<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------------------
COMMISSION FILE NUMBER 0-24497
---------------------
AIMCO PROPERTIES, L.P.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 84-1275621
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
2000 SOUTH COLORADO BOULEVARD
TOWER TWO, SUITE 2-1000
DENVER, COLORADO 80222-4348
(Address of principal executive offices) (Zip Code)
</TABLE>
(303) 757-8101
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last
report)
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. Yes [X] No [ ]
---------------------
The number of Partnership Common Units outstanding as of April 30, 2000:
73,483,671.
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AIMCO PROPERTIES, L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 (unaudited)
and December 31, 1999.....................................
Consolidated Statements of Income for the Three Months Ended
March 31, 2000 and 1999 (unaudited).......................
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2000 and 1999 (unaudited).................
Notes to Consolidated Financial Statements (unaudited)......
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................
Item 3. Quantitative and Qualitative Disclosures about Market
Risk......................................................
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds...................
Item 6. Exhibits and Reports on Form 8-K............................
Signatures..................................................
</TABLE>
2
<PAGE> 3
AIMCO PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate, net of accumulated depreciation of $487,975 and
$415,992.................................................. $4,507,911 $4,092,543
Property held for sale...................................... 4,376 4,162
Investments in unconsolidated real estate partnerships...... 813,971 890,318
Investments in unconsolidated subsidiaries.................. 49,247 44,921
Notes receivable from unconsolidated real estate
partnerships.............................................. 119,698 142,828
Notes receivable from unconsolidated subsidiaries........... 89,634 88,754
Cash and cash equivalents................................... 136,889 101,604
Restricted cash............................................. 92,803 84,595
Other assets................................................ 203,278 234,526
---------- ----------
Total assets...................................... $6,017,807 $5,684,251
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Secured notes payable....................................... $2,323,336 $1,954,259
Secured tax-exempt bond financing........................... 406,514 420,830
Unsecured short-term financing.............................. 277,200 209,200
---------- ----------
Total indebtedness................................ 3,007,050 2,584,289
Accounts payable, accrued and other liabilities............. 188,579 271,298
Resident security deposits and prepaid rents................ 26,797 22,793
---------- ----------
Total liabilities................................. 3,222,426 2,878,380
---------- ----------
Commitments and contingencies............................... -- --
Partnership-obligated mandatory redeemable convertible
preferred securities of a subsidiary trust................ 149,500 149,500
Minority interest........................................... 148,134 169,482
Partners' capital
Preferred Units........................................... 748,901 707,745
General Partner and Special Limited Partner............... 1,530,022 1,545,715
Limited Partners.......................................... 241,324 256,429
Less: Investment in AIMCO Preferred Stock................... (22,500) (23,000)
---------- ----------
Total partners' capital........................... 2,497,747 2,486,889
---------- ----------
Total liabilities and partners' capital........... $6,017,807 $5,684,251
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
RENTAL PROPERTY OPERATIONS:
Rental and other property revenues........................ $224,320 $110,552
Property operating expenses............................... (90,751) (42,436)
Depreciation.............................................. (64,690) (26,616)
Owned property management expense......................... (7,816) (3,395)
-------- --------
Income from property operations........................... 61,063 38,105
-------- --------
SERVICE COMPANY BUSINESS:
Management fees and other income.......................... 13,310 7,978
Management and other expenses............................. (4,957) (8,902)
-------- --------
Income (loss) from service company business............... 8,353 (924)
-------- --------
General and administrative expenses....................... (3,211) (2,594)
Interest expense.......................................... (56,224) (30,360)
Interest income........................................... 13,004 9,828
Equity in earnings of unconsolidated real estate
partnerships........................................... 2,445 2,695
Equity in earnings of unconsolidated subsidiaries......... 3,215 2,790
Loss from IPLP exchange and assumption.................... -- (684)
Minority interest......................................... (3,721) (2,065)
Amortization.............................................. (1,575) (1,942)
-------- --------
Income from operations.................................... 23,349 14,849
Gain on disposition of properties......................... 5,105 15
-------- --------
Net income................................................ 28,454 14,864
Net income attributable to preferred unit-holders......... 16,098 12,942
-------- --------
Net income attributable to common unit-holders............ $ 12,356 $ 1,922
======== ========
Basic earnings per common unit............................ $ 0.17 $ 0.03
======== ========
Diluted earnings per common unit.......................... $ 0.17 $ 0.03
======== ========
Dividends paid per common unit............................ $ 0.70 $ 0.6250
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
AIMCO PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
MARCH 31, MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................ $ 28,454 $ 14,864
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 67,720 32,885
Gain on disposition of properties...................... (5,105) (15)
Minority interest...................................... 3,721 2,065
Equity in earnings of unconsolidated real estate
partnerships.......................................... (2,445) (2,695)
Equity in earnings of unconsolidated subsidiaries...... (3,215) (2,790)
Losses from IPLP exchange and assumption............... -- 684
Changes in operating assets and operating
liabilities........................................... (19,574) 20,547
--------- ---------
Total adjustments................................. 41,102 50,681
--------- ---------
Net cash provided by operating activities......... 69,556 65,545
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate................................... (91) --
Additions to real estate.................................. (39,298) (19,465)
Proceeds from sale of property held for sale.............. 16,953 965
Additions to property held for sale....................... -- (146)
Cash from newly consolidated properties................... 14,179 --
Purchase of limited partnerships interests................ (102,814) (4,721)
Advances to unconsolidated partnerships................... -- (8,966)
Proceeds from repayment of notes receivable............... 8,684 6,444
Purchase of / additions to notes receivable............... (21,114) --
Cash received in connection with acquisitions............. -- 22,677
Cash paid for merger related costs........................ (4,679) (54,907)
Distributions from investments in unconsolidated real
estate partnerships, IPLP exchange and assumption, and
investment in AIMCO Preferred Stock.................... 19,476 32,452
--------- ---------
Net cash used in investing activities............. (108,704) (25,667)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from secured notes payable borrowings............ 82,762 175,963
Principal repayments on secured notes payable............. (38,082) (32,686)
Proceeds from secured tax-exempt bond financing........... -- 7,500
Principal repayments on secured tax-exempt bond
financing.............................................. (1,572) (1,172)
Net borrowings (paydowns) on revolving credit
facilities............................................. 68,000 (251,000)
Payment of loan costs, including proceed and costs from
interest rate hedge.................................... (3,603) (5,697)
Proceeds from issuance of common/preferred units, exercise
of options/warrants.................................... 35,720 114,907
Principal repayments received on notes due from common
unit purchases......................................... 3,526 2,230
Repurchase of common units................................ (2,515) --
Payment of distributions to General Partner and Special
Limited Partner........................................ (45,642) (35,141)
Payment of distributions to Limited Partners.............. (4,329) (8,857)
Payment of distributions to minority interest............. (7,512) (6,896)
Payment of preferred unit distributions................... (12,320) (13,300)
--------- ---------
Net cash provided by (used) in financing
activities...................................... 74,433 (54,149)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 35,285 (14,271)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 101,604 52,832
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 136,889 $ 38,561
========= =========
</TABLE>
Notes to consolidated financial statements.
5
<PAGE> 6
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1 -- ORGANIZATION
AIMCO Properties, L.P., a Delaware limited partnership (together with its
subsidiaries and other controlled entities, the "Partnership" (and together with
entities in which the Partnership has a controlling financial interest, the
"Company")), was formed on May 16, 1994 to conduct the business of acquiring,
developing, leasing, and managing multi-family apartment communities. The
Partnership's securities include Partnership Common Units ("Common OP Units"),
Partnership Preferred Units ("Preferred Units", together with Common OP Units,
the "OP Units"), and High Performance Units (see Note 9). Apartment and
Investment Management Company ("AIMCO") is the owner of the General Partner and
Special Limited Partner, as defined in the Third Amended and Restated Agreement
of Limited Partnership of AIMCO Properties, L.P. (the "Partnership Agreement"),
of the Partnership. The General Partner and Special Limited Partner hold Common
OP Units of the Partnership. In addition, AIMCO is the primary holder of all
Preferred Units outstanding in the Partnership. The Limited Partners of the
Partnership are individuals or entities that own Common OP Units other than
AIMCO. After holding the Common OP Units for one year, the Limited Partners have
the right to redeem their Common OP Units for cash, subject to the prior right
of the Partnership to elect to acquire some or all of the Common OP Units
tendered for redemption for cash or in exchange for shares of AIMCO Class A
Common Stock, on a one-for-one ratio.
The Partnership, through its operating divisions and subsidiaries, was
formed to hold and conduct substantially all of AIMCO's operations and manages
the daily operations of AIMCO's business and assets. All employees of the
Company are employees of the Partnership; AIMCO has no employees.
According to the terms of the Partnership Agreement, the capital structure
of the Partnership, in terms of the Common OP Units owned by the General
Partner, the Special Limited Partner and the Preferred Units outstanding, is
required to mirror the capital structure of AIMCO, with the only difference
being that the Partnership has additional Common OP Units and preferred units
outstanding which are owned by the Limited Partners and additional Preferred
units outstanding. Therefore, AIMCO is required to contribute to the Partnership
all proceeds from offerings of the AIMCO Class A Common Stock, preferred stock,
or any other equity offerings. In addition, substantially all of AIMCO's assets
must be owned through the Partnership; therefore, AIMCO is generally required to
contribute to the Partnership all assets acquired. In exchange for the
contribution of offering proceeds or assets, AIMCO receives additional interests
in the Partnership with similar terms (i.e., if AIMCO contributes proceeds of a
preferred stock offering, AIMCO receives Preferred Units).
AIMCO frequently consummates transactions for the benefit of the
Partnership. For legal, tax or other business reasons, AIMCO may hold title or
ownership of certain assets until they can be transferred to the Partnership.
However, the Partnership has a controlling financial interest in all of AIMCO's
assets in the process of transfer to the Partnership.
At March 31, 2000 the Partnership had 73,483,671 Common OP Units
outstanding and 27,181,000 Preferred Units outstanding.
As of March 31, 2000, the Company owned or managed 352,519 apartment units
in 1,834 properties located in 48 states, the District of Columbia and Puerto
Rico. Based on apartment unit data compiled by the National Multi-Housing
Council, we believe that, as of March 31, 2000, the Company was the largest
owner and manager of multi-family apartment properties in the United States. As
of March 31, 2000, the Company:
- owned or controlled 121,449 units in 439 apartment properties;
- held an equity interest in 115,951 units in 671 apartment properties; and
6
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AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
- managed 115,119 units in 724 apartment properties for third party owners
and affiliates of which 53,627 units have management agreements that are
cancelable in 30 days and 61,492 units with management agreements in
excess of one year.
NOTE 2 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month period
ended March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2000.
For further information, refer to the statements and notes thereto included
in the AIMCO Properties, L.P. annual report on Form 10-K for the year ended
December 31, 1999. Certain financial statement amounts have been reclassified to
conform to the 2000 presentation.
The accompanying consolidated financial statements include the accounts of
the Partnership and subsidiaries and limited partnerships in which the
Partnership has a financial controlling interest. Pursuant to a Management and
Contribution Agreement between the Partnership and AIMCO, the Partnership has
acquired, in exchange for interests in the Partnership, the economic benefits of
subsidiaries of AIMCO in which the Partnership does not have an interest, and
AIMCO has granted the Partnership a right of first refusal to acquire such
subsidiaries' assets for no additional consideration. Pursuant to the agreement,
AIMCO has also granted the partnership certain rights with respect to assets of
such subsidiaries. Interests held by limited partners in real estate
partnerships controlled by the Company and interests held by the shareholders of
Insignia Properties Trust (through February 26, 1999) are reflected as minority
interest. All significant intercompany balances and transactions have been
eliminated in consolidation. Minority interest in limited partnerships
represents the non-controlling partners' share of the underlying net assets of
the Company's controlled limited partnerships. With regard to such partnerships,
losses in excess of the bases of the minority interests ($3.4 million for first
quarter 2000) have been charged to operations and classified with real estate
structural depreciation expense by the Company. The assets of property owning
limited partnerships and limited liability companies owned or controlled by
AIMCO or the Partnership are generally not available to pay creditors of AIMCO
or the Partnership.
NOTE 3 -- ACQUISITIONS
During the three months ended March 31, 2000 the Company purchased:
- for $18 million limited partnership interests in 122 partnerships which
own 379 properties where the Company serves as general partner;
- one apartment community with details below:
<TABLE>
<CAPTION>
DATE ACQUIRED LOCATION NUMBER OF UNITS PURCHASE PRICE
- ------------- -------- --------------- --------------
<S> <C> <C> <C>
January 2000 Falls Church, VA 159 $12 million
</TABLE>
NOTE 4 -- INTEREST INCOME RECOGNITION FOR NOTES RECEIVABLE AND INVESTMENTS
As of March 31, 2000, the Company holds $52 million of par value notes,
plus accrued interest net of intercompany par value notes of $85 million
("general partner par value notes", for which management believes the
collectibility of such amounts is both probable and estimable. Interest income
for all general
7
<PAGE> 8
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
partner par value notes receivable, notes receivable from officers and others as
well as money market and interest bearing accounts is generally recognized as it
is earned. Interest income from such notes and investments for the three months
ended March 31, 2000 totaled approximately $6.8 million.
As of March 31, 2000, the Company held discounted notes with a carrying
value, including accrued interest, of $67 million which were made by
predecessors whose positions have been acquired by the Company at a discount and
are carried at the acquisition amount using the cost recovery method
("discounted notes"). The total face value plus accrued interest of these notes
was $141 million. In general, interest income from the discounted notes is not
recognized as it is accrued under the note instrument because the timing and
amounts of cash flows are not probable and estimable. Under the cost recovery
method, the discounted notes are carried at the acquisition amount, less
subsequent cash collections, until such time as collectibility is probable and
the timing and amounts are estimable. Based upon closed or pending transactions
(including sales activity), market conditions, and improved operations of the
obligor, among other things, certain notes and the related discounts have been
determined to be collectible. Accordingly, interest income that had previously
been deferred and portions of the related discounts were recognized as interest
income during the period. For the three months ended March 31, 2000, the Company
recognized deferred interest income and discounts of approximately $6 million
($0.08 per basic and $0.08 per diluted OP unit).
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
Legal
The Company is a party to various legal actions resulting from its
operating activities. These actions are routine litigation and administrative
proceedings arising in the ordinary course of business, some of which are
covered by liability insurance, and none of which are expected to have a
material adverse effect on the consolidated financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
Limited Partnerships
In connection with the Company's offers to purchase interests in limited
partnerships that own properties, the Company and its affiliates are sometimes
subject to legal actions, including allegations that such activities may involve
breaches of fiduciary duties to the limited partners of such partnerships or
violations of the relevant partnership agreements. The Company believes it
complies with its fiduciary obligations and relevant partnership agreements, and
does not expect such legal actions to have a material adverse effect on the
consolidated financial condition or results of operations of the Company and its
subsidiaries taken as a whole.
Pending Investigations of HUD Management Arrangements
In July 1999, NHP received a grand jury subpoena requesting documents
relating to NHP's management of HUD-assisted or HUD-insured multi-family
projects and NHP's operation of a group purchasing program created by NHP, known
as Buyers Access. The subpoena relates to the same subject matter as subpoenas
NHP received in October and December of 1997 from the HUD Inspector General. To
date, neither the HUD Inspector General nor the grand jury has initiated any
action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a
HUD property managed by NHP. AIMCO believes that NHP's operations and programs
are in compliance, in all material respects, with all laws, rules and
regulations relating to HUD-assisted or HUD-insured properties. AIMCO is
cooperating with the investigations and does not believe that the investigations
will result in a material adverse effect on the financial condition of the
Company. However, as with any similar investigation, there can be no assurance
that these will not result in material fines, penalties or other costs that may
impact the Company's future results of operations or cash flows in a particular
quarter.
8
<PAGE> 9
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Environmental
The Company is subject to various Federal, state and local laws that impose
liability on property owners or operators for the costs of removal or
remediation of certain hazardous substances present on a property. Such laws
often impose liability without regard to whether the owner or operator knew of,
or was responsible for, the release of the hazardous substances. The presence
of, or the failure to properly remediate, hazardous substances may adversely
affect occupancy at contaminated apartment communities and our ability to sell
or borrow against contaminated properties. In addition to the costs associated
with investigation and remediation actions brought by governmental agencies, the
presence of hazardous wastes on a property could result in personal injury or
similar claims by private plaintiffs. The Company is also subject to various
laws that impose liability for the cost of removal or remediation of hazardous
substances at the disposal or treatment facility. Anyone who arranges for the
disposal or treatment of hazardous or toxic substances is potentially liable
under such laws. These laws often impose liability whether or not the person
arranging for the disposal ever owned or operated the disposal facility. In
connection with the ownership, operation and management of our properties, the
Company could potentially be liable for environmental liabilities or costs
associated with properties or properties it acquires or manages in the future.
NOTE 6 -- PARTNERS' CAPITAL
OP Units
Op Units are redeemable by OP Unitholders (other than the General Partner
and Special Limited Partner) at their option, subject to certain restrictions,
on the basis of one OP Unit for either one share of AIMCO Class A Common Stock
or cash equal to the fair value of a share of AIMCO Class A Common Stock at the
time of redemption. The Company has the option to deliver shares of AIMCO Class
A Common Stock in exchange for all or any portion of the cash requested. When a
Limited Partner redeems an OP Unit for AIMCO Class A Common Stock, Limited
Partner's capital is reduced and Special Limited Partners' capital is increased.
OP Units held by AIMCO are not redeemable.
Tenders
During the three months ending March 31, 2000 the Company completed tender
offers for limited partnership interests resulting in the issuance of 7,712 OP
Units.
Preferred Units
All classes of Preferred Units are on equal parity and are senior to the OP
Units, except the Class E Preferred Units, which was junior to all other classes
of Preferred Units and senior to the OP Units. None of the classes of Preferred
Units have any voting rights, except the right to approve certain changes to the
Partnership Agreement that would adversely affect holders of such class of
units.
Holders of the Class B Cumulative Convertible Preferred Units (the "Class B
Preferred Units") are entitled to receive, when, as and if declared by the
General Partner, quarterly cash distributions per share equal to the greater of
$1.78125 or the cash distributions declared on the number of OP Units into which
one Class B Preferred Unit is convertible. Each share of Class B Preferred Unit
is convertible at the option of the holder, beginning August 1998, into 3.28407
OP Units, subject to certain anti-dilution adjustments.
Holders of Class J Cumulative Convertible Preferred Units (the "Class J
Preferred Units") were entitled to receive cash distributions at the rate of 7%
per annum for the $100 liquidation preference (equivalent to $7 per annum per
unit) for the period beginning November 6, 1998 and lasting until November 15,
1998, and 8% per annum of the liquidation preference (equivalent to $8 per annum
per unit) for the period beginning November 15, 1998 and lasting until November
15, 1999. On May 14, 1999, the Company notified the holders
9
<PAGE> 10
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of the Class J Preferred Units that the defined internal rate of return
threshold had been met, and the Company exercised its right to convert all of
the Class J Preferred Units into 2.5 million OP Units.
Holders of Class C, D, G and H Preferred Units are entitled to receive,
when, as and if declared by the General Partner, distributions at the following
rates per annum:
<TABLE>
<S> <C>
Class C Cumulative Preferred Units.......................... 9.000%
Class D Cumulative Preferred Units.......................... 8.750%
Class G Cumulative Preferred Units.......................... 9.375%
Class H Cumulative Preferred Units.......................... 9.500%
</TABLE>
Holders of Class K Convertible Cumulative Preferred Units (the "Class K
Preferred Units"), which were issued on February 18, 1999, are entitled to
receive cash distributions in an amount per share equal to the greater of (i)
$2.00 per year (equivalent to 8% of the liquidation preference), or (ii) the
cash distributions payable on the number of shares of AIMCO Class A Common Stock
into which a share of Class K Preferred Units is convertible.
Holders of Class L Convertible Cumulative Preferred Units (the "Class L
Preferred Units"), which were issued on May 28, 1999, are entitled to receive
cash distributions in an amount per share equal to the greater of (i) $2.025 per
year (equivalent to 8.1% of the liquidation preference), or (ii) the cash
distributions payable on the number of shares of AIMCO Class A Common Stock into
which a share of Class L Preferred Units is convertible. Beginning with the
third anniversary of the date of original issuance, the holder of Class L
Preferred Units will be entitled to receive an amount per share equal to the
greater of (i) $2.50 per year (equivalent to 10% of the liquidation preference),
or (ii) the cash distributions payable on the number of shares of AIMCO Class A
Common Stock into which a share of Class L Preferred Units is convertible.
In January 2000, AIMCO issued 1,200,000 shares of newly created Class M
Convertible Cumulative Preferred Stock, par value $.01 per share ("Class M
Preferred Stock"), in a direct placement. The proceeds of $30.0 million were
contributed by AIMCO to the Partnership in exchange for 1,200,000 Class M
Preferred Units and were used to repay certain indebtedness and for working
capital. For the period beginning January 13, 2000 through and including January
13, 2003, the holders of the Class M Preferred Units are entitled to receive,
when and as declared by the Board of Directors and AIMCO as General Partner,
annual cash distributions in an amount per unit equal to the greater of (i)
$2.125 per year (equivalent to 8.5% of the liquidation preference), or (ii) the
cash distributions payable on the number of units of Common OP Units into which
a unit of Class M Preferred Units is convertible. Beginning with the third
anniversary of the date of original issuance, the holders of Class M Preferred
Units will be entitled to receive an amount per unit equal to the greater of (i)
$2.3125 per year (equivalent to 9.25% of the liquidation preference), or (ii)
the cash distributions payable on the number of units of Common OP Units into
which a unit of Class M Preferred Units is convertible. The Class M Preferred
Units are senior to the Common OP Units as to distributions and liquidation.
Upon any liquidation, dissolution or winding up of the Company, before payments
or distributions by the Company are made to any holders of AIMCO Class A Common
Stock, the holders of the Class M Preferred Stock and the Class M Preferred
Units are entitled to receive a liquidation preference of $25 per share/unit,
plus accumulated, accrued and unpaid distributions.
On January 13, 2000 AIMCO completed a direct placement of 1,200,000 shares
of AIMCO Class M Convertible Cumulative Preferred Stock to an institutional
investor. The net proceeds of $30 million were contributed by AIMCO to the
Partnership in exchange for 1,200,000 OP Units and were used to repay
indebtedness and for working capital.
In addition to the Preferred Units described above, the Partnership has
issued Preferred Units to third parties as follows. In the three months ending
March 31, 2000, the Company completed tender offers for
10
<PAGE> 11
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
limited partnership interests resulting in the issuance of 11,000 Class Two
Preferred Units, and 206,000 Class Four Preferred OP Units.
In January 2000, the Company acquired Merrill House, a 159 unit apartment
community for approximately $12.2 million, including the issuance of 206,000
Preferred OP Units valued at $5.2 million.
In addition to the Preferred Units described above, the Partnership has
outstanding Preferred Units to third parties as follows:
<TABLE>
<CAPTION>
2000 1999
----- -----
<S> <C> <C>
Class One Partnership Preferred Units, redeemable to Class A
Common Stock in one year, holder to receive dividends at
8% ($8.00 per annum per unit)............................. 90 90
Class Two Partnership Preferred Units, redeemable to Class A
Common Stock in one year, holders to receive dividends at
8% ($2.00 per annum per unit)............................. 22 11
Class Three Partnership Preferred Units, redeemable to Class
A Common Stock in one year, holders to receive dividends
at 9.5% ($2.375 per annum per unit)....................... 1,683 1,682
Class Four Partnership Preferred Units, redeemable to Class
A Common Stock in two years, holders to receive dividends
at 8% ($2.00 per annum per unit).......................... 786 580
----- -----
2,581 2,363
===== =====
</TABLE>
NOTE 7 -- EARNINGS PER UNIT
The following table illustrates the calculation of basic and diluted
earnings per common unit for the three months ended March 31, 2000 and 1999 (in
thousands, except per common unit data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED:
---------------------
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
NUMERATOR:
Net income................................................ $ 28,454 $ 14,864
Preferred Unit dividends.................................. (16,098) (12,942)
-------- --------
Numerator for basic and diluted earnings per common
unit -- income attributable to common unit holders..... $ 12,356 $ 1,922
======== ========
DENOMINATOR:
Denominator for basic earnings per common unit -- weighted
average number of common units outstanding............. 72,306 64,923
Effect of dilutive securities:
Dilutive potential common units, options and warrants..... 368 1,226
-------- --------
Denominator for dilutive earnings per unit................ 72,674 66,149
======== ========
Basic earnings per common unit:
Operations............................................. $ 0.10 $ 0.03
Gain on disposition of properties...................... 0.07 --
-------- --------
Total............................................. $ 0.17 $ 0.03
======== ========
Diluted earnings per common unit:
Operations............................................. $ 0.10 $ 0.03
Gain on disposition of properties...................... 0.07 --
-------- --------
Total............................................. $ 0.17 $ 0.03
======== ========
</TABLE>
11
<PAGE> 12
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 -- INDUSTRY SEGMENTS
The Company owns and operates multi-family apartment communities throughout
the United States including Puerto Rico, which generate rental and other
property-related income through the leasing of apartment units. The Company
separately evaluates the performance of each of its apartment communities.
However, because the apartment communities have similar economic
characteristics, facilities, services and tenants, the apartment communities
have been aggregated into a single apartment communities segment. All segment
disclosures are included in or can be derived from the Company's consolidated
financial statements.
All revenues are from external customers and no revenues are generated from
transactions with other segments. There are no tenants who contributed 10% or
more of the Company's total revenues during the three months ended March 31,
2000 or March 31, 1999.
Although the Company operates in only one segment, there are different
components of the multi-family business for which management considers
disclosure to be useful. The following table presents the contribution
(separated between consolidated and unconsolidated activity) to the Company's
Free Cash Flow for the three months ended March 31, 2000, from the components of
the Company and a reconciliation of Free Cash Flow to Earnings Before Structural
Depreciation, to Net Income, and to Funds From Operations, and to Adjusted Funds
From Operations (in thousands, except equivalent units (ownership effected and
period weighted) and monthly rents):
12
<PAGE> 13
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CONSOLIDATED UNCONSOLIDATED TOTAL %
------------ -------------- -------- -----
<S> <C> <C> <C> <C>
REAL ESTATE
Conventional
Average monthly rent greater than $800 per unit (15,369
equivalent units)..................................... $ 25,460 $ 3,860 $ 29,320 19.1%
Average monthly rent $700 to $800 per unit (10,671
equivalent units)..................................... 10,232 2,705 12,937 8.4%
Average monthly rent $600 to $700 per unit (32,658
equivalent units)..................................... 26,716 5,025 31,741 20.7%
Average monthly rent $500 to $600 per unit (46,053
equivalent units)..................................... 33,806 4,982 38,788 25.3%
Average monthly rent less than $500 per unit (26,549
equivalent units)..................................... 13,907 1,999 15,906 10.4%
-------- ------- -------- -----
Subtotal conventional real estate contribution to
Free Cash Flow................................. 110,121 18,571 128,692 83.8%
Affordable (13,521 equivalent units)...................... 2,809 8,449 11,258 7.3%
College housing (average rent of $663 per month) (3.962
equivalent units)....................................... 3,256 340 3,596 2.3%
Other Properties.......................................... 440 665 1,105 0.7%
Resident services......................................... 1,407 159 1,566 1.0%
Minority interest......................................... (18,696) -- (18,696) (12.2)%
-------- ------- -------- -----
Total real estate contribution to Free Cash
Flow........................................... 99,337 28,184 127,521 83.1%
SERVICE BUSINESSES
Management contracts (property and asset management)
Controlled properties................................... 6,702 4,289 10,991 7.2%
Third party with terms in excess of one year............ -- 2,185 2,185 1.4%
Third party cancelable in 30 days....................... -- 257 257 0.2%
-------- ------- -------- -----
Subtotal management contracts contribution to
Free Cash Flow................................. 6,702 6,731 13,433 8.7%
Buyers Access............................................. -- 472 472 0.3%
Other service businesses.................................. 532 670 1,202 0.8%
-------- ------- -------- -----
Total service businesses contribution to Free
Cash Flow...................................... 7,234 7,873 15,107 9.8%
INTEREST INCOME
General partner loan interest............................. 3,815 -- 3,815 2.5%
Notes receivable from officers............................ 169 -- 169 0.1%
Other notes receivable.................................... 296 -- 296 0.2%
Money market and interest bearing accounts................ 2,532 -- 2,532 1.6%
-------- ------- -------- -----
Subtotal interest income......................... 6,812 -- 6,812 4.4%
Accretion of loan discount................................ 6,191 -- 6,191 4.0%
-------- ------- -------- -----
Total interest income contribution to Free Cash
Flow........................................... 13,003 -- 13,003 8.5%
FEE INCOME
Disposition Fees.......................................... 916 -- 916 0.6%
Refinancing Fees.......................................... 203 -- 203 0.1%
-------- ------- -------- -----
Total fee income contribution to Free Cash
Flow........................................... 1,119 -- 1,119 0.7%
-------- ------- -------- -----
General and Administrative Expense........................ (3,211) -- (3,211) (2.1)%
-------- ------- -------- -----
FREE CASH FLOW(1)......................................... $117,482 $36,057 $153,539 100.0%
======== ======= ======== =====
</TABLE>
13
<PAGE> 14
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
BASIC
----------------------------------------
CONSOLIDATED UNCONSOLIDATED TOTAL
------------ -------------- --------
<S> <C> <C> <C>
FREE CASH FLOW........................................... $117,482 $ 36,057 $153,539
COST OF SENIOR CAPITAL
Interest expense:
Secured debt
Long-term, fixed rate.......................... (40,968) (9,945) (50,913)
Long-term, variable rate....................... (176) (431) (607)
Short-term..................................... (10,850) (811) (11,661)
Lines of credit and other unsecured debt............... (5,778) (248) (6,026)
Interest expense on convertible debt................... (2,429) -- (2,429)
Interest capitalized................................... 1,994 1,165 3,159
Minority interest share of interest expense............ 7,940 -- 7,940
-------- -------- --------
Total interest expense after minority
interest..................................... (50,267) (10,270) (60,537)
Dividends on preferred equity securities................. (16,776) -- (16,776)
-------- -------- --------
Contribution before non-cash charges and ownership
adjustments....................................... 50,439 25,787 76,226
Non-structural depreciation, net of capital
replacements........................................... (851) (950) (1,801)
Amortization of intangible assets........................ (1,575) (508) (2,083)
Gain (loss) on sales of real estate...................... 5,105 -- 5,105
Deferred tax provision................................... -- (852) (852)
-------- -------- --------
Earnings Before Structural Depreciation
(EBSD)(1).................................... 53,118 23,477 76,595
Structural depreciation, net of minority interest........ (48,405) (15,834) (64,239)
-------- -------- --------
Net income(a).................................. 4,713 7,643 12,356
Gain (loss) on sales of real estate...................... (5,105) -- (5,105)
Non-structural depreciation, net of minority interest.... 8,572 3,128 11,700
Amortization of intangible assets........................ 1,575 508 2,083
Deferred tax provision................................... -- 852 852
Structural depreciation, net of minority interest........ 48,405 15,834 64,239
-------- -------- --------
Funds from Operations (FFO)(1)................. 58,160 27,965 86,125
Capital replacement reserve.............................. (7,721) (2,178) (9,899)
-------- -------- --------
Adjusted Funds From Operations (AFFO)(1)....... $ 50,439 $ 25,787 $ 76,226
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
COMMON EARNINGS
EARNINGS UNITS PER SHARE
-------- ------ ---------
<S> <C> <C> <C>
EBSD
Basic................................................. $76,595 72,307
Diluted............................................... 88,592 87,150
Net Income
Basic................................................. 12,356 72,307 $0.17
Diluted............................................... 12,356 72,675 $0.17
FFO
Basic................................................. 86,125 72,307
Diluted............................................... 98,122 87,150
AFFO
Basic................................................. 76,226 72,307
Diluted............................................... 88,223 87,150
</TABLE>
14
<PAGE> 15
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
- ---------------
(1) "Free Cash Flow", "Earnings Before Structural Depreciation", "Funds From
Operations", and "Adjusted Funds From Operations" are measurement standards
used by the Company's management. These should not be considered
alternatives to net income or net cash flow from operating activities, as
determined in accordance with GAAP, as an indication of the Company's
performance or as a measure of liquidity.
- Free Cash Flow ("FFO") is defined by the Company as net operating income
minus the capital spending required to maintain the related assets. It
measures profitability prior to the cost of capital.
- Earning Before Structural Depreciation ("EBSD") is defined by the Company
as Net Income, determined in accordance with GAAP, plus "structural
depreciation", i.e. depreciation of buildings and land improvements whose
useful lives exceed 20 years.
- Funds From Operations is defined by the Board Governors of the National
Association of Real Estate Investment Trusts ("NAREIT") as net income
(loss), computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains and losses from debt restructuring
and sales of property, plus real estate related depreciation and
amortization (excluding amortization of financing costs), and after
adjustments for unconsolidated partnerships and joint ventures. The
Company calculates FFO based on the NAREIT definition, as adjusted for
amortization and the non-cash deferred portion of the income tax
provision for unconsolidated subsidiaries and deducts the payment of
dividends on preferred stock. There can be no assurance that the
Company's basis for computing FFO is comparable with that of other real
estate investment trusts.
- Adjusted Funds From Operations ("AFFO") is defined by the Company as FFO
less a charge for Capital Replacements equal to $300 per apartment unit.
NOTE 9 -- HIGH PERFORMANCE UNITS
In January 1998, the Partnership sold an aggregate of 15,000 of its Class I
High Performance Partnership Units (the "High Performance Units") to a joint
venture comprised of twelve members of AIMCO's senior management and to three of
its independent directors for a total of $2.1 million in cash. The High
Performance Units have nominal value unless the Company's total return over the
three year period ending December 31, 2000, is at least 30% and exceeds the
industry average, as determined by a peer group index, by at least 15%. At the
conclusion of the three year period, if the Company's Total Return satisfies
these criteria, the holders of the High Performance Units will receive
distributions and allocations of income and loss from the Partnership in the
same amounts and at the same times as would holders of a number of Common OP
Units equal to the quotient obtained by dividing the (i) product of (a) 15% of
the amount by which the Company's cumulative Total Return over the three year
period exceeds the greater of 115% of a peer group index or 30% (such excess
being the "Excess Return"), multiplied by (b) the weighted average market value
of the Company's outstanding Class A common stock and Common OP Units, by (ii)
the market value of one share of Class A common stock at the end of the three
year period. The three year measurement period will be shortened in the event of
a change of control of the Company. Unlike Common OP Units, the High Performance
Units are not redeemable or convertible into Class A common stock unless a
change of control of the Company occurs. Because there is substantial
uncertainty that the High Performance Units will have more than nominal value
due to the required Total Return over the three year term, the Company has not
recorded any value to the High Performance Units in the consolidated financial
statements as of March 31, 2000. The Company includes any dilutive effect of the
High Performance Units in its AFFO earnings.
The Morgan Stanley REIT Index is being used as the peer group index for
purposes of the High Performance Units. The Morgan Stanley REIT Index is a
capitalization-weighted index (with dividends reinvested) of the most actively
traded real estate investment trusts. The Morgan Stanley REIT Index is comprised
of over 100 real estate investment trusts selected by Morgan Stanley & Co.
Incorporated. The
15
<PAGE> 16
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Board of Directors of the Company has selected this index because it believes
that it is the real estate investment trust index most widely reported and
accepted among institutional investors.
"Total return" means, for any security and for any period, the cumulative
total return for such security over such period, as measured by (i) the sum of
(a) the cumulative amount of dividends paid in respect of such security for such
period (assuming that all cash dividends are reinvested in such security as of
the payment date for such dividend based on the security price on the dividend
payment date), and (b) an amount equal to (x) the security price at the end of
such period, minus (y) the security price at the beginning of such period,
divided by (ii) the security price at the beginning of the measurement period;
provided, however, that if the foregoing calculation results in a negative
number, the "total return" shall be equal to zero. For purposes of calculating
the Total return of the AIMCO Class A Common Stock, the security price at the
end of the period will be based on an average of the volume-weighted average
daily trading price of the AIMCO Class A Common Stock for the 20 trading days
immediately preceding the end of the period.
The High Performance Units are not convertible into AIMCO Class A Common
Stock. However, in the event of a change of control of the Company, holders of
High Performance Units will have redemption rights similar to those of holders
of Common OP Units. Upon the occurrence of a change of control, any holder of
High Performance Units may, subject to certain restrictions, require the
Partnership to redeem all or a portion of the High Performance Units held by
such party in exchange for a cash payment per unit equal to the market value of
a share of AIMCO Class A Common Stock at the time of redemption. However, in the
event that any High Performance Units are tendered for redemption, the
Partnership's obligation to pay the redemption price is subject to the prior
right of the Company to acquire such High Performance Units in exchange for an
equal number of shares of AIMCO Class A Common Stock (subject to certain
adjustments).
If AIMCO's total return over the measurement period exceeds 115% of the
total return of the Morgan Stanley REIT Index and exceeds the minimum return
(30% over three years), then the holders of High Performance Units could be
entitled to a significant percentage of future distributions made by the
Partnership. This could have a dilutive effect on future earnings per unit, and
on the equity ownership of partners in the Partnership after the three year
measurement period.
The following table illustrates the value of the 15,000 High Performance
Units on the three year measurement period, assuming a range of different prices
for the AIMCO Class A Common Stock at the end of the measurement period. For the
period from January 1, 1998 to March 31, 2000, the cumulative total return of
the Morgan Stanley REIT Index was (18.58)% and the cumulative total return of
the AIMCO Class A Common Stock was 19.93%. As a result, for purposes of the
illustration, we have assumed that the cumulative total return of the AIMCO
Class A Common Stock will exceed 115% of the cumulative total return of the peer
group index. This implies that the High Performance Units will only have value
if the cumulative total return on the AIMCO Class A Common Stock from January 1,
1998 to January 1, 2001 exceeds 30%. We have also assumed, for purposes of the
illustration, that the weighted average market value of outstanding equity
(AIMCO Class A Common Stock and Common OP Units) during the measurement period
is $2,377,769,040, which was the amount as of March 31, 2000.
16
<PAGE> 17
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Please note that the table below is for illustrative purposes only and
there can be no assurance that actual outcomes will be within the ranges used.
Some of the factors that could affect the results set forth in the table are the
total return of the AIMCO Class A Common Stock relative to the total return of
the Morgan Stanley REIT Index, and the market value of the average outstanding
equity of the Company during the measurement period. These factors may be
affected by general economic conditions, local real estate conditions and the
dividend policy of the Company.
<TABLE>
<CAPTION>
CASH
VALUE OF OP UNIT PROCEEDS TO
AVERAGE EXCESS HIGH DILUTION AS A COMPANY
MARKET SHAREHOLDER PERFORMANCE OP UNIT % OF TOTAL FROM INITIAL
STOCK AIMCO MINIMUM EXCESS CAPITALIZATION VALUE ADDED UNITS DILUTION DILUTED UNITS INVESTMENT
PRICE TOTAL RETURN RETURN (THOUSANDS) (THOUSANDS) (THOUSANDS) (THOUSANDS) OUTSTANDING (THOUSANDS)
(12/31/00) RETURN (1) (2) (3) (4) (5) (6) (7) (8)
- ---------- ------ ------- ------ -------------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$38.00 26.04% 30.00% 0.00% $2,377,769 $ -- $ 6 -- 0.00% 2,064
38.50 27.65 30.00 0.00 2,377,769 -- 6 -- 0.00 2,064
39.00 29.26 30.00 0.00 2,377,769 -- 6 -- 0.00 2,064
39.41 30.58 30.00 0.58 2,377,769 13,791 2,070 52 0.06 2,064
39.50 30.87 30.00 0.87 2,377,769 20,687 3,103 79 0.09 2,064
40.00 32.48 30.00 2.48 2,377,769 58,969 8,845 221 0.25 2,064
41.00 35.69 30.00 5.69 2,377,769 135,295 20,294 495 0.57 2,064
42.00 38.90 30.00 8.90 2,377,769 211,621 31,743 756 0.87 2,064
43.00 42.11 30.00 12.11 2,377,769 287,948 43,192 1,004 1.15 2,064
44.00 45.32 30.00 15.32 2,377,769 364,274 54,641 1,242 1.42 2,064
45.00 48.53 30.00 18.53 2,377,769 440,601 66,090 1,469 1.69 2,064
46.00 51.74 30.00 21.74 2,377,769 516,927 77,539 1,686 1.93 2,064
47.00 54.94 30.00 24.94 2,377,769 593,016 88,952 1,893 2.17 2,064
48.00 58.15 30.00 28.15 2,377,769 669,342 100,401 2,092 2.40 2,064
</TABLE>
- ---------------
(1) Assumes that the AIMCO total return will exceed that of the peer group by at
least 15%.
(2) "Excess Return" is the amount, if any, by which the total return of the
AIMCO Class A Common Stock over the measurement period exceeds the minimum
return.
(3) Assumes the market value of outstanding equity (AIMCO Class A Common Stock
and Common OP Units) at March 31, 2000 throughout the measurement period.
(4) "Excess Shareholder Value Added" is calculated by multiplying the Excess
Return by the average market capitalization.
(5) The "Value of High Performance Units" is calculated by multiplying the
Excess Shareholder Value Added by 15%. If "Excess Shareholder Return" is 0,
the "Value of High Performance Units" is calculated by multiplying the stock
price by 150 OP Units. The initial investment of $2,070,000 will continue to
be treated as contributed equity on the balance sheet of the Partnership.
(6) The "OP Unit Dilution" is calculated by dividing the Value of High
Performance Units by the stock price at the end of the period.
(7) "OP Unit Dilution as a % of total diluted units outstanding" is calculated
by dividing the OP Unit Dilution by the total weighted-average diluted units
outstanding as of March 31, 2000.
(8) If "Excess Shareholder Return" is 0, the "Cash Proceeds To Company From
Initial Investment" is calculated by subtracting the "Value of High
Performance Units" from $2,070,000, which is the purchase price of 15,000
High Performance Units.
17
<PAGE> 18
AIMCO PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THE FOLLOWING TABLE SUMMARIZES THE STATUS OF THE HIGH PERFORMANCE UNITS AS
OF DECEMBER 31, 1999 AND MARCH 31, 2000:
<TABLE>
<CAPTION>
AVERAGE EXCESS VALUE OF HIGH
AIMCO TOTAL MORGAN STANLEY MINIMUM EXCESS MARKET SHAREHOLDER PERFORMANCE
AS OF RETURN REIT INDEX RETURN RETURN CAPITALIZATION VALUE ADDED(1) UNITS(2)
----- ----------- -------------- ------- ------ -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1999............. 22.71% (20.69)% 19.11% 3.60% 2,327,728,992 83,798,244 12,569,737
March 31, 2000................ 19.93% (18.58)% 21.75% 0.00% 2,377,770,912 -- --
<CAPTION>
OP UNIT
AS OF DILUTION
----- --------
<S> <C>
December 31, 1999............. 340,096(3)
March 31, 2000................ --
</TABLE>
- ---------------
(1) Return exceeded multiplied by average market capitalization
(2) Excess Shareholder Value added multiplied by 15%
(3) OP Unit calculation based on trailing 20-day average stock price of $36.96
NOTE 10 -- PORTFOLIOS HELD FOR SALE
The Company is currently marketing for sale certain real estate properties.
Approximately 5,811 units with an approximate carrying value of $133 million are
included with real estate in the consolidated financial statements and
approximately 23,379 units with an approximate carrying value of $117 million
are included with investments in unconsolidated real estate partnerships and
notes receivable from unconsolidated real estate partnerships in the
consolidated financial statements. The Company does not expect to incur any
material losses with respect to the sales of the properties.
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
As of March 31, 2000, the Company owned or managed 352,519 apartment units,
comprised of 121,449 units in 439 apartment communities owned or controlled by
the Company (the "Owned Properties"), 115,951 units in 671 apartment communities
in which the Company has an equity interest (the "Equity Properties") and
115,119 units in 724 apartment communities which the Company manages for third
parties and affiliates (the "Managed Properties" and together with the Owned
Properties and the Equity Properties, the "AIMCO Properties"). The apartment
communities are located in 48 states, the District of Columbia and Puerto Rico.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements in certain circumstances. Certain
information included in this Report contains or may contain information that is
forward looking, including, without limitation, statements regarding the effect
of acquisitions, the company's future financial performance and the effect of
government regulations. Actual results may differ materially from those
described in the forward looking statements and will be affected by a variety of
risks and factors including, without limitation, national and local economic
conditions, the general level of interest rates, terms of governmental
regulations that affect the company and interpretations of those regulations,
the competitive environment in which the company operates, financing risks,
including the risk that the company's cash flows from operations may be
insufficient to meet required payments of principal and interest, real estate
risks, including variations of real estate values and the general economic
climate in local markets and competition for tenants in such markets,
acquisition and development risks, including failure of such acquisitions to
perform in accordance with projections, and possible environmental liabilities,
including costs which may be incurred due to necessary remediation of
contamination of properties presently owned or previously owned by the Company.
In addition, the Company's current and continuing qualification as a real estate
investment trust involves the application of highly technical and complex
provisions of the Internal Revenue Code and depends on its ability to meet the
various requirements imposed by the Internal Revenue Code, through actual
operating results, distribution levels and diversity of stock ownership. Readers
should carefully review the Company's financial statements and the notes
thereto, as well as the risk factors described in documents the Company files
from time to time with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 2000 to the Three Months Ended
March 31, 1999
NET INCOME
The Company recognized net income of $28.5 million for the three months
ended March 31, 2000, compared to $14.9 million for the three months ended March
31, 1999. The increase in net income of $13.6 million, or 91.3%, was primarily
the result of: an increase in net "same store" property results; the acquisition
of 28 properties during 1999; the completion of the merger of Insignia
Properties Trust into AIMCO; the purchase of $271 million in limited partnership
interests from unaffiliated third parties in 1999; and an increase in interest
income on notes receivable from unconsolidated real estate partnerships in 2000.
The effect of the above on net income was partially offset by the sale of eight
properties during 1999 and thirteen properties in 2000. These factors are
discussed in more detail in the following paragraphs.
CONSOLIDATED RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the consolidated Owned Properties
totaled $224.3 million for the three months ended March 31, 2000, compared to
$110.6 million for the three months ended March 31, 1999, an increase of $113.7
million, or 102.8%. The increase in rental and other property revenues was
primarily due to: an increase in "same store" sales revenue of 3%; the purchase
of 28 properties; the acquisition of controlling interests in partnerships
owning 183 properties; and the subsequent consolidation of the purchased and
newly controlled entities; and the sale of 13 properties.
19
<PAGE> 20
Property operating expenses for the consolidated Owned Properties,
consisting of on-site payroll costs, utilities (net of reimbursements received
from tenants), contract services, turnover costs, repairs and maintenance,
advertising and marketing, property taxes and insurance, totaled $90.8 million
for the three months ended March 31, 2000, compared to $42.4 million for the
three months ended March 31, 1999, an increase of $48.4 million or 114.2%. The
increase in property operating expenses was primarily due to: an increase in
"same store" expenses of 1%; the purchase of 28 properties; the acquisition of
controlling interests in partnerships owning 183 properties; the subsequent
consolidation of the purchased and newly controlled entities; and the sale of 13
properties.
SERVICE COMPANY BUSINESS
The Company's share of income from the service company business was $8.4
million for the three months ended March 31, 2000, compared to $(0.9) million
for the three months ended March 31, 1999. The increase in service company
business income of $9.3 million was primarily due to a change in the allocation
of management contract expense between the consolidated service company and the
unconsolidated subsidiaries. The allocation of such expense will remain constant
on a year to year comparison, and the core business operations remained
unchanged between the periods.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased from $2.6 million for the
three months ended March 31, 1999 to $3.2 million for the three months ended
March 31, 2000, a 23.1% increase. The increase of $0.6 million is primarily due
to the growth of the Company, as well as increased levels of personnel in the
accounting and finance departments.
INTEREST EXPENSE
Interest expense, which includes the amortization of deferred financing
costs, totaled $59.1 million for the three months ended March 31, 2000, compared
to $30.4 million for the three months ended March 31, 1999, an increase of $28.7
million, or 94.4%. The increase was primarily due to the Company acquiring
controlling interests in partnerships owning 183 properties and the subsequent
consolidation of these properties. The Company had also drawn $277 million on
its credit facility with Bank of America as of March 31, 2000 compared to $124
million at March 31, 1999, which incurred interest at a weighted average
interest rate of 8.55% and 7.67%, during the respective three month periods then
ended.
INTEREST INCOME
Interest income totaled $15.9 million for the three months ended March 31,
2000, compared to $9.8 million for the three months ended March 31, 1999. The
increase of $6.1 million or 62.2% is primarily due to the recognition of
interest income on discounted notes.
FUNDS FROM OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Net Income.................................................. $28,454 $ 14,864
Gain on disposition of properties........................... (5,105) (15)
Real estate depreciation, net of minority interest.......... 56,976 25,095
Real estate depreciation related to unconsolidated
entities.................................................. 18,960 21,105
Amortization of goodwill.................................... 1,760 2,602
Amortization of recoverable amount of management
contracts................................................. 323 10,397
Deferred taxes.............................................. 852 2,456
Preferred OP Unit distributions............................. (4,101) (11,205)
------- --------
Funds From Operations (FFO)................................. $98,120 $ 65,299
======= ========
</TABLE>
20
<PAGE> 21
Funds From Operations increased from $66 million for the three months ended
March 31, 1999 to $98 million for the three months ended March 31, 2000
primarily due to: an increase of 5% in "same store" property operations; the
acquisition and subsequent consolidation of newly controlled entities and
controlling interests in partnerships owning 183 properties; the purchase of 28
properties and resultant sale of 13 properties.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2000 and 1999, net cash flows were as
follows (dollars in thousands):
<TABLE>
<CAPTION>
2000 1999
--------- --------
<S> <C> <C>
Cash flow provided by operating activities.................. $ 69,556 $ 65,545
Cash flow (used in) investing activities.................... (108,704) (25,667)
Cash flow provided by financing activities.................. 74,433 (54,149)
</TABLE>
During the three months ended March 31, 2000, the Company closed $119
million of long-term fixed-rate, fully amortizing notes payable with a weighted
average interest rate of 8.3%. Each of the notes is individually secured by one
of twelve properties with no cross-collateralization. The Company used the net
proceeds totaling $117.5 million after transaction costs to repay existing debt.
During the three months ended March 31, 2000, the Company also assumed a $7
million long-term fixed rate, fully amortizing note payable with an interest
rate of 8.37% in connection with the acquisition of one property. The note is
secured by the acquired property.
In August 1999, the Company closed a $300 million revolving credit facility
arranged by Bank of America, N.A. BankBoston, N.A. and First Union National Bank
with a syndicate comprised of a total of nine lender participants. Effective
March 15, 2000 the credit facility was expanded by $45 million with the
potential to expand it by another $55 million to a total of $400 million. On
April 14, 2000, the credit facility was expanded by $5 million to $350 million.
The obligations under the credit facility are secured by certain non-real estate
assets of the Company. The credit facility including the $50 million expansion
is available for general corporate purposes and has a two-year term with two
one-year extensions. The annual interest rate under the credit facility is based
on either LIBOR or a base rate which is the higher of Bank of America's
reference rate or 0.5% over the federal funds rate, plus, in either case, an
applicable margin. The margin ranges between 2.05% and 2.55%, in the case of
LIBOR-based loans, and between 0.55% and 1.05%, in the case of base rate loans,
based upon a fixed charge coverage ratio. The weighted average interest rate at
March 31, 2000 and 1999 was 8.55% and 7.67% respectively. The amount available
under the credit facility at March 31, 2000 and 1999 was $72.8 million and $75.7
million respectively.
The Company expects to meets its short-term liquidity requirements
including property acquisitions, tender offers and refinancing of short-term
debt with long-term, fixed rate, fully amortizing debt, secured or unsecured
short-term debt, the issuance of debt or equity securities in public offerings
or private placements, and cash generated from operations.
On January 11, 2000, AIMCO completed a direct placement of 681,818 shares
of Class A common stock into which 1,200,000 shares of Class M Convertible
Cumulative Preferred Stock are convertible to AEW Targeted Securities Fund II,
L.P. and simultaneously contributed the proceeds to the Partnership. The net
proceeds of approximately $30 million was used to repay indebtedness and for
working capital.
At March 31, 2000 the Company had $137 million in cash and cash
equivalents. In addition, the Company had $93 million of restricted cash,
primarily consisting of reserves and impounds held by lenders for capital
expenditures, property taxes and insurance. The Company's principal demands for
liquidity include normal operating activities, payments of principal and
interest on outstanding debt, capital improvements, acquisitions of or
investments in properties, dividends paid to its stockholders and distributions
paid to minority limited partners in the AIMCO operating partnership. The
Company considers its cash provided by operating activities, and funds available
under its credit facilities, to be adequate to meet short-term liquidity
21
<PAGE> 22
demands. The Company utilizes its revolving credit facility for general
corporate purposes and to fund investments on an interim basis.
From time to time, the Company has offered to acquire and, in the future,
may offer to acquire the interests held by third party investors in certain
limited partnerships for which the Company acts as general partner. Any such
acquisitions will require funds to pay the cash purchase price for such
interest. During the three months ended March 31, 2000, the Company made
separate offers to the limited partners of 122 partnerships to acquire their
limited partnership interests. The Company purchased approximately $18 million
(including transaction costs) of limited partnership interests.
RETURN ON ASSETS AND RETURN ON EQUITY
The Company's Return On Assets and Return On Equity for the three months
ended March 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED:
-------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Return on Assets(a)...................................... 10.2% 9.5%
Return on Equity
Basic(b)............................................... 14.4% 14.1%
Diluted(c)............................................. 13.0% 11.6%
</TABLE>
- ---------------
(a) The Company defines Return on Assets as (i) Free Cash Flow divided by (ii)
Average Assets. Assets are total assets, plus accumulated depreciation,
less accumulated Capital Replacements ($68,189), and less all current
liabilities. "Average Assets" are computed by averaging the sum of Assets
at the beginning and the end of the period.
(b) The Company defines Return on Equity-Basic as (i) AFFO-Basic; divided by
(ii) Average Equity. "Equity" is total stockholders' equity, plus
accumulated depreciation, less accumulated Capital Replacements ($68,189),
less preferred stock, and plus minority interest in Operating Partnership,
net of preferred OP unit interests ($103,759). "Average Equity" is computed
by averaging the sum of Equity at the beginning and the end of the period.
(c) The Company defines Return on Equity-Diluted assuming conversion of debt
and preferred securities whose conversion is dilutive.
The increase in Return On Assets from the 1999 period to the 2000 period is
the result of higher returns on acquired properties, as well as the additional
properties consolidated in the fourth quarter of 1999 and the first quarter of
2000.
The increase in Return On Equity from the 1999 period to the 2000 period is
primarily due to increased Return on Assets.
The Company's Return On Assets and Return On Equity for the three months
ended March 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
BASED ON BASED ON
AFFO FFO
------------- -------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
------------- -------------
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
Return on Assets(a)........................................ 10.2% 9.5% 10.7% 10.1%
Return on Equity
Basic(b)................................................. 14.4% 12.5% 15.8% 14.8%
Diluted(c)............................................... 13.0% 10.4% 14.1% 12.2%
</TABLE>
22
<PAGE> 23
- ---------------
(a) The Company defines Return on Assets (AFFO) as (i) Free Cash Flow divided
by (ii) Average Assets. Average assets are total assets, plus accumulated
depreciation, less accumulated Capital Replacements ($68,189), and less all
current liabilities. "Average Assets" are computed by averaging the sum of
Assets at the beginning and the end of the period. The Company defines
Return on Assets (FFO) as (i) Free Cash Flow plus Capital Replacements;
divided by (ii) Average Assets plus accumulated Capital Replacements.
(b) The Company defines Return on Equity-Basic (AFFO) as (i) AFFO-Basic;
divided by (ii) Average Equity. "Equity" is total partners' capital, plus
accumulated depreciation, less accumulated Capital Replacements ($68,189),
and less preferred units. "Average Equity" is computed by averaging the sum
of Equity at the beginning and the end of the period. The Company defines
Return on Equity-Basic (FFO) as (i) AFFO-Basic plus Capital Replacements;
divided by (ii) Average Equity plus accumulated Capital Replacements.
(c) The Company defines Return on Equity-Diluted (AFFO) and Return on
Equity-Diluted (FFO) assuming conversion of debt and preferred securities
whose conversion is dilutive.
The increase in Return On Assets (AFFO) and (FFO) from the 1999 period to
the 2000 period is the result of higher returns on acquired properties, as well
as the additional properties consolidated in the fourth quarter of 1999 and the
first quarter of 2000.
The increase in Return On Equity-Basic (AFFO) and (FFO) and Return On
Equity -- Diluted (AFFO) and (FFO) from the 1999 period to the 2000 period is
primarily due to somewhat increased financial leverage from debt and preferred
equity securities.
LITIGATION
The Company is a party to various legal actions resulting from its
operating activities. These actions are routine litigation and administrative
proceedings arising in the ordinary course of business, some of which are
covered by liability insurance, and none of which are expected to have a
material adverse effect on the consolidated financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
In connection with the Company's offers to purchase interests in limited
partnerships that own properties, the Company and its affiliates are sometimes
subject to legal actions, including allegations that such activities may involve
breaches of fiduciary duties to the limited partners of such partnerships or
violations of the relevant partnership agreements. The Company believes it
complies with its fiduciary obligations and relevant partnership agreements, and
does not expect such legal actions to have a material adverse effect on the
consolidated financial condition or results of operations of the Company and its
subsidiaries taken as a whole.
CONTINGENCIES
Pending Investigations of HUD Management Arrangements
In July 1999, NHP received a grand jury subpoena requesting documents
relating to NHP's management of HUD-assisted or HUD-insured multi-family
projects and NHP's operation of a group purchasing program created by NHP, known
as Buyers Access. The subpoena relates to the same subject matter as subpoenas
NHP received in October and December of 1997 from the HUD Inspector General. To
date, neither the HUD Inspector General nor the grand jury has initiated any
action against NHP or AIMCO or, to NHP's or AIMCO's knowledge, any owner of a
HUD property managed by NHP. AIMCO believes that NHP's operation and program are
in compliance, in all material respects, with all laws, rules and regulations
relating to HUD-assisted or HUD-insured properties. AIMCO is cooperating with
the investigation and does not believe that the investigations will result in a
material adverse impact on its operations. However, as with any similar
investigation, there can be no assurance that these will not result in material
fines, penalties or other costs.
23
<PAGE> 24
Environmental
Various Federal, state and local laws subject property owners or operators
to liability for the costs of removal or remediation of certain hazardous
substances present on a property. Such laws often impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
release of the hazardous substances. The presence of, or the failure to properly
remediate, hazardous substances may adversely affect occupancy at contaminated
apartment communities and our ability to sell or borrow against contaminated
properties. In addition to the costs associated with investigation and
remediation actions brought by governmental agencies, the presence of hazardous
wastes on a property could result in personal injury or similar claims by
private plaintiffs. Various laws also impose liability for the cost of removal
or remediation of hazardous substances at the disposal or treatment facility.
Anyone who arranges for the disposal or treatment of hazardous or toxic
substances is potentially liable under such laws. These laws often impose
liability whether or not the person arranging for the disposal ever owned or
operated the disposal facility. In connection with the ownership, operation and
management of our properties, we could potentially be liable for environmental
liabilities or costs associated with our properties or properties we may acquire
or manage in the future.
YEAR 2000 DISCLOSURE
The Year 2000 (Y2K) issue is the result of computer programs being written
using two digits rather than four digits to define the applicable year. Any of
the Company's computer programs or hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
The Company has funded Y2K compliance efforts from cash flow from
operations and has not incurred any significant costs to date related to Y2K
issues. To date, there has been no material negative impact on the Company's
results of operations or financial condition as a result of the Y2K issue or its
Y2K compliance efforts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure relates to changes in interest
rates. The Company is not subject to any foreign currency exchange rate risk or
commodity price risk, or any other material market rate or price risks. The
Company uses predominantly long-term, fixed-rate and self-amortizing
non-recourse debt in order to avoid the refunding or repricing risks of
short-term borrowings. The Company uses short-term debt financing and working
capital primarily to fund acquisitions and generally expects to refinance such
borrowings with proceeds from equity offerings or long term debt financings.
The Company had $366 million of variable rate debt outstanding at March 31,
2000, which represents 12.2% of the Company's total outstanding debt. Based on
this level of debt, an increase in interest rates of 1% would result in the
Company's income and cash flows being reduced by $3.7 million on an annual
basis.
The estimated aggregate fair value of the Company's cash and cash
equivalents, receivables, payables and short-term secured and unsecured debt as
of March 31, 2000 is assumed to approximate their carrying value due to their
relatively short terms. Management further believes that, after consideration of
interest rate agreements, the fair market value of the Company's secured
tax-exempt bond debt and secured long-term debt approximates their carrying
value, based on market comparisons to similar types of debt instruments having
similar maturities.
24
<PAGE> 25
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
From time to time during the quarter, AIMCO issued shares of Class A Common
Stock in exchange for Common OP Units tendered to the Partnership for redemption
in accordance with the terms and provisions of the agreement of limited
partnership of the Partnership. Such shares are issued based on an exchange
ratio of one share for each Common OP Unit. The shares are issued in exchange
for Common OP Units in private transactions exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section
4(2) thereof. During the three months ended March 31, 2000, 133,732 shares of
Class A Common Stock were issued in exchange for Common OP Units.
As disclosed on AIMCO's current report on Form 8-K, dated January 13, 2000,
on January 13, 2000, AIMCO sold 1,200,000 shares of Class M Convertible
Cumulative Preferred Stock to an institutional investor for $30 million and
simultaneously contributed to proceeds to the operating partnership. The shares
were issued in a private transaction exempt from registration under the
Securities Act pursuant to Section 4(2) thereof.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed with this report(1):
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.1 -- Eleventh Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of January 13, 2000 (Exhibit 10.12 to
AIMCO's Annual Report on Form 10-K for the fiscal year
1999, is incorporated herein by this reference)
10.2 -- Twelfth Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of April , 2000 (Exhibit 10.2 to AIMCO's
Quarterly Report on Form 10-Q for the quarterly period
ending March 31, 2000, is incorporated herein by this
reference)
10.3 -- Amended and Restated Credit Agreement, dated as of March
15, 2000, among AIMCO Properties, L.P., the lenders
listed therein, Bank of America, N.A., Fleet National
Bank (as successor in interest to BankBoston, N.A.), and
First Union National Bank (Exhibit 10.20 to AIMCO
Properties, L.P.'s Annual Report on Form 10-K for the
fiscal year 1999, is incorporated herein by this
reference)
10.4 -- First Amendment to $345,000,000 Amended and Restated
Credit Agreement, dated as of April 14, 2000, among AIMCO
Properties, L.P., Bank of America, N.A. and U.S. Bank
National Association (Exhibit 10.4 to AIMCO's Quarterly
Report on Form 10-Q for the quarterly period ending March
31, 2000, is incorporated herein by this reference)
27.1 -- Financial Data Schedule
99.1 -- Agreement re: disclosure of long-term debt instruments
</TABLE>
- ---------------
(1) Schedule and supplemental materials to the exhibits have been omitted but
will be provided to the Securities and Exchange Commission upon request.
(b) Reports on Form 8-K for the quarter ended March 31, 2000:
During the quarter for which this report is filed, the Partnership filed
its Current Report on Form 8-K, dated December 15, 1999, relating to its
acquisition of certain residential communities and related interests from
Dreyfuss Brothers, Inc.
25
<PAGE> 26
AIMCO PROPERTIES, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIMCO Properties, L.P.
By: AIMCO-GP, Inc. its General
Partner
By: /s/ PAUL J. MCAULIFFE
----------------------------------
Paul J. McAuliffe
Executive Vice President,
Chief Financial Officer
(duly authorized officer and
principal financial officer)
Date: May 15, 2000
26
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.1 -- Eleventh Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of January 13, 2000 (Exhibit 10.12 to
AIMCO's Annual Report on Form 10-K for the fiscal year
1999, is incorporated herein by this reference)
10.2 -- Twelfth Amendment to the Third Amended and Restated
Agreement of Limited Partnership of AIMCO Properties,
L.P., dated as of April , 2000 (Exhibit 10.2 to AIMCO's
Quarterly Report on Form 10-Q for the quarterly period
ending March 31, 2000, is incorporated herein by this
reference)
10.3 -- Amended and Restated Credit Agreement, dated as of March
15, 2000, among AIMCO Properties, L.P., the lenders
listed therein, Bank of America, N.A., Fleet National
Bank (as successor in interest to BankBoston, N.A.), and
First Union National Bank (Exhibit 10.20 to AIMCO
Properties, L.P.'s Annual Report on Form 10-K for the
fiscal year 1999, is incorporated herein by this
reference)
10.4 -- First Amendment to $345,000,000 Amended and Restated
Credit Agreement, dated as of April 14, 2000, among AIMCO
Properties, L.P., Bank of America, N.A. and U.S. Bank
National Association (Exhibit 10.4 to AIMCO's Quarterly
Report on Form 10-Q for the quarterly period ending March
31, 2000, is incorporated herein by this reference)
27.1 -- Financial Data Schedule
99.1 -- Agreement re: disclosure of long-term debt instruments
</TABLE>
- ---------------
(1) Schedule and supplemental materials to the exhibits have been omitted but
will be provided to the Securities and Exchange Commission upon request.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 229,692
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,995,886
<DEPRECIATION> 487,975
<TOTAL-ASSETS> 6,017,807
<CURRENT-LIABILITIES> 0
<BONDS> 3,007,050
149,500
748,901
<COMMON> 0
<OTHER-SE> 1,748,846
<TOTAL-LIABILITY-AND-EQUITY> 6,017,807
<SALES> 237,630
<TOTAL-REVENUES> 253,520
<CGS> 168,214
<TOTAL-COSTS> 173,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59,110
<INCOME-PRETAX> 23,349
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,349
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,349
<EPS-BASIC> 0.17
<EPS-DILUTED> 0.17
</TABLE>
<PAGE> 1
EXHIBIT 99.1
AGREEMENT REGARDING DISCLOSURE OF LONG-TERM DEBT INSTRUMENTS
In reliance upon Item 601(b)(4)(iii)(A), of Regulation S-K, AIMCO
Properties, L.P., a Delaware limited partnership (the "Partnership") has not
filed as an exhibit to its Quarterly Report on Form 10-Q for the quarterly
period ending March 31, 2000, any instrument with respect to long-term debt not
being registered where the total amount of securities authorized thereunder does
not exceed 10 percent of the total assets of the Partnership and its
subsidiaries on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A), of
Regulation S-K, the Partnership hereby agrees to furnish a copy of any such
agreement to the Securities Exchange Commission upon request.
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
By: /s/ PETER KOMPANIEZ
-------------------
Peter Kompaniez
President
