continued technological investment, and by avoiding costs, for example by retention of residents. We apply this same focus to our general and administrative expenses, expecting these costs to be lower, as a percentage of the gross asset value of our investments, than are our peers.
We are defined by a commitment to our mission, vision, and values. We strive to provide an exceptional living experience for residents and a great place to work for teammates, to be a good neighbor in the communities we serve, and a good steward for our investors. We are accountable to teammates in return for their hard and meaningful work of providing homes for others. We see our workforce as a team, and not employees only. Our view is relational, and not transactional, reflecting a longer view of the benefits of a cohesive and caring team.
Our intentional focus on a collaborative and productive culture based on respect for others and personal responsibility is reinforced by a preference for promotion from within. We focus on succession planning and talent development to produce a strong, stable team that is the enduring foundation of our success. The Compensation and Human Resources Committee of the Board of Directors is responsible for succession planning in all leadership positions, both in the short-term and the long-term, with particular focus on CEO succession.
Our focus on our team and culture is widely recognized. In 2023, AIR was named a Kingsley Excellence Elite Five multifamily company and a winner of the 2023 Kingsley Excellence Awards for customer service for the second year in a row. Of the winners, AIR ranked second among all operators, and first among publicly traded REITs. AIR is committed to world-class customer service, which we deliver through listening to, learning from, and responding to our residents every day. We also benefit from the support of great leadership, contributions from exceptional teammates, and a strong culture. These strengths are confirmed by such awards as AIR's 2023 Top Workplaces USA Award (the second consecutive year), a 10-time winner of Top Workplace in Colorado (by the Denver Post), Top Workplace in Philadelphia (by The Philadelphia Inquirer), and in South Florida (by the Sun Sentinel) as well as two time winner of Built in 2023 Best Places to Work in Colorado, Los Angeles, Miami, and Washington, D.C., and the Denver Business Journal Healthiest Employer in Colorado for the third year in a row. We take seriously our responsibility to care for our customers, our neighbors, and each other as teammates. We are grateful for these recognitions and consider them confirmation of our success.
We are committed to transparency, and continuous improvement, as measured by Global Real Estate Sustainability Benchmark (“GRESB”). Strong progress was made by AIR in 2023 in advancing its commitments to responsibility beyond governance, achieving a GRESB score of 82 out of 100, placing AIR in the top 20% of residential companies in the Americas. We also published our 2022-2023 Corporate Responsibility Report highlighting our commitment to community and continued progress on our goals.
Results of Operations
Because our operating results depend primarily on income from our apartment communities, the supply of and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our apartment communities and the pace and price at which we acquire and dispose of our apartment communities affects our operating results.
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying condensed consolidated financial statements included in Item 1.

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Financial Highlights
Net income attributable to common stockholders per common share, on a dilutive basis was $4.43 and $4.35 for the three and nine months ended September 30, 2023, respectively, compared to $0.01 and $3.68 for the three and nine months ended September 30, 2022, respectively, due primarily to:
•Same Store revenue growth of 6.8% which resulted in higher net operating income ("NOI") of 6.3%, primarily driven by an increase of 5.6% in residential rents for the three months ended September 30, 2023 compared to 2022. Additionally, acquisitions are growing faster than Same Store. For example, the Class of 2022 had revenue growth of 9.9%, which resulted in higher NOI of 20.1% for the three months ended September 30, 2023 compared to 2022,
•Higher gains on dispositions of real estate,
•Gains on derivative instruments, and
•Lower loss on extinguishment of debt, offset partially by
•Lower interest income from the note receivable from Aimco, which was repaid in the second and third quarters of 2022, and the $17.4 million prepayment penalty received from Aimco in connection with these repayments, and
•Higher interest expense due to higher interest rates and higher outstanding property debt balances.
Pro forma FFO per share was $0.64 and $1.76 for the three and nine months ended September 30, 2023, respectively, compared to $0.58 and $1.81 for the three and nine months ended September 30, 2022, respectively, due primarily to the below factors.
•Same Store revenue growth of 6.8% which resulted in higher NOI of 6.3% primarily driven by an increase of 5.6% in residential rents for the three months ended September 30, 2023 compared to 2022. Additionally, acquisitions are growing faster than Same Store. For example, the Class of 2022 had revenue growth of 9.9% which resulted in higher NOI of 20.1% for the three month ended September 30, 2023 compared to 2022, and
•Gains on derivative instruments as noted above, offset partially by
•A decrease in interest income as noted above, and
•An increase in interest expense as noted above.
For the three and nine months ended September 30, 2023, Pro forma FFO includes $0.05 per share of non-recurring items including derivative gains that were accelerated through the repayment of certain previously hedged term loans, partially offset by higher than anticipated casualty and legal costs. After consideration of these non-recurring items Run-Rate FFO per share was $0.59 and $1.72 for the three and nine months ended September 30, 2023, respectively.
For the three and nine months ended September 30, 2022, Pro forma FFO includes $0.03 and $0.22 per share, respectively, of non-recurring items including the impact from the Aimco note receivable prepayment. After consideration of these non-recurring items Run-Rate FFO per share was $0.55 and $1.59 for three and nine months ended September 30, 2022, respectively.
Additionally, Run-Rate AFFO per share was $0.52 and $1.51 for three and nine months ended September 30, 2023, respectively, compared to $0.50 and $1.42 for three and nine months ended September 30, 2022, respectively. Our 2023 capital allocation decisions have resulted in paired trades in which we have purchased apartment communities with an anticipated higher rate of NOI growth and lower recurring capital needs and sold partial interests in apartment communities with lower anticipated rates of NOI growth and higher capital needs.
Results of Operations for the Three and Nine Months Ended September 30, 2023, Compared to 2022
Property Operations
We have two segments: Same Store and Other Real Estate. Our Same Store segment includes communities that are owned and managed by AIR and have reached a stabilized level of operations. Our Other Real Estate segment includes four properties acquired in 2022, four properties previously leased to Aimco, and four properties acquired in 2023.
As of September 30, 2023, our Same Store segment included 63 apartment communities with 22,794 apartment homes and our Other Real Estate segment included 12 apartment communities with 3,829 apartment homes.

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Proportionate Property Net Operating Income
Our proportionate share of financial information includes our share of unconsolidated real estate partnerships and excludes the noncontrolling interest partners’ share of consolidated real estate partnerships. We believe proportionate information benefits the users of our financial information by providing the amount of revenues, expenses, assets, liabilities, and other items attributable to our stockholders.
We use proportionate property 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.
We do not include offsite costs associated with property management, casualty gains or losses, or the results of apartment communities sold or held for sale in our assessment of segment performance. Accordingly, these items are not allocated to our segment results discussed below.
Please see Note 12 to the condensed consolidated financial statements in Item 1 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.
Three Months Ended September 30,Historical Change
(dollars in thousands)20232022$%
Rental and other property revenues, before utility reimbursements:
Same Store$151,619 $142,009 $9,610 6.8 %
Other Real Estate29,54314,02515,518 nm
Total181,162 156,034 25,128 16.1 %
Property operating expenses, net of utility reimbursements:
Same Store40,35337,3493,004 8.0 %
Other Real Estate8,1584,7833,375 nm
Total48,511 42,132 6,379 15.1 %
Proportionate property net operating income:
Same Store111,266104,6606,606 6.3 %
Other Real Estate21,3859,24212,143 nm
Total$132,651 $113,902 $18,749 16.5 %
For the three months ended September 30, 2023, compared to 2022, excluding changes attributable to changes in ownership, our Same Store proportionate property NOI increased by 6.3%. This increase was attributable primarily to a $9.6 million, or 6.8%, increase in rental and other property revenues due to a 5.6% increase in residential rental rates, and a 1.2% increase in other rental income, partially offset by a 0.6% decrease in ADO.
Other Real Estate proportionate property NOI for the three months ended September 30, 2023, compared to 2022, increased by $12.1 million, due primarily to contribution from four properties acquired in 2023, four properties acquired in 2022, and NOI contribution from the four properties acquired on September 1, 2022, when their respective master leases were canceled.

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Nine Months Ended September 30,Historical Change
(dollars in thousands)20232022$%
Rental and other property revenues, before utility reimbursements:
Same Store$445,881 $411,052 $34,829 8.5 %
Other Real Estate86,10416,43769,667 nm
Total531,985 427,489 104,496 24.4 %
Property operating expenses, net of utility reimbursements:
Same Store117,014111,3165,698 5.1 %
Other Real Estate28,0105,79922,211 nm
Total145,024 117,115 27,909 23.8 %
Proportionate property net operating income:
Same Store328,867299,73629,131 9.7 %
Other Real Estate58,09410,63847,456 nm
Total$386,961 $310,374 $76,587 24.7 %
For the nine months ended September 30, 2023, compared to 2022, excluding changes attributable to changes in ownership, our Same Store proportionate property NOI increased by 9.7%. This increase was attributable primarily to a $34.8 million, or 8.5%, increase in rental and other property revenues due to an 8.1% increase in residential rental rates, and an 0.8% increase in other residential income, partially offset by a 0.7% decrease in ADO.
Other Real Estate proportionate property NOI for the nine months ended September 30, 2023, compared to 2022, increased by $47.5 million, due primarily to contribution from four properties acquired in 2023, four properties acquired in 2022, and NOI contribution from the four properties acquired on September 1, 2022, when their respective master leases were canceled.
Non-Segment Real Estate Operations
Operating income amounts not attributed to our segments include offsite costs associated with property management, casualty losses, and the results of apartment communities sold or held for sale, which we do not allocate to our segments for purposes of evaluating segment performance.
For the three and nine months ended September 30, 2023, compared to 2022, non-segment real estate operations decreased by $1.2 million and $21.8 million, respectively, due primarily to $5.9 million and $22.1 million of lower NOI attributable to sold properties due to decreased disposition activity, with dispositions of nine additional properties during 2022 compared to 2023.
Additionally, for the three months ended September 30, 2023, the decrease in non-segment real estate operations was offset partially by $4.7 million of lower casualty losses due to receipt of third-party casualty recoveries in 2023.
Depreciation and Amortization
For the three months ended September 30, 2023, compared to 2022, depreciation and amortization expense decreased $11.4 million, or 12.6%, due primarily to the reduction in depreciation associated with sold properties, offset partially by properties acquired subsequent to September 30, 2022.
For the nine months ended September 30, 2023, compared to 2022, depreciation and amortization expense increased $10.3 million, or 4.1%, due primarily to properties acquired subsequent to September 30, 2022, offset partially by the reduction in depreciation associated with sold properties.
General and administrative expenses
For the three months ended September 30, 2023, compared to 2022, general and administrative expenses decreased $2.0 million, or 26.1%, due primarily to lower personnel costs.
For the nine months ended September 30, 2023, compared to 2022, general and administrative expenses were relatively flat.

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Other expenses, net
Other expenses, net, includes costs associated with our risk management activities, partnership administration expenses, and certain non-recurring items.
For the three and nine months ended September 30, 2023, compared to 2022, other expenses, net, increased by $3.2 million and $8.6 million, respectively, due primarily to higher legal expenses, and one-time severance payments. Additionally, for the nine months ended September 30, 2023, other expenses, net further increased due to incremental ground lease expense associated with an acquired property.
Interest Income
For the three and nine months ended September 30, 2023, compared to 2022, interest income decreased by $6.7 million, or, 69.6%, and $42.6 million, or 87.4%, respectively, due primarily to $17.4 million of lower interest income associated with the 2022 prepayment of our notes receivable from Aimco. Interest income decreased further due to lower interest income associated with properties leased to Aimco through September 1, 2022, when the leases were canceled.
Interest Expense
For the three months ended September 30, 2023, compared to 2022, interest expense decreased $9.8 million, or 29.9%, due primarily to the the impact of hedged derivative activity on interest expense, lower balances on our revolving credit facility, and repayment of $325 million of term loans.
For the nine months ended September 30, 2023, compared to 2022, interest expense increased $15.8 million, or 19.6%, due primarily to higher rates on our term loans and revolving credit facility, interest expense associated with our senior unsecured notes issued in the second quarter of 2022, and higher outstanding property debt balances; offset partially by the impact of hedged derivative activity on interest expense, lower balances on our revolving credit facility, and repayment of $325 million of term loans.
Loss on Extinguishment of Debt
During the three months ended September 30, 2023 and 2022, we did not incur a loss on extinguishment of debt.
For the nine months ended September 30, 2023, compared to 2022, loss on extinguishment of debt decreased by $21.6 million, due to higher prepayment penalties incurred from the early payment of property debt in 2022.
Gains on Dispositions and Impairments of Real Estate
During the three months ended September 30, 2023, we recognized a $692.9 million gain on dispositions of real estate and impairments of real estate due primarily to the gain associated with sale of a partial interest in 10 properties in connection with the Core JV.
During the nine months ended September 30, 2023, we recognized a $675.5 million gain on dispositions and impairments of real estate due primarily to:
•$698.8 million of gain on dispositions of real estate from the sale of 10 properties in connection with the Core JV;
•$0.5 million of gain in connection with the formation of the Value-Add JV; offset partially by
•A non-cash impairment loss on real estate of $23.6 million due to the evaluation of the expected hold period of three apartment communities included in our Other Real Estate reporting segment, which are now sold.
During the three months ended September 30, 2022, there were no apartment communities sold. During the nine months ended September 30, 2022, we recognized $587.6 million of gain on dispositions of real estate related to the sale of 12 apartment communities. During the three and nine months ended September 30, 2022, we did not recognize any real estate impairment losses.
Gain on Derivative Instruments
During the three and nine months ended September 30, 2023, we recognized $14.1 million and $23.3 million, respectively, of gains on derivative instruments that are not designated as cash flow hedges primarily related to mark-to-

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market valuation changes and cancellation of certain interest swaps and treasury locks during the period. During the three and nine months ended September 30, 2022, we did not recognize any gains on derivative instruments.
Loss from Unconsolidated Real Estate Partnerships
For the three and nine months ended September 30, 2023, compared to 2022, loss from unconsolidated real estate partnerships increased $10.3 million and $9.3 million, respectively. During the third quarter of 2023, our unconsolidated joint ventures generated NOI of $11.1 million. This incremental NOI was offset by higher depreciation expense due to valuing the properties in the Core and Value-Add JV's at fair market value.
Income Tax Expense
Certain of our operations, including property management, are conducted through taxable REIT subsidiaries (“TRS entities”).
Our income tax expense calculated in accordance with GAAP includes income taxes associated with the income or loss of our TRS entities for which the tax consequences have been realized or will be realized in future periods. Income taxes related to these items, as well as changes in valuation allowance, are included in income tax expense in our condensed consolidated statements of operations.
For the three and nine months ended September 30, 2023, compared to 2022, income tax expense increased $4.5 million and $4.9 million, respectively, due primarily to the recognition of an income tax liability resulting from the formation of the Core JV.
Critical Accounting Estimates
We prepare our condensed consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the critical accounting policies that involve our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements relate to the impairment of our long-lived assets.
Our critical accounting estimates are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022. There have been no other significant changes in our critical accounting estimates from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.
Non-GAAP Measures
Certain key financial indicators we use in managing our business and in evaluating our financial condition and operating performance are non-GAAP measures. Key non-GAAP measures we use are defined and described below, and for those non-GAAP measures used or disclosed within this quarterly report, we provide reconciliations of the non-GAAP measures to the most directly comparable financial measure computed in accordance with GAAP.
NAREIT Funds From Operations, Pro forma Funds From Operations, Run-Rate FFO and Run-Rate Adjusted Funds From Operations
Many of our investors focus on multiples of Funds From Operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), referred to herein as “NAREIT FFO.” These investors also focus on NAREIT FFO, as adjusted for non-cash, unusual, or non-recurring items. We refer to this metric as Pro forma Funds From Operations (“Pro forma FFO”) and use it as a measure of operational performance.
NAREIT FFO is a non-GAAP measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate assets generally appreciate over time or maintain residual value to a much greater extent than do other depreciable assets such as machinery, computers, or other personal property. NAREIT defines FFO as net income computed in accordance with GAAP, excluding: (i) depreciation and amortization related to real estate; (ii) gains and losses from sales and impairment of depreciable assets and land used in our primary business; and (iii) income taxes directly associated with a gain or loss on the sale of real estate; and adjustments for our share of FFO of unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are

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calculated on the same basis to determine NAREIT FFO. We calculate NAREIT FFO attributable to AIR common stockholders (diluted) by subtracting dividends on Preferred Stock and preferred units and amounts allocated from NAREIT FFO to participating securities.
In addition to NAREIT FFO, we use Pro forma FFO, Run-Rate FFO and Run-Rate Adjusted Funds From Operations (“AFFO”) to measure short-term and current period performance. Pro forma FFO represents NAREIT FFO as defined above, excluding certain amounts that are unique or occur infrequently. Run-Rate FFO represents Pro forma FFO as defined above, excluding certain amounts that are unique or occur infrequently. Run-Rate AFFO represents Pro forma FFO as defined above, reduced by Capital Replacements, and is a measure of current period performance.
NAREIT FFO, Pro forma FFO, Run-Rate FFO and Run-Rate AFFO should not be considered alternatives to net income determined in accordance with GAAP, as indications of our performance. Although we use these non-GAAP measures for comparability in assessing our performance compared to other REITs, not all REITs compute these same measures and those who do may not compute them in the same manner. Accordingly, there can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other REITs.

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NAREIT FFO, Pro forma FFO, Run-Rate FFO, and Run-Rate AFFO are calculated as follows (in thousands, except per share data):
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Net income attributable to AIR common stockholders$663,596 $1,760 $650,700 $574,363 
Adjustments:
Real estate depreciation and amortization, net of noncontrolling partners’ interest87,169 85,057 260,930 240,436 
Gain on dispositions and impairments of real estate, net of noncontrolling partners’ interest(690,992)— (673,520)(587,453)
Income tax adjustments related to gain on dispositions and other tax-related items 4,400 (348)4,400 (1,448)
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities38,773 (5,250)25,962 21,327 
NAREIT FFO attributable to AIR common stockholders$102,946 $81,219 $268,472 $247,225 
Adjustments:
Gain on derivative instruments (1)(12,436)— (21,688)— 
Non-cash straight-line rent (2)3,068 3,660 9,248 4,944 
Business transformation and transition related costs (3)897 1,419 1,420 3,881 
Loss on extinguishment of debt (4)— — 2,008 23,636 
Casualty losses and other (5)(272)4,389 1,855 4,635 
Common noncontrolling interests in AIR OP’s share of above adjustments and amounts allocable to participating securities541 (581)454 (1,887)
Pro forma FFO attributable to AIR common stockholders$94,744 $90,106 $261,769 $282,434 
Cash swap acceleration income, net of common noncontrolling interests in AIR OP and participating securities(10,854)— (10,854)— 
Aimco note prepayment, net of common noncontrolling interests in AIR OP and participating securities— (4,673)— (34,456)
Casualty and Legal expense in excess of run-rate, net of common noncontrolling interests in AIR OP and participating securities2,665 — 4,628 — 
Run Rate FFO attributable to AIR common stockholders$86,555 $85,433 $255,543 $247,978 
Capital Replacements, net of common noncontrolling interests in AIR OP and participating securities(7,476)(6,706)(26,449)(22,912)
Leasing Commissions, net of common noncontrolling interests in AIR OP and participating securities(1,712)(1,632)(5,029)(4,227)
Run-Rate AFFO attributable to AIR common stockholders$77,367 $77,095 $224,065 $220,839 
Weighted-average common shares outstanding – basic147,474 153,811 148,372 155,488 
Dilutive common share equivalents 299 246 143 269 
Total shares and dilutive share equivalents147,773 154,057 148,515 155,757 
Net income attributable to AIR per share – diluted$4.43 $0.01 $4.35 $3.68 
NAREIT FFO per share – diluted$0.70 $0.53 $1.81 $1.59 
Pro forma FFO per share – diluted$0.64 $0.58 $1.76 $1.81 
Run-Rate FFO per share - diluted$0.59 $0.55 $1.72 $1.59 
Run-Rate AFFO per share - diluted$0.52 $0.50 $1.51 $1.42 
(1)During 2023, in anticipation of future financing transactions, we entered into treasury locks that did not qualify for hedge accounting under GAAP. Changes in the fair value of these instruments are included in net income attributable to AIR common stockholders. Any non-cash changes in fair value are excluded in the determination of Pro forma FFO.
(2)In 2018 and 2022, we assumed 99-year ground leases with scheduled rent increases. Due to the terms of the leases, GAAP rent expense will exceed cash rent payments until 2076 and 2079, respectively. We include the cash rent payments for these ground leases in Pro forma FFO but exclude the incremental straight-line non-cash rent expense. The rent expense for these leases is included in other expenses, net, in our condensed consolidated statements of operations.
(3)During 2023 and 2022, we incurred consulting, placement, legal, and other transformation related costs as we fully implement AIR’s business model, including projects intended to increase efficiency and reduce costs in future periods. As we engage in and finalize our

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finance transformation initiative that modernizes our systems and processes, including a new ERP system, we expect to continue to incur these costs throughout 2023. We excluded these costs from Pro forma FFO because we believe they are not related to ongoing operating performance.
(4)During 2023 and 2022, we incurred debt extinguishment costs related to the prepayment of debt. In 2023, these costs are related to the prepayment of high-cost, floating-rate debt. We excluded these costs from Pro forma FFO because we believe they are not representative of future cash flows.
(5)During 2023, we incurred significant casualty losses related to fire damage at our Palazzo East at Park La Brea apartment community. During 2021, we incurred significant casualty losses due to Hurricane Ida-induced flooding in downtown Philadelphia causing damage to our Park Towne Place apartment community, whose clean-up costs extended into 2022. During the third quarter of 2023, we recorded a net gain upon receipt of third-party funds, upon closing the 2021 Park Towne Place claim. AIR excludes individually significant casualty losses from the computation of FFO when the expected gains or losses are atypical and costs are greater than $1 million. Individual casualty losses less than $1 million are included in FFO. In 2023, these "normal" casualty losses are expected to exceed historical averages and AIR's expectation entering the year by $1.7 million. AIR has excluded casualty losses that exceeded our beginning of year expectations in the determination of Run-Rate FFO.
Please see the Results of Operations section for discussion of the factors affecting our Pro forma FFO for 2023.
Leverage Ratios
We target Net Leverage to Adjusted EBITDAre between 5.0x and 6.0x. We also focus on Proportionate Debt to Adjusted EBITDAre. We believe these ratios, which are based in part on non-GAAP financial information, are commonly used by investors and analysts to assess the relative financial risk associated with balance sheets of companies within the same industry, and they are believed to be similar to measures used by rating agencies to assess entity credit quality.
Our leverage ratios for the three months ended September 30, 2023, are presented below:
Annualized Current Quarter
Proportionate Debt to Adjusted EBITDAre6.2x
Net Leverage to Adjusted EBITDAre6.3x
Proportionate Debt, as used in our leverage ratios, is a non-GAAP measure and includes our share of the long-term, non-recourse property debt, outstanding borrowings under our revolving credit facility, term loans, and unsecured notes. Proportionate Debt excludes unamortized debt issuance costs because these amounts represent cash expended in earlier periods and do not reduce our contractual obligations. We reduce our recorded debt by the amounts of cash and restricted cash on-hand, excluding tenant security deposits included in restricted cash, assuming the remaining amounts of cash and restricted cash would be used to reduce our outstanding leverage.
We believe Proportionate Debt is useful to investors as it is a measure of our net exposure to debt obligations. Proportionate Debt, as used in our leverage ratios, is calculated as set forth in the table below.
Preferred equity represents the redemption amounts for AIR’s Preferred Stock and the AIR Operating Partnership’s Preferred Partnership Units and, although perpetual in nature, are another component of our overall leverage.

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The reconciliation of total indebtedness to Proportionate Debt and Preferred Equity, as used in our leverage ratios, is as follows (in thousands):
September 30, 2023
Total indebtedness$3,128,234 
Adjustments:
Debt issuance costs related to non-recourse property debt and term loans17,292 
Proportionate share adjustments related to debt obligations 60,530 
Cash and restricted cash(134,170)
Tenant security deposits included in restricted cash11,890 
Proportionate share adjustments related to cash and restricted cash 10,791 
Proportionate Debt3,094,567 
Perpetual Preferred Stock2,000 
Preferred noncontrolling interests in AIR Operating Partnership77,140 
Net Leverage$3,173,707 
We calculated Adjusted EBITDAre used in our leverage ratios based on annualized current quarter amounts. 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 facilitate comparison of credit strength between AIR and other companies. EBITDAre and Adjusted EBITDAre should not be considered alternatives to net income 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, and depreciation and amortization expense, which we have further adjusted for:
•gains and losses on dispositions of depreciated property;
•impairment write-downs of depreciated property; and
•adjustments to reflect our share of EBITDAre of investments in unconsolidated entities and consolidated entities with non-controlling interests.
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 for the effect of the following items for the reasons set forth below:
•the amount by which GAAP rent expense exceeds cash rent payments for two long-term ground leases until 2076 and 2079 is excluded. The excess of GAAP rent expense over the cash payments for these leases does not reflect a current obligation that affects our ability to service debt; and
•applicable Pro forma FFO adjustments to NAREIT FFO under the heading “NAREIT Funds From Operations and Pro forma Funds From Operations,” excluding items that are not included in EBITDAre, to exclude certain amounts that are unique or occur infrequently.

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The reconciliation of net income to EBITDAre and Adjusted EBITDAre, as used in our leverage ratios, is as follows (in thousands):
Three Months Ended
September 30, 2023
Net income$710,512 
Adjustments:
Interest expense22,888 
Income tax expense4,595 
Depreciation and amortization79,023 
Gain on dispositions of real estate (692,861)
Net income attributable to noncontrolling interests in consolidated real estate partnerships(2,525)
EBITDAre adjustments attributable to noncontrolling interests and unconsolidated real estate partnerships13,437 
EBITDAre$135,069 
Pro forma FFO and other adjustments, net (1)177 
Quarterly Adjusted EBITDAre$135,246 
Adjusted EBITDAre, before removal of annualization impact for non-recurring items$540,984 
Removal of annualization impact for non-recurring items (2)(38,313)
Adjusted EBITDAre$502,671 
(1)Includes pro forma adjustments to NAREIT FFO under the heading NAREIT Funds From Operations and Pro forma Funds From Operations, excluding items that are not included in EBITDAre such as prepayment penalties, net. EBITDAre has also been adjusted by $0.9 million to reflect the disposition of two properties and the Core Joint Venture, as if the transactions closed on July 1, 2023, and an adjustment of $11.5 million non-cash gain on derivative instruments.
(2)Third quarter 2023 EBITDAre benefits from $12.8 million of items that are not expected to recur in the future. As such, they were not annualized in the computation of Adjusted EBITDAre.
Liquidity and Capital Resources
Liquidity
Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flows from operations. Additional sources are proceeds from dispositions of apartment communities, proceeds from refinancing existing property debt, borrowings under new property debt, borrowings under our credit facilities, and proceeds from equity offerings. As of September 30, 2023, our available liquidity was $2.1 billion, which consisted of:
•$95.7 million of our share of cash and cash equivalents;
•$15.8 million of our share of restricted cash, excluding amounts related to tenant security deposits, which consists primarily of escrows held by lenders for capital additions, property taxes, and insurance;
•$970.0 million of available capacity to borrow under our revolving credit facility after consideration of letters of credit; and
•$1.0 billion of committed property level financing through our secured credit facility with Fannie Mae.
Additional liquidity may also be provided through future secured and unsecured financings.
Uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, dividends paid to stockholders, distributions paid to noncontrolling interest partners, acquisitions of apartment communities, and repurchases of equity securities. We use our cash and cash equivalents and cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and cash provided by operating activities are not sufficient to meet our short-term liquidity needs, we have additional means, such as short-term borrowing availability and proceeds from apartment community sales and debt refinancing. We may use our revolving credit facility for working capital and other short-term purposes, such as funding investments on an interim basis. We expect to meet our long-term liquidity requirements, including apartment community acquisitions, primarily through secured and unsecured borrowings, the issuance of equity securities (including OP Units), the sale of apartment

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communities, and cash generated from operations. Additionally, we expect to meet our liquidity requirements associated with our debt maturities.
There have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022.
Leverage and Capital Resources
The availability 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 believe we have mitigated much of this exposure by reducing our short and intermediate-term maturity risk through refinancing such loans with long-dated debt.
If financing options become unavailable for our future debt needs, we may consider alternative sources of liquidity, such as reductions in capital spending, or proceeds from apartment community dispositions.
The combination of secured and unsecured debt, preferred OP Units, and redeemable noncontrolling interests in a consolidated real estate partnership comprise our total leverage. The weighted-average remaining term to maturity for our total leverage was 6.9 years as of September 30, 2023, inclusive of extension options, with a weighted-average interest rate of 4.3%. We have sufficient committed credit to repay all debt coming due through 2027.
Under our credit agreement and unsecured notes payable, we have agreed to maintain certain financial covenants, as well as other covenants customary for similar credit arrangements. The financial covenants we are required to maintain include a maximum leverage ratio of no greater than 0.60 to 1.00; a fixed charge coverage ratio of no less than 1.50 to 1.00, a maximum secured indebtedness to total assets ratio of no greater than 0.40 to 1.00, a maximum unsecured leverage ratio no greater than 0.60 to 1.00, and a minimum unsecured interest coverage ratio no less than 1.50 to 1.00. We believe we were in compliance with these covenants as of September 30, 2023 and expect to remain in compliance during the next 12 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 condensed consolidated statements of cash flows in Item 1 of this report.
Operating Activities
For the nine months ended September 30, 2023, net cash provided by operating activities was $301.7 million. Our operating cash flow is affected primarily by rental rates, occupancy levels, operating expenses related to our portfolio of apartment communities, and changes in working capital items. Cash provided by operating activities for the nine months ended September 30, 2023, decreased by $49.7 million compared to the same period in 2022, due primarily to lower net operating income associated with sold apartment communities, partially offset by increased contribution from properties recently acquired.
Investing Activities
For the nine months ended September 30, 2023, our net cash used in investing activities of $270.0 million consisted primarily of purchases of real estate and capital expenditures, offset partially by proceeds from dispositions of real estate and distributions from unconsolidated real estate partnerships. Net cash provided by investing activities of $252.9 million for the same period in 2022 consisted primarily of proceeds from dispositions of real estate and proceeds from the partial repayment of the notes receivable from Aimco, which was repaid in the second and third quarters of 2022, offset partially by purchases of real estate and capital expenditures.
Capital additions totaled $128.4 million and $111.2 million during the nine months ended September 30, 2023 and 2022, respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.

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We categorize capital spending for communities in our portfolio broadly into five primary categories:
•capital replacements, expenditures that are necessary to help preserve the value of and maintain functionality at the communities;
•capital enhancements, which may include kitchen and bath remodeling, energy conservation projects, and investments in more durable, longer-lived materials designed to position assets for higher rental levels in their respective markets;
•initial capital expenditures, which represent capital additions contemplated in the underwriting at our recently acquired communities. These amounts are considered in the underwriting of the acquisition and are therefore included with the purchase price when determining expected returns;
•casualty, which represents capitalized costs incurred in connection with the restoration of an apartment community after a casualty event; and
•other, which represents capitalized costs in connection with tenant improvements, entitlement, and planning.
We exclude the amounts of capital spending related to apartment communities sold or classified as held for sale at the end of the period from the foregoing measures in order to view the spend for the continuing portfolio.
A summary of the capital spending for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying condensed consolidated statements of cash flows, are presented below (in thousands):
Nine Months Ended
September 30, 2023September 30, 2022
Capital Replacements$24,605 $19,965 
Capital Enhancements65,244 61,795 
Initial Capital Expenditures32,620 22,157 
Casualty5,036 3,649 
Other869 3,624 
Total capital additions$128,374 $111,190 
Plus: additions related to apartment communities sold and held for sale12,674 37,962 
Consolidated capital additions$141,048 $149,152 
Plus: net change in accrued capital spending(193)1,963 
Total capital expenditures per condensed consolidated statements of cash flows$140,855 $151,115 
For the nine months ended September 30, 2023 and 2022, we capitalized $1.0 million and $1.1 million of interest costs, respectively, and $12.7 million and $12.6 million of indirect costs, respectively.
Financing Activities
Net cash used in financing activities of $199.0 million for the nine months ended September 30, 2023 consisted primarily of net repayments on our revolving credit facility, the repayment of term loans, payment of dividends, and repurchases of Common Stock and OP Units, offset partially by net proceeds from non-recourse property debt. Net cash used in financing activities of $582.5 million for the nine months ended September 30, 2022 consisted primarily of repayments of non-recourse debt and term loans, payment of dividends and distributions, and repurchases of Common Stock and OP Units, offset partially by proceeds from the issuance of unsecured notes payable.
Future Capital Needs
We expect to fund any future acquisitions, debt maturities, and other capital spending principally with proceeds from apartment community sales (including the formation of joint ventures), secured and unsecured borrowings, the issuance of equity securities (including OP Units), and operating cash flows. 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 2023 and beyond.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our chief market risks are refunding risk, that is the availability of property debt, corporate debt, or other cash sources to refund maturing debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We use short-term debt financing and working capital primarily to fund short-term uses and generally expect to refinance such borrowings with cash from operating activities, proceeds from apartment community sales, long-term debt, or equity financings. Our objective in managing these risks is to reduce fluctuations in earnings and cash flows associated with changes in interest rate movements. We use derivative financial instruments, principally interest rate swaps and treasury rate locks, to reduce our exposure to interest rate risk. We do not hold or issue derivatives for speculative purposes and closely monitor the credit quality of the institutions with which we transact.
As of September 30, 2023, on a consolidated basis, we had $475.0 million of outstanding borrowings on our term loans, and $25.8 million of variable-rate borrowings under our revolving credit facility. After consideration of our interest rate swap derivatives, which reduce our total variable rate exposure by $350 million, we estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease interest expense by $1.5 million, net, on an annual basis.
As of September 30, 2023, we had $134.2 million of cash and cash equivalents and restricted cash, a portion of which bears interest at variable rates, which may partially mitigate the effect of an increase in variable rates on our variable-rate debt discussed above.
As of September 30, 2023, we had one undesignated forward starting interest rate swap with a notional value of $50.0 million that was entered into in anticipation of future debt. We estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease interest expense by $0.5 million, net, on an annual basis.
We estimate the fair value of debt instruments as described in Note 9 to the condensed consolidated financial statements in Item 1. The estimated fair value of total indebtedness, including our non-recourse property debt, term loans, revolving credit facility, and unsecured notes payable, was approximately $2.8 billion as of September 30, 2023.
ITEM 4. CONTROLS AND PROCEDURES
AIR
Disclosure Controls and Procedures
AIR’s management, with the participation of AIR’s chief executive officer and chief financial officer, has evaluated the effectiveness of AIR’s 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, AIR’s chief executive officer and chief financial officer have concluded that, as of the end of such period, AIR’s disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
There has been no change in AIR’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third quarter of 2023 that has materially affected, or is reasonably likely to materially affect, AIR’s internal control over financial reporting.
The AIR Operating Partnership
Disclosure Controls and Procedures
The AIR Operating Partnership’s management, with the participation of the chief executive officer and chief financial officer of AIR, who are the equivalent of the AIR Operating Partnership’s chief executive officer and chief financial officer, respectively, has evaluated the effectiveness of the AIR Operating Partnership’s 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, the chief executive officer and chief financial officer of AIR have concluded that, as of the end of such period, the AIR Operating Partnership’s disclosure controls and procedures are effective.

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Changes in Internal Control Over Financial Reporting
There has been no change in the AIR Operating Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third quarter of 2023 that has materially affected, or is reasonably likely to materially affect, the AIR Operating Partnership’s internal control over financial reporting.

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PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
As of the date of this report, there have been no material changes from the risk factors in AIR’s and the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
AIR
Unregistered Sales of Equity Securities
From time to time, we may issue shares of Common Stock in exchange for OP Units. Such shares are issued based on an exchange ratio of one share for each common OP Unit. We may also issue shares of Common Stock in exchange for limited partnership interests in consolidated real estate partnerships. During the three months ended September 30, 2023, we did not issue any shares of Common Stock in exchange for OP Units or limited partnership interests in consolidated real estate partnerships.
Repurchases of Equity Securities
AIR’s Board of Directors has authorized a share repurchase program of its outstanding capital stock for $500 million. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions. As of September 30, 2023, there was $105.5 million remaining available for future share repurchases under this authorization.
Fiscal periodTotal
Number of
Shares
Repurchased		Average
Price Paid
per Unit		Total Number of
Shares Repurchased as Part
of Publicly Announced
Plans or Programs		Maximum Dollar Value
of Shares that May Yet
Be Repurchased Under
Plans or Programs
(in thousands) (1)
July 1 – July 31, 2023— $— — $183,290 
August 1 – August 31, 20232,249,800 $34.57 2,249,800 $105,507 
September 1 – September 30, 2023— $— — $105,507 
   Total2,249,800 $34.57 2,249,800 
The AIR Operating Partnership
Unregistered Sales of Equity Securities
The AIR Operating Partnership did not issue nor repurchase any unregistered OP Units during the three months ended September 30, 2023.
Repurchases of Equity Securities
The AIR Operating Partnership’s Partnership Agreement generally provides that after holding common OP Units for one year, limited partners other than AIR have the right to redeem their common OP Units for cash or, at our election, shares of AIR Common Stock on a one-for-one basis (subject to customary antidilution adjustments). During the three months ended September 30, 2023, no common OP Units were redeemed in exchange for Common Stock.

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The following table summarizes the AIR Operating Partnership’s repurchases or redemptions of common OP Units in exchange for cash during the three months ended September 30, 2023:
Fiscal periodTotal
Number of
Units
Repurchased		Average
Price Paid
per Unit		Total Number of
Units Repurchased as Part
of Publicly Announced
Plans or Programs		Maximum Number
of Units that May Yet
Be Repurchased Under
Plans or Programs (1)
July 1 – July 31, 202312,505 $35.52 N/AN/A
August 1 – August 31, 202326,289 $34.99 N/AN/A
September 1 – September 30, 202311,926 $33.77 N/AN/A
   Total50,720 $34.83 
(1)The terms of the AIR Operating Partnership’s Partnership Agreement do not provide for a maximum number of OP Units that may be repurchased, and other than the express terms of its Partnership Agreement, the AIR Operating Partnership has no publicly announced plans or programs of repurchase.
Dividend and Distribution Payments
As a REIT, AIR is required to distribute annually to holders of its Common Stock at least 90% 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. Our credit agreement includes customary covenants, including a restriction on dividends and distributions and other restricted payments, but permits dividends and distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of AIR’s FFO for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain AIR’s REIT status.
ITEM 5. OTHER INFORMATION
None.

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ITEM 6. EXHIBITS
The following exhibits are filed with this report:
EXHIBIT NO.
DESCRIPTION
3.1
3.2
10.1
31.1
31.2
31.3
31.4
32.1
32.2
101
The following materials from AIR’s and the AIR Operating Partnership’s combined Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) condensed consolidated balance sheets; (ii) condensed consolidated statements of operations; (iii) condensed consolidated statements of comprehensive income; (iv) condensed consolidated statements of equity and partners’ capital; (v) condensed consolidated statements of cash flows; and (vi) notes to condensed consolidated financial statements.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
APARTMENT INCOME REIT CORP.
By:/s/ Molly H.N. Syke
Molly H.N. Syke
Vice President and Chief Accounting Officer
APARTMENT INCOME REIT, L.P.
By:AIR-GP, Inc., its General Partner
By:/s/ Molly H.N. Syke
Molly H.N. Syke
Vice President and Chief Accounting Officer
Date: November 3, 2023

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