EDGAR 10-K Filing

Company CIK: 926660
Filing Year: 2025
Filename: 926660_10-K_2025_0001628280-25-013828.json

---

ITEM 1. BUSINESS
ITEM 1. BUSINESS
The Company
The AIR Operating Partnership is focused on the ownership and operation 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. Please refer to Note 14 to the consolidated financial statements in Item 8 for discussion regarding our segments.
On June 28, 2024, AIR completed the Merger with the Parent Parties as discussed and defined in detail within Note 3 to the consolidated financial statements included in Item 8. As a result of the Merger, the Parent Parties control the General Partner and Special Limited Partner of the AIR Operating Partnership. Additionally, all stock options and restricted stock awards outstanding, whether vested or unvested, were cancelled and converted into the right to receive cash. Also in connection with the Merger, all shares of Class A preferred stock outstanding were redeemed by AIR resulting in the cancellation of the mirrored preferred units at the AIR Operating Partnership. The remaining issued and outstanding equity interests of the AIR Operating Partnership, including common OP Units, preferred OP units, and LTIP units were unaffected by the Merger and continue to have the rights and privileges set forth in the partnership agreement (as amended, the "Partnership Agreement"). OP Units and preferred OP units can be repurchased or redeemed and LTIP units can be converted as set forth in the Partnership Agreement.
Business Overview
We own and operate a portfolio of stabilized apartment communities, diversified by both geography and price point. As of December 31, 2024, our portfolio included 77 apartment communities with 27,395 apartment homes.
Our business activities are defined by a commitment to our core values of integrity, respect, collaboration, performance, and a focus on our customers. These values and our corporate mission, “to consistently provide quality apartment homes in a respectful environment delivered by a team of people who care,” shape our culture. In all of our interactions with residents, teammates, business partners, lenders, and partners, we aim to be the best owner and operator of apartment communities, inspired by a talented team committed to exceptional customer service, strong financial performance, and outstanding corporate citizenship.
We seek to improve our property operations through application of the AIR Edge. We seek teams that are more cohesive, better compensated, and more productive. We seek customers that make better neighbors and stay longer. Our high customer retention is driven by delivering world-class customer service; taking advantage of real-time analytics and artificial intelligence; increasing automation; centralizing operational tasks where efficient to do so; standardizing business processes, and operational measurements; and enhancing financial controls over field operations.
Competition
In attracting and retaining residents to occupy our apartment communities, we compete with numerous other housing providers. Our apartment communities compete directly with other rental apartments, as well as condominiums and single-family homes that are available for rent or purchase in the markets in which our apartment communities are located. Principal factors of competition include rent or price charged, attractiveness of the location and apartment community, and the quality and breadth of services. The number of competitive apartment communities relative to demand in a particular area has a material effect on our ability to lease apartment homes at our apartment communities and on the rents we charge. In certain markets, there exists a high supply of newly-constructed apartment homes, single-family homes, and condominiums relative to consumer demand, which affects the pricing and occupancy of our rental apartments. See Item 1A, Risk Factors, for additional information with respect to competition.
Taxation
The AIR Operating Partnership is treated as a partnership for United States federal income tax purposes and is not subject to United States federal income taxation. The state and local tax laws may not conform to the United States federal income tax treatment, and the Operating Partnership may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business. Any taxes imposed on us reduce our operating cash flow and net (loss) income.
Table of Content
Partners in the AIR Operating Partnership, however, are subject to tax on their allocable share of partnership income, gains, losses, deductions, and credits, regardless of whether the partners receive any actual distributions of cash or other property from the AIR Operating Partnership during the taxable year. Generally, the characterization of any particular item is determined by the AIR Operating Partnership rather than at the partner level, and the amount of a partner’s allocable share of such item is governed by the terms of the Partnership Agreement.
Certain of our operations, or a portion thereof, including certain property management and risk management activities, are conducted through taxable real estate investment trust (“REIT”) subsidiaries, which are subsidiaries of the AIR Operating Partnership, and each of which we refer to as a “TRS.” A TRS is a corporate subsidiary that has elected to be a TRS instead of a REIT and, as such, is subject to United States federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents and investment partners that cannot be offered directly by a REIT.
Regulation
General
Apartment communities and their owners are subject to various laws, ordinances, and regulations. Existing rent control laws, as well as future enactment of rent control or rent stabilization laws, “just cause” evictions, or other laws regulating multi-family housing (such as resident screening requirements or limitations on fees) may reduce rental revenue, increase operating and compliance costs, require modification of resident screening requirements, or affect the stability of our communities. In addition, apartment communities and their owners are subject to numerous other requirements, including those related to real estate broker licensing and regulations relating to recreational facilities such as swimming pools, activity centers, and other common areas. Changes in laws increasing the potential liability for environmental conditions existing on communities or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction, and safety requirements, may result in significant unanticipated expenditures, which would adversely affect our net (loss) income and cash flows from operating activities.
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 at an apartment community. These materials may include lead-based paint, asbestos, and petroleum-based fuels. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the release or presence of such materials. In connection with the ownership, operation, and management of apartment communities, we could potentially be liable for environmental liabilities or costs associated with our current communities, communities we acquire or manage in the future, or communities we previously owned or operated in the past. These and other risks related to environmental matters are described in more detail in Item 1A, Risk Factors.
Insurance
Our primary lines of insurance coverage are property, general liability, workers’ compensation, business interruption, pollution, and cybersecurity. We believe that our insurance coverages adequately insure our apartment communities against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, terrorism, and other perils, and adequately insure us against other risk. Our coverage includes deductibles, retentions, and limits that are customary in the industry. We have established loss prevention, loss mitigation, claims handling, and litigation management procedures to manage our exposure.
Corporate Responsibility
Corporate responsibility is a longstanding AIR Operating Partnership priority and a key part of our culture. We offer benefits reinforcing our value of respect and caring for each other, including an opportunity to manage one’s life through flexible work schedules, paid time for parental leave, retirement plans for all, financial support for our teammates who are becoming United States citizens, and a bonus structure at all levels of the organization. We also pay full compensation and benefits for teammates who are actively deployed by the United States military.
We are committed to transparency, and continuous improvement, as measured by Global Real Estate Sustainability Benchmark (“GRESB”). We received a score of 87 out of 100 in 2024, second among our peers and 17 out of 145 among residential entities in the Americas. We received a 100% score for reporting, stakeholder engagement, and
sustainable building certifications, a perfect social score, and a four out of five-star GRESB rating for overall management and performance. In addition, we received an "A" for public disclosure or a 93 out of 100.
Human Capital
We strive to provide a great place to work for teammates. 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.
Our focus on our team and culture is widely recognized. We have received the following awards:
•2024 Top Workplaces USA Award for the third consecutive year,
•2024 Top Workplace Culture Excellence Award for Purpose & Values, Work-Life Flexibility, Compensations & Benefits, Innovation, Leadership, Women-Led, Professional Development, Employee Well-Being, and Employee Appreciation for the second consecutive year,
•2024 Top Workplace in Colorado (by the Denver Post), an 11-time winner,
•2024 Top Workplace in Philadelphia (by The Philadelphia Inquirer) for the second consecutive year,
•2024 Top Workplace in South Florida (by the Sun Sentinel) for the second consecutive year,
•2024 Top Workplace in Los Angeles (greater Los Angeles County),
•Built in 2024 Best Places to Work in Colorado, Los Angeles, Miami, and Washington, D.C
Approximately 64% of all open manager level positions were filled internally in 2024, and approximately 43% of all open positions were filled internally. We provide both formal and informal training and coaching for teammates at every level of the organization. In 2024, 62% of our teammates voluntarily took part in our leadership and professional development training.
As of December 31, 2024, we had approximately 790 teammates, of whom approximately 660 were at the apartment community level performing on-site functions, with the remainder performing off-site functions. As of December 31, 2024, unions represented approximately 27 of our teammates. We have never experienced a work stoppage and we believe we maintain satisfactory relations with our teammates.
Available Information
Our Annual Reports on Form 10-K, the Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any amendments to any of those reports that are filed with the Securities and Exchange Commission are available free of charge through our website at www.aircommunities.com and the SEC’s website at www.sec.gov. The information contained on our website is not incorporated into this Annual Report.

---

ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
The risk factors noted in this section, and other factors noted throughout this Annual Report, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement.
Risks Related to Our Business
Failure to generate sufficient net operating income may adversely affect our liquidity or limit our ability to fund necessary capital expenditures.
Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including:
•the general economic climate, including the impact of international hostilities and unrest;
•an inflationary environment in which the costs to operate and maintain our communities increase at a rate greater than our ability to increase rents, which we can only do upon renewal of existing leases or at the inception of new leases;
•competition from other apartment communities and other housing options;
Table of Content
•local conditions, such as loss of jobs, unemployment rates, recession, or an increase in the supply of apartments, which might adversely affect apartment occupancy or rental rates;
•changes in governmental regulations and the related cost of compliance;
•changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing; and
•changes in interest rates and the availability of financing.
Our ability to fund necessary capital expenditures on our communities depends on, among other things, our ability to generate net operating income in excess of required debt payments. If we are unable to fund capital expenditures on our communities, we may not be able to preserve the competitiveness of our communities, which could adversely affect their net operating income and long-term value.
Competition could limit our ability to lease apartment homes or increase or maintain rents.
Our apartment communities compete for residents with other housing alternatives, including other rental apartments and condominiums, and, to a lesser degree, single-family homes that are available for rent, as well as new and existing condominiums, and single-family homes for sale. Competitive residential housing, as well as household formation and job creation in a particular area, could adversely affect our ability to lease apartment homes and to increase or maintain rental rates.
We may experience various increased costs, including increased property taxes.
Real property taxes on our properties may increase as our properties are reassessed by tax assessors or as property tax rates change. A California law commonly referred to as Proposition 13 (“Prop 13”) limits annual real estate tax assessment increases on California properties to 2% of assessed value while guaranteeing a base tax rate of 1%. However, under Prop 13, property tax reassessment at market value occurs as a result of a "change in ownership" of a property. Additionally, the base tax rate of 1% for all taxing authorities guaranteed under Prop 13 does not include additional property tax levies for approved voter indebtedness or non-ad valorem tax increases. Various initiatives to repeal or amend Prop 13, to eliminate its application to commercial and residential property, to increase the permitted annual real estate tax increases, and/or to introduce split tax roll legislation could increase the assessed value and/or tax rates applicable to commercial property in California. Further, changes in U.S. federal tax law could cause state and local governments to alter their taxation of real property.
Rent control laws and other regulations that limit our ability to select residents, increase rental rates or limit our ability to evict residents to limited circumstances may negatively impact our rental income and profitability.
State and local governmental agencies continue to introduce and enact rent control laws or other regulations that limit our ability to select residents, increase rental rates, or limit our ability to evict residents (known as “just cause” evictions), which may affect our rental income. Especially in times of recession and economic slowdown, rent control initiatives can acquire significant political support. If rent controls unexpectedly became applicable to certain of our properties, our revenue from and the value of such properties could be adversely affected. In addition, resident selection is a key component of our operating model - selecting for residents who pay rent and rent increases, stay with us longer, and make good neighbors. Certain jurisdictions limit our ability to consider the rental history, credit history, eviction history, and criminal backgrounds of potential residents. We intend to comply with resident screening laws that apply to our communities, and our failure to comply could harm our business or our reputation.
Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our financial condition and results of operations.
The availability and cost of insurance are determined by the quality of our properties and their maintenance and our operating procedures, as well as by market conditions outside our control. No assurance can be made that we will be able to obtain and maintain insurance at the same levels and on the same terms as we do today. If we are not able to obtain or maintain insurance in amounts we consider appropriate for our business, or if the cost of obtaining such insurance increases materially, we may prefer to retain a larger portion of the potential loss associated with our exposures to risks. We are insured for a portion of our consolidated apartment communities’ exposure to casualty losses resulting from fire, earthquake, hurricane, tornado, flood, and other perils, which insurance is subject to deductibles and self-insurance retention that exceed expected losses. We recognize casualty losses or gains based on the net book value of the affected apartment community and the amount of any related insurance proceeds. In many instances, the actual cost to repair or
Table of Content
replace the apartment community may exceed its net book value and any insurance proceeds. We recognize the uninsured portion of losses as casualty losses in the periods in which they are incurred. In addition, we are self-insured for a portion of our exposure to third-party claims related to our teammate health insurance plans, workers’ compensation coverage, and general liability exposure. With respect to our exposure to claims of third parties, we establish reserves at levels that reflect our known and estimated losses. The ultimate cost of losses and the impact of unforeseen events may vary materially from recorded reserves, and variances may adversely affect our operating results and financial condition. We purchase insurance to reduce our exposure to losses and limit our financial losses on large individual risks.
Investments through joint ventures introduce governance risks even where the business of the joint venture adds no further business risks.
We have in the past contributed or sold properties to joint ventures with other persons or entities when we believe circumstances warrant the use of such structures.
These investments involve risks including, but not limited to, the possibility the other partners may have business, economic, or other objectives which are inconsistent with ours. In addition, the other partners may have the ability to take or force action (or withhold consent that may be required to take actions) contrary to our requests. In general, we structure such agreements with our partners so that we have full authority to use our expertise to make operating decisions.
Also, our partners might become insolvent or fail to make capital contributions when due, which may require us to contribute additional capital. In such event, the additional capital contributed is most often on favorable terms. In general, we and our partners may each have the right to trigger a buy-sell or other similar arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of our interest in the joint venture (if we are the seller) or of the other partner’s interest in the joint venture (if we are the buyer) at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income. Each joint venture agreement is individually negotiated and our ability to operate, finance, or dispose of properties and interests in such joint ventures in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement. We are also subject to other risks in connection with joint ventures, including (i) a deadlock if we and our partner are unable to agree upon certain major and other decisions (which could result in litigation or disposing of an asset at a time at which we otherwise would not sell the asset), and (ii) limitations on our ability to liquidate our position in the joint venture without the consent of the other partner.
Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection.
Information technology, communication networks, and related systems are essential to the operation of our business. We use these systems to manage our resident and vendor relationships, internal communications, accounting and record-keeping systems, and many other key aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks, which also depend on the strength of our procedures and the effectiveness of our internal controls. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyberattacks.
Despite system redundancy, risk transfer, insurance, indemnification, the implementation of security measures, our required teammate awareness training, and the existence of a disaster recovery plan for our internal information technology systems, our systems, and systems maintained by third-party vendors with which we do business, are vulnerable to damage from any number of sources. We face risks associated with energy blackouts, natural disasters, terrorism, war, telecommunication failures, and cyberattacks and intrusions, such as computer viruses, malware, attachments to emails, intrusion, and unauthorized access, including from persons inside our organization or from persons outside our organization with access to our systems. We expend financial resources to protect against threats and cyberattacks and may be required to expend additional financial and other resources to address disruptions caused by cyberattacks. Although we make efforts to maintain the security and integrity of our systems and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which may be confidential, proprietary, or commercially sensitive in nature), and a loss of confidence in our security measures, which could harm our business.
Table of Content
Additionally, if our information systems suffer severe damage, disruption or shutdown, we could experience delays in our financial results and we may lose revenue as a result of our inability to collect payments from residents.
We also are subject to laws, rules, and regulations in the United States, such as the California Consumer Protection Act, or CCPA , relating to the collection, use, and security of employee and other data. Evolving compliance and operational requirements under the CCPA and the privacy and data security laws of other jurisdictions in which we operate impose significant costs that are likely to increase over time. Our failure to comply with laws, rules, and regulations related to privacy and data protection could harm our business or reputation.
Potential liability or other expenditures associated with potential environmental contamination may be costly.
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. Potentially hazardous materials may include petroleum-based fuels, lead-based paint, or asbestos, among other materials. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the presence of such materials. The presence of, or the failure to manage or remediate properly, these materials may adversely affect occupancy at such 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, damages to natural resources, and for potential fines or penalties in connection with such damage or with respect to the improper management of hazardous materials. Moreover, private plaintiffs may potentially make claims for investigation and remediation costs they incur, or personal injury, disease, disability, or other infirmities related to the alleged presence of hazardous materials at an apartment community. In addition to potential environmental liabilities or costs associated with our current 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.
Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
Under the Americans with Disabilities Act of 1990 (“ADA”), all places intended to be used by the public are required to meet certain federal requirements related to access and use by disabled persons. The Fair Housing Amendments Act of 1988 (“FHAA”) requires apartment communities first occupied after March 13, 1991, to comply with design and construction requirements for disabled access. For those apartment communities receiving federal funds, the Rehabilitation Act of 1973 also has requirements regarding disabled access. These and other federal, state, and local laws may require structural modifications to our apartment communities or changes in policy/practice or affect renovations of the communities. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that our apartment communities are substantially in compliance with legal requirements, we may incur unanticipated expenses to comply with the ADA, the FHAA, the Rehabilitation Act of 1973, and related state and local legal requirements in connection with the ongoing operation of our apartment communities and the apartment communities we manage.
Natural disasters and severe weather may affect our financial condition and results of operations.
Natural disasters such as earthquakes and severe weather such as hurricanes may result in significant damage to our apartment communities. The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather event (such as a hurricane) affecting a region may have a significant adverse effect on our financial condition and results of operations. We cannot accurately predict natural disasters or severe weather, or the number and type of such events that will affect us. As a result, our operating and financial results may vary significantly from one period to the next. Although we anticipate and plan for losses, there can be no assurance that our financial results will not be adversely affected by our exposure to losses arising from natural disasters or severe weather in the future that exceed our previous experience and assumptions.
We depend on our senior management.
Our success and our ability to implement and manage anticipated future growth depend, in large part, upon the efforts of our senior management team, who have extensive market knowledge and relationships, and exercise substantial influence over our operational activities. The loss of services of one or more members of our senior management team, or our inability to attract and retain similarly qualified personnel, could adversely affect our business, which could adversely affect our financial condition, results of operations, and cash flow.
Table of Content
Moisture infiltration and resulting mold remediation may be costly.
Although we are proactively engaged in managing moisture intrusion and preventing the presence of mold at our apartment communities, it is not unusual for periodic moisture intrusion to cause mold in isolated locations within an apartment community. We have implemented policies, procedures, and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will manage mold exposure at our apartment communities and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. We have only limited insurance coverage for property damage claims arising from the presence of mold and for personal injury claims related to mold exposure.
Adverse economic and geopolitical conditions, local, regional, national, or international health crises and dislocations in the credit markets could negatively impact our residents and our operations.
Factors that could negatively impact our operations or those of entities in which we hold a partial interest during a pandemic or another health crisis, adverse economic or geopolitical event, or dislocation in the credit market include:
•our ability to raise rents or collect rents and late fees on a timely basis or at all, without reductions or other concessions;
•our ability to evict residents for non-payment and for other reasons;
•our ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption;
•fluctuations in regional and local economies, local real estate conditions, and rental rates;
•our ability to control incremental costs associated with such factors;
•our ability to dispose of communities at all or on terms favorable to us; and
•potential litigation.
In addition, the recent political shifts could lead to new legislative and regulatory initiatives or the roll-back of initiatives of the previous presidential administration in a variety of areas which may result in wide-ranging and unpredictable macroeconomic effects that impact our business.
Risks Related to Our Indebtedness and Financing
Increases in interest rates would increase our interest expense and reduce our profitability.
As of December 31, 2024, we had approximately $4.1 billion of variable-rate indebtedness outstanding, before consideration of floating-to-fixed-rate interest rate swaps and interest rate cap derivatives. After consideration of these derivatives, 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 $1.2 million or $11.5 million, respectively, on an annual basis.
As of December 31, 2024, we had $644.5 million in 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 indebtedness discussed above.
Our debt financing could result in foreclosure resulting in a loss of income and value, prevent us from making distributions on our equity, or otherwise adversely affect our liquidity.
We have fixed-rate and variable-rate property debt, maturing at various times over the next few years, which are secured by assets of certain subsidiaries of the AIR Operating Partnership. Over time, we may become party to one or more additional financing arrangements, including credit facilities or other bank debt, and bonds.
In connection with such financing arrangements, we are subject to the risk that: (i) our cash flow from operations will be insufficient to make required payments of principal and interest; (ii) our indebtedness may not be refinanced; or (iii) the terms of any refinancing will not be as favorable as the terms of then-existing indebtedness. If we are unable to make required payments of principal and interest or are unable to refinance at maturity on favorable terms, or at all, the lenders could foreclose on the collateral securing that debt, resulting in the loss to us of income and asset value.
Table of Content
We also anticipate that certain of our subsidiaries will maintain a certain amount of non-recourse property-level indebtedness. If we fail to make required payments of principal and interest on our mortgage debt, our lenders could foreclose on the apartment communities and other collateral securing such debt, resulting in the loss to us of income and asset value.
Our organizational documents do not limit the amount of debt that we may incur.
Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity.
Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit markets. During periods of economic uncertainty, the United States credit markets may experience significant liquidity disruptions, which may cause the cost on debt financings to widen considerably and make obtaining financing, both non-recourse property debt and corporate borrowings such as those under a credit facility, more difficult. In particular, apartment borrowers have benefited from the historic willingness of the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), to make substantial amounts of loans secured by multi-family properties, even in times of economic distress. These two lenders are federally chartered and subject to federal regulation, which is subject to change, making uncertain their prospects and ability to provide liquidity in a future downturn.
If our ability to obtain financing is adversely affected, we may be unable to satisfy scheduled maturities on existing financing through other sources of liquidity, which could result in lender foreclosure, resulting in loss of income and asset value, both of which would adversely affect our liquidity.
Because real estate investments are relatively illiquid, we may not be able to sell apartment communities when appropriate.
Real estate investments are relatively illiquid and generally cannot be sold quickly. Thus, we may not be able to change our portfolio promptly in response to changes in economic or other market conditions. Our ability to dispose of apartment communities in the future will depend on prevailing economic and market conditions, including the cost and availability of financing. This could have a material adverse effect on our financial condition or results of operations.
Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
From time to time, we may enter into interest rate hedge agreements to manage some of our exposure to interest rate volatility. Interest rate hedge agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to changes in interest rates. These risk factors may lead to failure to hedge effectively against changes in interest rates and therefore could adversely affect our results of operations.
We may increase leverage, which could further exacerbate the risks associated with our indebtedness.
We may decide to increase our leverage. We will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the issuance, or placement, of new indebtedness, including the estimated market value of our assets and the ability of particular assets, and our company as a whole, to generate cash flow to cover the expected debt service. We may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our indebtedness could intensify.
Risks Related to Our Organization and Structure
We are controlled by Blackstone and its interests may conflict with ours or yours in the future.
Following the Merger, affiliates of Blackstone control the General Partner and AIR Operating Partnership is a subsidiary of the Parent Entities. Accordingly, Blackstone has significant influence with respect to our management, business plans and policies, including the election and removal of AIR's officers and directors. Blackstone and its affiliates engage in a broad spectrum of activities, including investments in real estate generally. In the ordinary course of their business activities, Blackstone and its affiliates may engage in activities where their interests conflict with our interests or those of our common unitholders. Blackstone also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, Blackstone may have an
Table of Content
interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.
Risks Related to Conflicts of Interest
Various potential and actual conflicts of interest will arise, and these conflicts may not be identified or resolved in a manner favorable to us.
Blackstone has conflicts of interest, or conflicting loyalties, as a result of the numerous activities and relationships of Blackstone and its affiliates, partners, members, shareholders, officers, directors and employees, some of which are described herein. However, not all potential, apparent and actual conflicts of interest are included herein, and additional conflicts of interest could arise as a result of new activities, transactions or relationships commenced in the future. If any matter arises that we and our affiliates determine in our good faith judgment constitutes an actual and material conflict of interest, we and our affiliates will take such actions as we determine appropriate to mitigate the conflict.
The personnel of Blackstone are not required to dedicate a specific portion of their time to the management of our business.
Blackstone affiliates are not obligated to dedicate any specific personnel exclusively to us, nor are they or their personnel obligated to dedicate any specific portion of their time to the management of our business. Affiliates of Blackstone and its portfolio companies may provide services to us, but we cannot provide any assurances regarding the amount of time that such affiliates will dedicate to the management of our business and such affiliates may have conflicts in allocating time, resources and services among our business and any other investment vehicles and accounts.
We and Blackstone vehicles have competed, and in the future will likely compete, with or enter into transactions with existing and future private and public investment vehicles established and/or managed by Blackstone or its affiliates, which may present various conflicts of interest that restrict our ability to pursue certain investment opportunities or take other actions that are beneficial to our business and/or result in decisions that are not in the best interests of our unitholders.
We are subject to conflicts of interest arising out of our relationship with Blackstone, including the General Partner and its affiliates. Certain Blackstone employees serve on AIR's Board of Directors. If any matter arises that Blackstone determines in its good faith judgment constitutes an actual and material conflict of interest, Blackstone and relevant affiliates will take the actions they determine appropriate to mitigate the conflict. There is no guarantee that the policies and procedures adopted by us, or the policies and procedures adopted by Blackstone and its affiliates, will enable us to identify, adequately address or mitigate these conflicts of interest in a way that is favorable to us, which could result in increased costs to our unitholders. Some examples of conflicts of interest that may arise by virtue of our relationship with Blackstone include:
•Broad and Wide-Ranging Activities. Blackstone and its affiliates engage in a broad spectrum of activities, including a broad range of activities relating to investments in the real estate industry, and have invested or committed billions of dollars in capital through various investment funds, managed accounts and other vehicles affiliated with Blackstone. In the ordinary course of their business activities, Blackstone and its affiliates may engage in activities where the interests of certain divisions of Blackstone and its affiliates, or the interests of their clients may conflict with the interests of our unitholders. Certain of these divisions and entities affiliated with Blackstone have or may have an investment strategy similar to our investment strategy and therefore will likely compete with us.
•Blackstone’s Policies and Procedures. Specified policies and procedures implemented by Blackstone and its affiliates to mitigate potential conflicts of interest and address certain regulatory requirements and contractual restrictions may reduce the advantages across Blackstone’s and its affiliates’ various businesses that Blackstone expects to draw on for purposes of pursuing attractive investment opportunities. Because Blackstone has many different businesses, it is subject to a number of actual and potential conflicts of interest, greater regulatory oversight and more legal and contractual restrictions than that to which it would otherwise be subject if it had just one line of business. In addressing these conflicts and regulatory, legal and contractual requirements across its various businesses, Blackstone has implemented certain policies and procedures (e.g., information walls) that may reduce the benefits that Blackstone could otherwise expect to utilize for purposes of identifying and managing our real estate investments. For example, Blackstone may come into possession of material non-public information with respect to companies that are clients of Blackstone or its affiliates, in which the General Partner may be considering making an investment. As a consequence, that information, which could be of benefit to us, might become restricted to those other businesses and otherwise be unavailable to us, and could also restrict our
Table of Content
activities. Additionally, the terms of confidentiality or other agreements with or related to companies in which any investment vehicle of Blackstone has or has considered making an investment or which is otherwise a client of Blackstone and its affiliates may restrict or otherwise limit the ability of Blackstone or its affiliates, to engage in businesses or activities competitive with such companies.
•Assignment and Sharing or Limitation of Rights. In the future, we may invest alongside other Blackstone vehicles and in connection therewith have and may, for legal, tax, regulatory or other reasons which may be unrelated to us, share with or assign to such other Blackstone vehicles certain of our rights, in whole or in part, or to limit our rights, including certain control- and/or foreclosure-related rights with respect to such shared investments and/or otherwise agree to implement certain procedures to mitigate conflicts of interest which typically involve maintaining a noncontrolling interest in any such investment and a forbearance of our rights, including certain non-economic rights, subject to certain limitations. While it is expected that our participation in connection with any such investments and transactions would be negotiated by third parties on market prices, such investments and transactions will give rise to potential or actual conflicts of interest. We cannot make assurances that any such conflict will be resolved in our favor. Such sharing or assignment of rights could make it more difficult for us to protect our interests and could give rise to a conflict (which may be exacerbated in the case of financial distress) and could result in another Blackstone vehicle exercising such rights in a way adverse to us.
•Entering into Financing Transactions with Other Blackstone Vehicles. We may from time to time engage in financing transactions with Blackstone vehicles. We and/or Blackstone may face conflicts of interest in connection with any borrowings or disputes related to such financing agreement(s) which may adversely impact us.
•Underwriting and Other Relationships. As part of its regular business, Blackstone provides a broad range of underwriting, investment banking, placement agent services and other services. In connection with selling investments by way of a public offering, a Blackstone broker-dealer may act as the managing underwriter or a member of the underwriting syndicate on a firm commitment basis and purchase securities on that basis. Blackstone may retain any commissions, remuneration, or other profits and receive compensation from such underwriting activities, which have the potential to create conflicts of interest. Blackstone may also participate in underwriting syndicates from time to time with respect to us or portfolio companies/entities of Blackstone vehicles, or may otherwise be involved in the private placement of debt or equity securities issued by us or such portfolio companies/entities, or otherwise in arranging financings with respect thereto or advising on such transactions. Subject to applicable law, Blackstone may receive underwriting fees, placement commissions, or other compensation with respect to such activities, which will not be shared with us or our unitholders.
In the regular course of its investment banking business, Blackstone represents potential purchasers, sellers and other involved parties, including corporations, financial buyers, management, shareholders and institutions, with respect to assets that are suitable for investment by us. In such case, Blackstone’s client would typically require Blackstone to act exclusively on its behalf, thereby precluding us from acquiring such assets. Blackstone is under no obligation to decline any such engagement to make the investment opportunity available to us.
Blackstone has long-term relationships with a significant number of corporations and their senior management. In determining whether to invest in a particular transaction, we may consider those relationships, which may result in certain transactions that we will not undertake in view of such relationships.
•Service Providers. Certain of our service providers, or their affiliates (including accountants, administrators, lenders, brokers, attorneys, consultants, title agents, loan servicing and administration providers, property managers and investment banking or commercial banking firms) also provide goods or services to or have business, personal or other relationships with Blackstone. For example, Blackstone may hold equity or other investments in companies or businesses in the real estate industry and other industries that may provide products or services to or otherwise contract with us or other Blackstone vehicles. In connection with any such investment, Blackstone or other Blackstone vehicles (or their respective portfolio companies/entities) may make referrals or introductions to other portfolio companies/entities in an effort, in part, to increase the customer base of such companies or businesses, and therefore the value of the investment, or because such referrals or introductions may result in financial incentives (including additional equity ownership) and/or milestones benefiting the referring or introducing party that are tied or related to participation by portfolio companies/entities. We will not share in any fees, economics or equity accruing to Blackstone or such other Blackstone vehicles as a result of these relationships. In addition, we may enter into agreements regarding group procurement (such as a group purchasing organization), benefits management, purchase of title and/or other insurance policies (which will from time to
Table of Content
time be pooled and discounted due to scale) from a third party or a Blackstone affiliate, and other similar operational, administrative, or management related initiatives that result in commissions, discounts or similar payments to Blackstone or its affiliates (including personnel), including related to a portion of the savings achieved that may result in higher costs than historically incurred. Such service providers may be sources of investment opportunities or co-investors or commercial counterparties. Such relationships may influence the General Partner in deciding whether to select such service provider. In certain circumstances, service providers, or their affiliates, may charge different rates (including below-market rates or at no cost) or have different arrangements for services provided to Blackstone or its affiliates as compared to services provided to us, which in certain circumstances may result in more favorable rates or arrangements than those payable by us.
In addition, certain advisors and service providers (including law firms) may temporarily provide their personnel to Blackstone, us or other Blackstone vehicles or their portfolio companies pursuant to various arrangements including at cost or at no cost. While often we and such other Blackstone-advised funds and their portfolio companies are the beneficiaries of these types of arrangements, Blackstone is from time to time a beneficiary of these arrangements as well, including in circumstances where the advisor or service provider also provides services to us in the ordinary course. Such personnel may provide services in respect of multiple matters, including in respect of matters related to Blackstone, its affiliates and/or portfolio companies and any costs of such personnel may be allocated accordingly.
•Material Non-Public Information. We, directly or through Blackstone, the General Partner or certain of their respective affiliates may come into possession of material non-public information. Disclosure of such information to the personnel responsible for management of our business may be on a need-to-know basis only, and we may not be free to act upon any such information. Therefore, we may not have access to material non-public information in the possession of Blackstone which might be relevant to an investment decision to be made by the General Partner on our behalf, and the General Partner may initiate a transaction or purchase or sell an investment which, if such information had been known to it, may not have been undertaken. Due to these restrictions, the General Partner may not be able to initiate a transaction on our behalf that it otherwise might have initiated and may not be able to purchase or sell an investment that it otherwise might have purchased or sold, which could negatively affect our operations.
•Possible Future Activities. Blackstone and their affiliates continue to develop relationships with a significant number of companies, financial sponsors and their senior managers, including relationships with clients who may hold or may have held investments similar to those intended to be made by us. These clients may themselves represent appropriate investment opportunities for us or may compete with us for investment opportunities. In addition, Blackstone may enter into one or more strategic relationships in certain regions or with respect to certain types of investments that, although intended to provide greater opportunities for us, may require us to share such opportunities or otherwise limit the amount of an opportunity we can otherwise take.
•Transactions with Blackstone Vehicles. From time to time, we may enter into purchase and sale transactions with Blackstone vehicles. Such transactions will be conducted in accordance with our internal corporate policies and applicable laws and regulations to ensure fairness to the Operating Partnership.
•Family Relationships. Certain personnel and other professionals of Blackstone have family members or relatives that are actively involved in the industries and sectors in which we invest and/or have business, personal, financial or other relationships with companies in the real estate industry, which gives rise to potential or actual conflicts of interest. For example, such family members or relatives might be officers, directors, personnel or owners of companies or assets which are actual or potential investments of us or our other counterparties. Moreover, in certain instances, we may transact with companies that are owned by such family members or relatives or in respect of which such family members or relatives have other involvement. In most such circumstances, we will not be precluded from undertaking any of these investment activities or transactions. To the extent Blackstone determines appropriate, it may put in place conflict mitigation strategies with respect to a particular circumstance, such as internal information barriers or recusal, disclosure or other steps determined appropriate by Blackstone or the General Partner.
Risks Related to Valuation
Redemptions of our units are generally based on our most recent quarter-end calculations of NAV per common OP unit, which calculations are not current as of a future date.
Generally, the price at which we make redemptions of our common OP Units will equal the NAV (as defined in our Valuation Policy) per common OP Unit as of the last day of the prior calendar quarter. The NAV per common OP Unit,
Table of Content
if calculated as of the date on which you deliver a Notice of Redemption (as defined in our Partnership Agreement), may be significantly different than the redemption price you receive. Certain of our investments or liabilities could change in value significantly between the end of the prior calendar quarter as of which our NAV per common OP Unit is determined and the date that you deliver a Notice of Redemption. Because the price at which your common OP Units may be redeemed by us is generally based on our prior calendar quarter’s NAV per common OP Unit, you may receive less than realizable value for your investment.
The General Partner has discretion to determine whether a Material Event (as defined in our Valuation Policy) has occurred, and whether and in what amount to make adjustments to the Value of a REIT Share (as defined in our Valuation Policy), prior to the end of the then-current calendar quarter.
The General Partner may, in its sole discretion, but is not obligated to, determine the Value of a REIT Share as of any particular Valuation Date (as referenced in our Valuation Policy) to be an amount that it believes is more appropriate than the most recently determined NAV per common OP Unit (including by updating a previously determined NAV per common OP Unit) where it believes there has been a Material Change (as defined in our Valuation Policy) (positive or negative) to our NAV per common OP Unit since the end of the prior calendar quarter. If the General Partner determines that a Material Event has not occurred, or determines that one has occurred but does not adjust the Value of a REIT Share to account for such Material Change, you may receive less than realizable value for your investment. On the other hand, if the General Partner determines that a Material Event has occurred and adjusts the Value of a REIT Share to account for such Material Change, the amount of the adjustment may not fully and accurately reflect the impact of the Material Event. As a result, you may receive less than realizable value for your investment. See “-It may be difficult to reflect, fully and accurately, material events that may impact our quarterly NAV per common OP Unit” below.
Valuations and appraisals of our real estate are estimates of fair value and may not necessarily correspond to realizable value.
The General Partner calculates NAV by valuing our properties quarterly, based on current material market data and other information deemed relevant, with review for reasonableness each quarter by an independent valuation advisor. Each property will be valued by an independent third-party appraisal firm annually. Annual appraisals may be delayed for a short period in certain circumstances. Concurrent with the appraisal process, the General Partner will value each property and, taking into account the appraisal, among other factors, will determine the appropriate valuation within the range provided by the independent third-party appraisal firm.
Although quarterly valuations of each of our real properties will be reviewed for reasonableness by an independent valuation advisor, such reviews are based on asset- and portfolio-level information provided by the General Partner, including historical operating revenues and expenses of the properties, lease agreements on the properties, revenues and expenses of the properties, information regarding recent or planned capital expenditures and any other information relevant to valuing the real property, which information will not be independently verified by the independent valuation advisor. While the independent valuation advisor is responsible for reviewing our property valuations as set forth in our Valuation Policy, the independent valuation advisor is not responsible for, and does not calculate, our NAV per common OP Unit, and the General Partner is ultimately and solely responsible for the determination of our NAV per common OP Unit.
Within the parameters of our Valuation Policy, the valuation methodologies used to value our properties and certain of our investments will involve subjective judgments and projections with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond its control and our control, as well as certain factual matters, and may not be accurate. For example, our independent valuation advisor and other independent third-party appraisal firms will assume that we have clear and marketable title to each real estate property valued, that no title defects exist unless specifically informed to the contrary, that improvements were made in accordance with law, that no hazardous materials are present or were present previously, that no deed restrictions exist, and that no changes to zoning ordinances or regulations governing use, density or shape are pending or being considered. Furthermore, our independent valuation advisor’s review, opinions and conclusions will necessarily be based upon market, economic, financial and other circumstances and conditions existing prior to the valuation, and any material change in such circumstances and conditions may affect our independent valuation advisor’s review and conclusions. Our independent valuation advisor’s review reports may contain other assumptions, qualifications and limitations set forth in the respective appraisal reports that qualify the review, opinions and conclusions set forth therein. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller.
Table of Content
As such, valuations and appraisals of our properties will be only estimates of fair value, and the carrying value of our real properties may not reflect the price at which the properties could be sold in the market. Our NAV per common OP Unit does not represent the amount of our assets less our liabilities in accordance with GAAP. The difference between carrying value and the ultimate sales price could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the appraisal. There will be no retroactive adjustment in the valuation of such assets or the price we paid to redeem common OP Units to the extent such valuations prove to not accurately reflect the realizable value of our assets. Because the price at which your common OP Units may be redeemed by us is generally based on our prior calendar quarter’s NAV per common OP Unit, you may receive less than realizable value for your investment.
Our NAV per common OP Unit may change materially if the appraised values of our properties materially change from prior appraisals, the actual operating results for a particular calendar quarter differ from what we originally budgeted for that quarter or if the value of a liability (contingent or otherwise) is determined to be different than initially anticipated.
Each of our properties will be appraised at least once per year. When these appraisals are considered by the General Partner for purposes of valuing the relevant property, there may be a material change in our NAV per common OP Unit from the value previously reported. In addition, actual operating results for a given calendar quarter may differ from what we originally budgeted for that quarter. It is also possible that we determine that we underestimated or overestimated the value of our existing liabilities (contingent or otherwise) in a prior calendar quarter. Any of the foregoing may cause a material increase or decrease in the NAV per common OP Unit for a subsequent calendar quarter. We will not retroactively adjust the NAV per common OP Unit reported for a previous calendar quarter. Therefore, because a new annual appraisal may differ materially from the prior appraisal, the actual results from operations may be better or worse than what we previously budgeted for a particular calendar quarter or because the value of our liabilities may be different than originally anticipated, the adjustment to take into consideration the new appraisal, actual operating results or new valuation of liabilities may cause the NAV per common OP Unit to increase or decrease, and such increase or decrease will occur only as of the end of the calendar quarter in which the adjustment is made.
It may be difficult to reflect, fully and accurately, material events that may impact our quarterly NAV per common OP Unit.
The General Partner’s determination of our quarterly NAV per common OP Unit will be based in part on appraisals of each of our properties provided annually by independent third-party appraisal firms and reviewed by an independent valuation advisor, each in accordance with Valuation Policy. As a result, our published NAV per common OP Unit in any given calendar quarter may not fully reflect any or all changes in value that may have occurred since the most recent appraisal or valuation. The General Partner will review appraisal reports and is responsible for notifying the applicable independent valuation advisor of the occurrence of any property-specific or market-driven event it believes may cause a material valuation change in the real estate valuation, but it may be difficult to reflect fully and accurately rapidly changing market conditions or material events that may impact the value of our real estate or liabilities between valuations, or to obtain complete information regarding any such events in a timely manner. For example, an unexpected termination or renewal of a material lease, a material increase or decrease in vacancies or an unanticipated structural or environmental event at a property may cause the value of a property to change materially, yet obtaining sufficient relevant information after the occurrence has come to light and/or analyzing fully the financial impact of such an event may be difficult to do and may require some time. As a result, the NAV per common OP Unit may not reflect a material event until such time as sufficient information is available and analyzed, and the financial impact is fully evaluated, such that our NAV per common OP Unit may be appropriately adjusted in accordance with our Valuation Policy. Depending on the circumstance, the resulting potential disparity in our NAV per common OP Unit may be in favor or to the detriment of either unitholders who deliver a Notice of Redemption, or other existing unitholders.
NAV calculations are not governed by governmental or independent securities, financial or accounting rules or standards.
While we believe our NAV calculation methodologies are consistent with standard industry practices, there is no SEC or other regulatory agency rule or regulation that requires we calculate NAV, or the components used in calculation NAV, in a certain way. As a result, other companies in the real estate industry may use different methodologies or assumptions to determine NAV.
Further, there are no accounting rules or standards that prescribe which components should be used in calculating NAV, and our NAV per common OP Unit is not audited by our independent registered public accounting firm. We will calculate and publish NAV per common OP Unit quarterly solely for purposes of establishing the Value of a REIT Share and similar terms as set forth in our Partnership Agreement, including for purposes of redeeming common OP Units in
Table of Content
accordance with the Partnership Agreement. You should not view our quarterly NAV per common OP Unit, on its own, as a measure of our historical or future financial condition or performance. The components and methodology used in calculating our NAV per common OP Unit may differ from those used by other companies now or in the future.
In addition, calculations of our NAV per common OP Unit, to the extent that they incorporate valuations of our assets and liabilities, are not prepared in accordance with GAAP. These valuations may differ from liquidation values that could be realized in the event that we were forced to sell assets.
Additionally, errors may occur in calculating our NAV per common OP Unit, which could impact the price at which we redeem common OP Units. If such errors were to occur, the General Partner, depending on the circumstances surrounding each error and the extent of any impact the error has on the price at which common OP Units are redeemed, may determine in its sole discretion to take certain corrective actions in response to such errors, including making adjustments to prior NAV calculations. You should carefully review the disclosure of our Valuation Policy as described above and how NAV per common OP Unit will be calculated.
We may need to adjust the methodologies used in calculating NAV per common OP Unit in certain situations.
While the methodologies contained in our Valuation Policy are designed to operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the occurrence of certain extraordinary events (such as a significant disruption in relevant markets, a terrorist attack or an act of nature), our ability to calculate NAV per common OP unit may be impaired or delayed, including, without limitation, circumstances where there is a delay in accessing or receiving information from vendors or other reporting agents upon which we may rely upon in determining the quarterly value of our NAV. In these circumstances, a more accurate valuation of our NAV per common OP unit could be obtained by using different assumptions or methodologies. Accordingly, in special situations when, in the General Partner’s reasonable judgment, the administration of the Valuation Policy would result in a valuation that does not represent a fair and accurate estimate of the value of our investment, alternative methodologies may be applied.
Our independent valuation advisor and/or independent third-party appraisers may have conflicts of interests and other relationships with us and our affiliates.
To the extent engaged, we expect to pay fees to our independent valuation advisor upon its delivery to us of its review reports. We also expect to agree to indemnify any independent valuation advisor against certain liabilities arising out of its engagement.
We expect that any independent valuation advisor and certain of the independent third-party appraisers we engage will have provided, and will be expected to continue to provide, real estate appraisal, appraisal management and real estate valuation advisory services to Blackstone and its affiliates and will have received, and would be expected to continue to receive, fees in connection with such services. We also expect that any independent valuation advisor and certain of the independent third-party appraisers we may engage, and their respective affiliates, may from time to time in the future perform other commercial real estate and financial advisory services for Blackstone and its affiliates, or in transactions related to the properties that are the subjects of the valuations being performed for us, or otherwise, so long as such other services do not adversely affect the independence of the independent valuation advisor or the applicable appraiser as certified in the applicable appraisal report.
We do not make any representations, warranties or guarantees regarding the accuracy of our NAV.
As described above, valuations and appraisals of our real estate are estimates of fair value and may not necessarily correspond to realizable value. Accordingly, we do not represent, warrant or guarantee that:
•a unitholder would be able to realize the NAV per common OP unit for the common OP Units a unitholder owns if the unitholder attempts to sell its common OP Units;
•a unitholder would ultimately realize distributions per common OP unit equal to the NAV per common OP unit for the common OP Units it owns upon liquidation of our assets and settlement of our liabilities or a sale of our company;
•our common OP Units would trade at their NAV per common OP unit on a national securities exchange;
•a third party would offer the NAV per common OP Unit in an arm’s-length transaction to purchase all or substantially all of our common OP Units; or
Table of Content
•the NAV per Common OP Unit would equate to a market price of an open-ended real estate fund.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

---

ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
Additional information about our consolidated real estate, including property debt, is contained in “Schedule III - Real Estate and Accumulated Depreciation” in this Annual Report on Form 10-K.
Our portfolio is diversified by both geography and price point, with a mix of urban and suburban submarkets, and consists of market rate apartment communities in which we own a substantial interest. Our portfolio includes garden style, mid-rise, and high-rise apartment communities located in 10 states and the District of Columbia. Our portfolio strategy seeks predictable rent growth from a portfolio of apartment communities diversified among some of the largest markets in the United States. The following table sets forth information on the apartment communities in our portfolio as of December 31, 2024:
Number of
Apartment
Communities Number of
Apartment
Homes Average
Economic
Ownership
Bay Area 8 2,077 73 %
Boston 6 1,284 100 %
Denver 8 2,280 87 %
Los Angeles 9 3,815 78 %
Miami 10 3,994 96 %
Philadelphia 9 2,749 75 %
San Diego 6 2,367 81 %
Washington, D.C. 13 6,837 69 %
Other markets 8 1,992 100 %
Total portfolio (1) 77 27,395 81 %
(1)Total portfolio represents the number of apartment communities in which we owned an equity interest.
As of December 31, 2024, on a consolidated basis, our apartment communities contained, on average, 356 apartment homes, with the largest community containing 2,113 apartment homes. These apartment communities offer residents a range of amenities, including resort pools with cabanas, grills, clubhouses, spas, fitness centers, package lockers, dog parks, and large open spaces. Many of the apartment homes offer features such as granite countertops, wood flooring, stainless steel appliances, fireplaces, spacious closets, washer and dryer connections, balconies, and patios.
As of December 31, 2024, on a consolidated basis, apartment communities in our portfolio were encumbered by, in aggregate, $6.3 billion of property debt with a weighted-average interest rate of 5.9% and a weighted-average maturity of 5.2 years. The apartment communities collateralizing this non-recourse property debt have an estimated aggregate fair value of $9.7 billion.

---

ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
Information regarding legal matters included in Note 8 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K is incorporated by reference into this Item 3. In addition to the matters referred to in Note 8, 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 consolidated financial condition, results of operations, or cash flows.

---

ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Table of Content
PART II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Interests in the AIR Operating Partnership that are held by limited partners are referred to as OP Units. OP Units include common partnership units (“common OP Units”) and partnership preferred units (“preferred OP Units”). There is no public market for OP Units, and we have no intention of listing them on any securities exchange. In addition, the Partnership Agreement restricts the transferability of OP Units.
On March 10, 2025, there were 156,183,610 common partnership units and equivalents outstanding (144,568,877 of which were held by the General Partner and Special Limited Partner) that were held by 1,579 unitholders of record.
Unregistered Sales of Equity Securities
During the three months ended December 31, 2024, we did not issue any unregistered OP Units.
Repurchases of Equity Securities
The Partnership Agreement generally provides that after holding common OP Units for one year, limited partners have the right to redeem their common OP Units for cash. The following table summarizes the AIR Operating Partnership’s repurchases or redemptions of common OP Units in exchange for cash:
Fiscal period Total
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)
October 1 - October 31, 2024 139,905 $ 25.62 N/A N/A
November 1 - November 30, 2024 5,141 $ 25.69 N/A N/A
December 1 - December 31, 2024 2,521 $ 25.69 N/A N/A
Total 147,567 $ 25.62
(1)The terms of the 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.
For additional information regarding the calculation of NAV, please refer to Management's Discussion And Analysis of Financial Condition and Results of Operations included in Item 7.

---

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 for the year ended December 31, 2024, compared to 2023, should be read in conjunction with the accompanying consolidated financial statements in Item 8. For discussion of the year ended December 31, 2023, compared to 2022, please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the subheading “Results of Operations for the Year Ended December 31, 2023, Compared to 2022” included in the AIR Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2023.
Table of Content
Financial Highlights
Net income attributable to the AIR Operating Partnership's common unitholders per unit, on a dilutive basis, of $4.27 for the year ended December 31, 2023, decreased to a net loss of ($2.38) for the year ended December 31, 2024, due primarily to:
•Lower gains on dispositions of real estate;
•Merger-related costs incurred in the current year including transaction costs as well as loss on extinguishment of debt;
•Increased interest expense; partially offset by
•An increase in residential rents and ADO, as defined below.
Results of Operations for the Year Ended December 31, 2024, Compared to 2023
Property Operations
We have two segments: Same Store and Other Real Estate. Our Same Store segment includes communities that are owned and managed and have reached a stabilized level of operations. Our Other Real Estate segment includes four properties acquired in 2023, two properties acquired in 2024, and two properties undergoing planned property capital investment.
As of December 31, 2024, our Same Store segment included 69 apartment communities with 24,275 apartment homes and our Other Real Estate segment included 8 apartment communities with 3,120 apartment homes.
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 unitholders.
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 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 refer to Note 14 to the consolidated financial statements included in Item 8 for further discussion regarding our segments, including a reconciliation of these proportionate amounts to consolidated rental and other property revenues and property operating expenses.
Table of Content
Year Ended December 31, Historical Change
(dollars in thousands) 2024 2023 $ %
Rental and other property revenues, before utility reimbursements:
Same Store $ 683,735 $ 664,022 $ 19,713 3.0 %
Other Real Estate 79,626 55,696 23,930 nm
Total 763,361 719,718 43,643 6.1 %
Property operating expenses, net of utility reimbursements:
Same Store 178,483 171,610 6,873 4.0 %
Other Real Estate 27,967 20,111 7,856 nm
Total 206,450 191,721 14,729 7.7 %
Proportionate property net operating income:
Same Store 505,252 492,412 12,840 2.6 %
Other Real Estate 51,659 35,585 16,074 nm
Total $ 556,911 $ 527,997 $ 28,914 5.5 %
For the year ended December 31, 2024, compared to 2023, our Same Store proportionate property NOI increased by 2.6%. This increase was attributable primarily to a 2.7% increase in residential rents, a 30 basis point increase in Average Daily Occupancy ("ADO"), resulting in a $19.7 million, or 3.0%, increase in rental and other property revenues. Property operating expenses increased primarily due to unfavorable tax assessments in the Miami market as compared to 2023.
Other Real Estate proportionate property NOI increased by $16.1 million for the year ended December 31, 2024, compared to 2023, due primarily to the earn-in of four properties acquired in 2023 and two properties acquired in 2024.
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 year ended December 31, 2024, compared to 2023, non-segment real estate operations were relatively flat.
General and Administrative Expenses
For the year ended December 31, 2024, compared to 2023, general and administrative expenses increased by $4.3 million, due primarily to a change in characterization of certain property management expenses. Property management and general and administrative costs, in aggregate, were relatively flat year over year.
Other Expenses, Net
Other expenses, net, includes costs associated with our risk management activities, partnership administration expenses, ground leases and certain non-recurring items.
For the year ended December 31, 2024, compared to 2023, other expenses, net, increased by $50.1 million, due primarily to the write-off of costs associated with pre-development, development, and redevelopment projects, increased separation costs, including the acceleration of share-based compensation expense due to the departure of certain executives.
Interest Income
For the year ended December 31, 2024, compared to 2023, interest income increased by $8.3 million, due primarily to higher cash on hand invested in short-term liquid investments.
Interest Expense
For the year ended December 31, 2024, compared to 2023, interest expense increased by $130.7 million, due primarily to a $2.7 billion increase in the average debt outstanding during the year and a 180 basis point increase in the weighted-average interest rates.
Table of Content
Loss on Extinguishment of Debt
For the year ended December 31, 2024, compared to 2023, loss on extinguishment of debt increased by $34.9 million, due primarily to costs incurred associated with the short-term bridge financing placed in the second quarter and repaid in the third quarter of 2024.
Gain on Dispositions and Impairments of Real Estate
During the year ended December 31, 2024, we recognized $4.0 million of gain on dispositions and impairments of real estate, net due primarily to the contribution of one property to the Core JV in 2024.
During the year ended December 31, 2023, we recognized $677.7 million of gain on dispositions of real estate and impairments of real estate, net due primarily to the gain associated with the sale of a partial interest in 10 properties in connection with the Core JV; offset partially by a non-cash impairment loss on real estate.
Gain on Derivative Instruments
During the year ended December 31, 2024, we recognized $11.2 million of gains due primarily to the mark-to-market valuation changes in interest rate swaps and interest rate caps, net during the period.
During the year ended December 31, 2023, we recognized $16.7 million of gains due primarily to the mark-to-market valuation changes in interest rate swaps and treasury locks during the period.
Loss from Unconsolidated Real Estate Partnerships
For the year ended December 31, 2024, loss from unconsolidated real estate partnerships decreased $12.6 million, compared to 2023 primarily due to an increase in NOI from our unconsolidated joint ventures and a reduction in amortization expense of intangible assets.
Merger-related costs
For the year ended December 31, 2024, we recorded $169.4 million of merger-related costs, primarily consisting of regulatory, advisory, legal, consulting, banking services, loan assumption fees, and the acceleration of share-based compensation related to the cancellation of the stock options and restricted stock awards incurred in connection with the Merger.
During the year ended December 31, 2023, we did not recognize any merger-related costs.
Income Tax Benefit (Expense)
Certain of our operations, or a portion thereof, including property management and risk management, are conducted through taxable REIT subsidiaries (“TRS entities”).
Our income tax benefit (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 benefit (expense) in our consolidated statements of operations.
During the years ended December 31, 2024 and 2023, we recognized income tax benefit (expense) of $2.3 million and ($2.4) million, respectively. Income tax benefit (expense) increased by $4.7 million due primarily to uncertain tax position reserves which passed the statute of limitations in 2024.
Net Asset Value
On June 28, 2024, the General Partner adopted a valuation policy (the “Valuation Policy”) regarding the determination of the Net Asset Value (“NAV”) of the common OP Unit. The Valuation Policy was furnished as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on July 1, 2024. The Valuation Policy sets out the methodology to be used in calculating the net asset value of the common OP Units and provides for the determination of NAV on a quarterly basis.
Table of Content
The NAV of the common OP Unit is determined by the General Partner in good faith on the basis of such information as it considers, in its reasonable judgment, appropriate.
During the quarter ended December 31, 2024, the NAV of the common OP Units for purposes of redemption, as adjusted for a special distribution, was $25.69. As of December 31, 2024, the NAV of the common OP Units for purposes of redemption was determined to be $28.41 per common OP Unit, which will be the basis for the NAV through the quarter ending March 31, 2025, adjusted for any distributions or material changes.
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 and funding from our General Partner and Special Limited Partner. Additional sources are proceeds from dispositions of apartment communities, proceeds from refinancing existing property debt, borrowings under new property debt and unsecured financings. As of December 31, 2024, our available cash and cash equivalents was $644.5 million.
For further information on our liquidity requirements related to our contractual obligations and commitments, refer to Note 5, Note 6, Note 8, and Note 9 to the consolidated financial statements in Item 8. In addition to the commitments outlined in the aforementioned notes, we also anticipate interest payments, net of the impact of our economic hedges, for the years ending December 31, 2025 through 2029 and thereafter of approximately $342 million, $329 million, $319 million, $315 million, $229 million, respectively, and approximately $191 million in the aggregate thereafter based on balances outstanding as of December 31, 2024.
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. 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 the sale of apartment communities.
The combination of non-recourse 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 5.1 years as of December 31, 2024, inclusive of extension options, with a weighted-average interest rate of 6.0%, after consideration of our interest rate swaps and interest rate caps.
Changes in Cash, Cash Equivalents and Restricted Cash
The following discussion relates to changes in consolidated cash, cash equivalents, and restricted cash due to operating, investing, and financing activities, which are presented in our consolidated statements of cash flows in Item 8 of this report.
Operating Activities
For the year ended December 31, 2024, net cash provided by operating activities was $111.1 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 year ended December 31, 2024, decreased by $259.3 million compared to 2023, due primarily to merger-related costs incurred in connection with the Merger, higher cash paid for interest due to higher average debt balances and higher average rates during the period, and the impact to lower net income from the contribution of apartment communities to two unconsolidated joint ventures throughout the second and third quarters of 2023.
Investing Activities
For the year ended December 31, 2024, our net cash used in investing activities of $385.1 million consisted primarily of purchases of real estate and capital expenditures.
Table of Content
For the year ended December 31, 2023, our net cash used in investing activities of $313.1 million consisted primarily of purchases of real estate and capital expenditures, offset partially by the contribution of apartment communities to two unconsolidated joint ventures throughout the second and third quarters of 2023.
Capital additions totaled $147.3 million and $173.7 million during the years ended December 31, 2024 and 2023, respectively. We generally fund capital additions with cash provided by operating activities and cash proceeds from sales of apartment communities.
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 building infrastructure 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 consolidated statements of cash flows, are presented below (in thousands):
Year Ended December 31,
2024 2023
Capital replacements $ 35,930 $ 32,497
Capital enhancements 61,015 71,996
Initial capital expenditures 42,090 43,415
Casualty 7,966 5,739
Other 1,160 1,927
Total capital additions $ 148,161 $ 155,574
Plus: additions related to apartment communities sold and held for sale - 12,674
Consolidated capital additions $ 148,161 $ 168,248
Plus: net change in accrued capital spending (833) 5,414
Total capital expenditures per consolidated statements of cash flows $ 147,328 $ 173,662
For the years ended December 31, 2024 and 2023, we capitalized $13.3 million and $16.2 million of indirect costs, respectively.
Financing Activities
Net cash provided by financing activities of $801.0 million for the year ended December 31, 2024, consisted primarily of net proceeds from debt transactions, offset partially by merger-related distributions.
Net cash used in financing activities of $241.3 million for the year ended December 31, 2023, consisted primarily of payments of dividends and repurchases of OP Units, offset partially by net cash provided from debt transactions.
Table of Content
Future Capital Needs
We expect to fund any future acquisitions, debt maturities, and other capital spending principally with proceeds from apartment community sales, additional borrowings, operating cash flows, and funding from our General Partner and Special Limited Partner. We believe, based on the information available at this time, that we have sufficient cash on hand and access to additional sources of liquidity to meet our operational needs for the next 12 months.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the following critical accounting estimates involve our more significant judgments used in the preparation of our consolidated financial statements.
Impairment of Long-Lived Assets
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. We use the held for sale impairment model for properties classified as held for sale, whereby an impairment charge is recognized if the carrying amount of the long-lived asset classified as held for sale exceeds its fair value less cost to sell. 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. The measurement of the impairment loss is based on the fair value of the communities and incorporates various estimates, assumptions, and market data, the most significant being market rental rates, operating expense assumptions, expected hold period, capitalization rates, and purchase and sale agreements. We project future rental revenue growth rates using forecasted rates from third-party market research analytics. Property expense growth rates and capitalization rates are based on the apartment communities’ historical, current, and expected future operating results, existing operating expense assumptions, and operational strategies. These projections are adjusted to reflect current economic conditions and require considerable management judgement. We did not recognize any such impairment during the years ended December 31, 2024 and 2022. We recognized an impairment loss on real estate included in our Other Real Estate segment of $23.6 million under the held for sale impairment model during the year ended December 31, 2023.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risks are refunding risk, that is the availability of property debt or other cash sources to refund maturing property debt, and repricing risk, that is the possibility of increases in base interest rates and credit risk spreads. We use working capital to fund short-term uses, with long-term uses expected to be financed by cash from operating activities, proceeds from apartment community sales, and long-term debt. We use derivative financial instruments, principally interest rate swaps, interest rate caps, and treasury rate locks, to reduce our exposure to interest rate risk. We closely monitor the credit quality of the institutions with which we transact.
As of December 31, 2024, on a consolidated basis, we had $2.1 billion of non-recourse fixed-rate property debt, and $4.1 billion of non-recourse variable-rate property debt outstanding. As of December 31, 2024, we have $3.0 billion of interest rate swap derivatives which reduce our total variable rate exposure by $3.0 billion, by fixing to a weighted-average interest rate of 6.9%. Additionally, we have net $1.1 billion of interest rate caps, which economically cap our variable interest rate exposure on the remaining $1.1 billion of variable-rate debt at a weighted-average rate of 7.2%. As of December 31, 2024, the capped rate on our interest rate caps is below the prevailing market rate.
After consideration of our interest rate swaps and our interest rate caps derivatives, 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 $1.2 million or $11.5 million, respectively, on an annual basis.
As of December 31, 2024, we had $550 million of speculative interest rate swap derivatives. As a result, we estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would increase or decrease gain (loss) on derivative instruments, net by $5.5 million on an annual basis.
As of December 31, 2024, we had $644.5 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.
Table of Content
After consideration of the interest rate swaps and interest rate caps derivatives described above, we estimate that a change in the floating rate of 100-basis points with constant credit risk spreads would decrease net (loss) income by $22.3 million and increase net (loss) income by $11.9 million, respectively, on an annual basis.
We estimate the fair value of debt instruments as described in Note 11 to the consolidated financial statements in Item 8. The estimated fair value of total indebtedness, including our non-recourse fixed-rate and variable-rate property debt was approximately $6.1 billion as of December 31, 2024.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The independent registered public accounting firm’s reports, consolidated financial statements and schedule listed in the “Index to Financial Statements” on page of this Annual Report are filed as part of this report and incorporated herein by this reference.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The AIR Operating Partnership’s management, with the participation of our co-principal executive officers and chief financial officer, has evaluated the effectiveness of our 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, our co-principal executive officers and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting
Management of the AIR Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our co-principal executive officers and chief financial officer, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the AIR Operating Partnership’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 Framework).
Based on their assessment, management concluded that, as of December 31, 2024, the AIR Operating Partnership’s internal control over financial reporting is effective.
Table of Content
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 fourth quarter of 2024 that has materially affected, or is reasonably likely to materially affect, the AIR Operating Partnership’s internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
Section 13(r) Disclosure
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Exchange Act, we hereby incorporate by reference herein Exhibit 99.1 of this report, which includes disclosures regarding activities at Mundys S.p.A., which may be, or may have been at the time considered to be an affiliate of Blackstone and, therefore, our affiliate.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Biographical information for the executives and directors follows.
Lisa R. Cohn
President , General Counsel, and Secretary (Co-Principal Executive Officer)
Age: 56
Director since 2024
Experience
•Co-Principal Executive Officer of AIR Communities (2024-Present)
•President, General Counsel and Secretary AIR Communities (2020-Present)
•Executive Vice President, General Counsel, Secretary, Aimco (2007-2020)
•Senior Vice President and Assistant General Counsel, Aimco (2004-2007)
•Vice President and Assistant General Counsel, Aimco (2002-2004)
•Associate, Hogan & Hartson LLP (now Hogan Lovells) (1998-2002)
•Federal Judicial Law Clerk, US District Court, District of Colorado (1996-1998)
Qualifications
•Ms. Cohn oversees the organization generally and has specific responsibilities for governance, information technology and process innovation, human resources, communications, legal, risk, insurance, government relations, finance, reporting and accounting.
•She has had increasing levels of responsibilities across the company, serving as a cross-functional leader of the organization. Ms. Cohn has had responsibility for construction services, asset quality and service, insurance, risk management, dispositions nationwide, and Aimco’s acquisition activities in the western region. She also served as chairman of Aimco’s Investment Committee.
•Member of NAREIT’s Advisory Board of Governors
•Member, Board of Trustees, National Storage Affiliates (NYSE: NSA) (2024-present)
•In private practice, Ms. Cohn focused on public and private mergers and acquisitions, venture capital financing, securities, and corporate governance.
Education
•JD, Harvard Law School, cum laude
•AB, Stanford University, with Honors and Distinction
Keith M. Kimmel
President of Property Operations,
AIR Communities (Co-Principal Executive Officer)
Age: 53
Experience
•Co-Principal Executive Officer of AIR Communities (2024-Present)
•President of Property Operations, AIR Communities (2020-Present)
•Executive Vice President of Property Operations, Aimco (2011-2020)
•Area Vice President Property Operations Western United States, Aimco (2008-2011)
•Regional Vice President Property Operations California, Aimco (2002-2008)
•Regional Property Manager Beverly Hills, Casden Properties (1998-2002)
•General Manager Southern California, Sares-Regis Group (1992-1998)
Qualifications
•Mr. Kimmel oversees the organization generally and has specific responsibility for leading corporate, national, regional, and field team members who serve their residents daily. He oversees the corporate teams responsible for data analytics, construction and asset quality, marketing, procurement, revenue management, and the shared service center.
•He is experienced in leading national and corporate teams; 1,000-2,500+ team members, 30,000-90,000+ units, $13B+ in multifamily real estate assets, and $1B in annual revenues.
•His career in the multifamily real estate business began in 1992 as a leasing consultant and then general manager where Mr. Kimmel developed his passion for operating communities, learning the intimate details of providing homes to residents, and celebrating the teams that make it all possible.
Paul L. Beldin
Chief Financial Officer and Executive Vice President
Age: 51
Experience
•Chief Financial Officer and Executive Vice President, Aimco (2015-December 2020)/AIR Communities ( December 2020-Present)
•Senior Vice President and Chief Accounting Officer, Aimco (2008-2015)
•Chief Financial Officer of America First Apartment Investors, Inc. (2005-2007)
•Audit Senior Manager, Deloitte (1996-2005)
Qualifications
•Mr. Beldin has over 20 years of real estate experience; including 10 years as a public company CFO.
•He is a certified public accountant.
•He is a member of NAREIT's CFO Counsel.
Education
•BS, University of Nebraska-Lincoln
Table of Content
Jacob Werner
Co-Head of Americas Acquisitions, Blackstone Real Estate
Age: 42
Director since 2024
Experience
•Co-Head of Americas Acquisitions, Blackstone Real Estate (2023-Present)
•Senior Managing Director, Blackstone Real Estate (2018-Present)
•Various other roles at Blackstone (2005-2018)
Qualifications
•Since joining Blackstone in 2005, Mr. Werner has been involved in a number of Blackstone's largest real estate investments, including BioMed Realty, Pure Industrial, Home Partners of America, and Education Realty Trust.
Education
•BS, McIntire School of Commerce at the University of Virginia (graduated with distinction)
Asim Hamid
Senior Managing Director, Blackstone Real Estate
Age: 46
Director since 2024
Experience
•Senior Managing Director, Blackstone Real Estate (2023-Present)
•Managing Director, Blackstone Real Estate (2020-2023)
•Principal, Blackstone Real Estate (2017-2020)
Qualifications
•Mr. Hamid focuses on new investment opportunities in the residential sector for Blackstone Real Estate.
Education
•BS in Finance and Accounting, Stern School of Business at New York University
Richard Reyes
Managing Director, Blackstone Real Estate
Age: 35
Director since 2024
Experience
•Managing Director, Blackstone Real Estate (2022-Present)
•Principal, Blackstone Real Estate (2020-2022)
•Associate, Blackstone Real Estate (2017-2019)
•Assistant Vice President, Waterton Associates (2015-2017)
Qualifications
•Mr. Reyes focuses on new investment opportunities in the multi family sector for Blackstone Real Estate.
Education
•BS in Finance from the University of Illinois
Scott McCallum
Managing Director,
Blackstone Real Estate
Age: 37
Director since 2024
Experience
•Managing Director, Blackstone Real Estate (2017-Present)
•Lieutenant, United States Navy (SEAL) (2010-2017)
Qualifications
•Mr. McCallum focuses on new investment opportunities in the multifamily sector.
•Since joining Blackstone in 2017, Mr. McCallum has worked on real estate investments across several property sectors in both Canada and the United States, including the privatizations of Tricon Residential, Bluerock Residential Growth REIT, Preferred Apartment Communities and AIR Communities, as well as a variety of other transactions contributing to the growth of Blackstone’s residential platforms in North America.
Education
•B.S. in Honors Economics (Arabic Minor) from the United States Naval Academy
How We Are Organized
The AIR Operating Partnership is managed by its general partner, AIR-GP LLC, a Delaware limited liability company (the “General Partner”). The General Partner’s sole member (AIR REIT Sub 2, LLC) is member-managed by AIR, which is managed by a Board of Directors. Lisa Cohn, Asim Hamid, Scott McCallum, Richard Reyes and Jacob Werner comprise the AIR Board of Directors, which functions as the Board of Directors of the Operating Partnership.
The Board of Directors does not have any standing committees, and while our board of directors has not designated any of its members as an audit committee financial expert (as defined under Item 407(d)(5) of Regulation S-K), we believe that the Board of Directors is qualified to address accounting or financial reporting issues that may come before it, and accordingly, an audit committee financial expert is not necessary.
Table of Content
How We Govern and Are Governed
Code of Ethics
AIR has a “Code of Business Conduct and Ethics” that applies to all teammates of the Operating Partnership, including its co-principal executive officers, principal financial officer, and principal accounting officer. The Code of Business Conduct and Ethics is posted on AIR’s website (www.aircommunities.com) and is also available in print to unitholders, upon written request to AIR’s Corporate Secretary. If, in the future, AIR waives a provision in the Code of Business Conduct and Ethics, AIR intends to satisfy any applicable disclosure requirement under Item 5.05 of Form 8-K by posting such information on AIR’s website (www.aircommunities.com), as necessary.
Corporate Responsibility Report
AIR publishes a Corporate Responsibility Report, which highlights our commitment to environmental and social responsibility. A copy of AIR’s current Corporate Responsibility Report is available on AIR’s website (www.aircommunities.com). Nothing on AIR’s website, including the Corporate Responsibility Report, shall be deemed incorporated by reference into this filing.
Insider Trading Policies and Procedures
Because we are a privately-held company and there is no public market for our securities, we do not have formal policies and procedures related to insider trading. Under our Code of Business Conduct and Ethics, covered persons are expected to comply with applicable laws, rules and regulations.
Table of Content

---

ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION & ANALYSIS (“CD&A”)
Executive Summary
•The Merger between AIR and affiliates of Blackstone Real Estate Partners X was completed on June 28, 2024, and in connection therewith, AIR ceased to be an NYSE-listed company.
•As a result of the Merger, all outstanding restricted stock and stock option awards, whether vested or unvested, were cancelled and converted into cash.
•Following the Merger, Terry Considine made the decision to step down from his role as Chief Executive Officer, effective October 2024. In addition, Joshua Minix also made the decision to step down from his role as Executive Vice President and Chief Investment Officer, effective October 2024.
•Following Mr. Considine’s departure, Lisa Cohn and Keith Kimmel were both appointed as Co-Principal Executive Officers of AIR Operating Partnership, effective October 2024.
Our Named Executive Officers
This CD&A describes the compensation programs and practices regarding our Named Executive Officers (“NEOs”) for 2024. Our NEOs for 2024 were our former Chief Executive Officer, our current Co-Principal Executive Officers, our Chief Financial Officer, and our Former Executive Vice President and Chief Investment Officer (based on his compensation during 2024, prior to his departure). Prior to the Merger, the compensation program described herein related to AIR, while it was an NYSE-listed company. Following the Merger, the compensation program relates to the AIR Operating Partnership, a privately held company.
Name First Elected Position
Terry Considine
July 1994 Former Chief Executive Officer and Director
Lisa R. Cohn December 2007 President, General Counsel, and Secretary (Co-Principal Executive Officer)
Keith M. Kimmel January 2011 President of Property Operations (Co-Principal Executive Officer)
Paul L. Beldin September 2015 Executive Vice President and Chief Financial Officer
Joshua Minix
October 2021 Former Executive Vice President and Chief Investment Officer
Overview of Pay-for-Performance Philosophy and 2024 Business Performance Results
We are a pay-for-performance organization. Prior to the Merger, we set target total compensation near the median of target total compensation for our peers as identified below, both as a measure of fairness and also to provide an economic incentive to remain with AIR. Actual compensation varies from target compensation based on our results. Each officer’s annual cash incentive compensation includes, “short term incentive” or “STI”, which is based in part on AIR’s performance against corporate, rather than personal, goals. Longer term compensation, “long term incentive” or “LTI”, follows a similar tiered structure. Prior to the Merger, each officer’s LTI was based in part on AIR's total shareholder return or “TSR”, relative to its peers, with executive officers having a greater share of their LTI based on relative TSR. In the case of Mr. Considine, his entire LTI award was “at risk” based on AIR's relative TSR. LTI was measured (typically over three years) and vested over time (typically 50% after three years and 50% after four years), so that officers would bear longer term exposure to the decisions they make. In the case of Mr. Minix, his compensation was tied to production, that is, transactions designed to upgrade the quality of AIR’s portfolio. Following the Merger, all outstanding restricted stock and stock option awards, whether vested or unvested, were cancelled and converted into cash. Following the Merger and going forward, LTI awards are expected to be time and performance-based deferred incentives that vest over an applicable service period.
We are neither required to conduct say-on-pay or say-on-frequency votes nor to provide disclosures relating to pay-versus-performance under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. However, we intend periodically to review the elements of our compensation, and we may make changes to the compensation structure relating to one or more named executive officers based on the outcome of such reviews from time to time.
Table of Content
Summary of Executive Compensation Program and Governance Practices
What We Pay and Why: Components of Executive Compensation
Total compensation for the AIR Operating Partnership's named executive officers is comprised of the following components:
Compensation
Component Form Purpose
Base Salary Cash Provide a salary that is competitive with market.
STI/Transaction Cash Reward executives for achieving short-term business objectives.
LTI Prior to the Merger: Restricted stock,
Long-Term Incentive Plan ("LTIP") units,
and/or stock options (collectively, “Equity
Awards”), subject to performance and/or time
vesting, typically over four years.
Following the Merger: deferred cash
incentives subject to time vesting.
Prior to the Merger: Align executive’s
compensation with stockholder objectives and
provide an incentive to take a longer-term
view of AIR’s performance.
Following the Merger: Align executive
compensation with company objectives and
provide an incentive to take a longer-term
view of the AIR Operating Partnership's
performance.
2024 Pay Overview
Prior to the Merger, AIR’s Compensation Committee (the “Committee”) determined the compensation for the CEO. In setting Mr. Considine’s target total compensation for 2024, the Committee considered, among other things, the peer group compensation data as discussed below and Mr. Considine’s expertise and experience. The Committee continued a compensation plan for Mr. Considine that resulted in approximately 10% base salary, 27% based on AIR’s performance against its 2024 corporate goals and individual performance goals, and 63% based on relative TSR, making more of Mr. Considine’s target compensation tied to AIR’s TSR than was the case for any of his peers. For the other NEOs, target total compensation was determined by the Committee upon Mr. Considine’s recommendation.
Following the Merger, the AIR Operating Partnership no longer has a Committee, and the Board is expected to continue to determine compensation of executive officers, in consultation with management.
Compensation Elements for Named Executive Officers
For 2024, total target compensation is the sum of base compensation earned in 2024, STI earned in 2024, and LTI awards granted in 2024.
Base Salary
For 2024, Mr. Considine’s base compensation was $800,000, which was below the median for CEOs of his experience, expertise, and tenure in AIR’s peer group. For 2024, base compensation for Messrs. Beldin and Kimmel and Ms. Cohn were set at $450,000, near the median base compensation paid by our peer companies to executives in similar positions. Mr. Minix had a draw in an amount equal to $450,000, which was earned based on transactions and forfeitable if he had not closed transactions sufficient to earn his draw payment as described in more detail below. Upon the resignation of Mr. Considine, Ms. Cohn and Mr. Kimmel were appointed as Co-Principal Executive Officers and each of their base salaries was increased to $550,000.
Short-Term Incentive Compensation for 2024
The Committee determined Mr. Considine’s STI for 2024 would be based on 50% of AIR’s performance against its Key Performance Indicators (“KPI”), described below, and 50% on his individual goals. The Committee granted Mr. Considine’s STI in the form of cash on January 1, 2024 in the amount of $2.2 million. Following the Merger and upon Mr. Considine’s decision to resign, the Considine Separation Agreement (as defined below) provided that Mr. Considine would receive an amount equal to $2,569,370, representing the pro-rated STI that he would otherwise have earned for 2024 based
Table of Content
on the actual achievement of the applicable performance targets for the first-half of 2024, which was paid in a lump sum in 2024.
For the other NEOs, with the exception of Mr. Minix, calculation of STI prior to the Merger was determined by management with respect to two components: AIR’s performance against the KPI; and each officer’s achievement of his or her individual Managing AIR Performance (“MAP”) goals. For each Ms. Cohn and Mr. Kimmel, an allocation of the target STI was made as follows: 75% of the target STI was calculated based on AIR’s performance against KPI and 25% of the target STI was calculated based on the achievement of their individual MAP goals. For Mr. Beldin, an allocation of the target STI was made as follows: 25% of the target STI was calculated based on AIR’s performance against KPI and 75% of the target STI was calculated based on the achievement of his individual MAP goals. AIR’s overall KPI performance was 111.5%. Accordingly, each was awarded 111.5% of the portion of his or her STI attributable to KPI (i.e., 75% of the target STI amount shown below for Ms. Cohn and Mr. Kimmel and 25% of the target STI amount shown below for Mr. Beldin). In determining the MAP achievement component of 2024 STI, management determined that Mr. Beldin’s MAP achievement would be paid at 135% of target and Ms. Cohn’s and Mr. Kimmel’s MAP achievement would each be paid at 145% of target.
Following the Merger, Ms. Cohn and Mr. Kimmel were appointed Co-Principal Executive Officers whereby each of their STI targets was increased to $850,000 and also tied to both AIR’s performance against its KPI and individual MAP results. For both Ms. Cohn and Mr. Kimmel, the allocation of the target STI will remain the same as before the Merger (25% MAP; 75% KPI).
For the first half of 2024, the KPI reflected our five areas of strategic focus, as set forth below. Specifically, the KPI consisted of the following five corporate goals, each weighted as described. Threshold performance paid out at 50%; target performance paid out at 100%; and maximum performance paid out at 200%, with performance in-between interpolated.
Each of the KPI objectives and associated weights are listed below:
•Operations Performance - Same Store NOI Achievement (30% of KPI)
▪This goal was achieved above target at 30.25%
•Portfolio Quality (10% of KPI)
▪This goal was achieved above target at 20%
•Financial Performance (40% of KPI)
▪Performance against overall FFO budget (15% of KPI)
◦Achieved above target at 18.3%
▪Performance against overall AFFO budget (15% of KPI)
◦Achieved above target at 16.3%
▪G&A performance compared to GAV (10% of KPI)
◦Achieved below target at 8.3%
•Balance Sheet - Debt to EBITDA, Balance Sheet Safety and Cost, Financial Flexibility, Investment Grade Rating (10% of KPI)
▪Achieved below target at 5%
•Team Engagement and ESG (10% of KPI)
▪Achieved above target at 15%
For the first half of 2024, and prior to the Merger, based on the evaluation of the KPI above, results were determined by management and the Board to be at 113.15%, which was rounded to 113%. For the second half of 2024, and following the Merger, KPI results were determined by management and the Board to be at 110% due to the outstanding
Table of Content
work of the team related to stabilizing the business following the Merger and navigating changes in leadership, all while maintaining high teammate engagement and low teammate turnover. The overall KPI achievement result for 2024 was 111.5%.
Various of the key financial indicators that AIR used in managing our business and in evaluating our financial condition and operating performance are non-GAAP measures, but the Operating Partnership no longer reports such measures.
Goal setting
For all numerical metrics, our target 2024 performance goals were aligned with our 2024 budget goals. We have a rigorous budgeting process that includes an evaluation of prior performance, market data, and peer performance. Our budget strategy is to set ambitious, achievable goals. Our 2024 budget and KPI goals were finalized in February 2024.
Investment-based Compensation for 2024
Mr. Minix was responsible for AIR’s portfolio management and led our investment team and was expected to be fully compensated based on transactions, had he remained with AIR. At the time of his departure, on October 7, 2024, Mr. Minix earned $1,996,176, of which $1,629,254 was his separation payment.
Long-Term Incentive Compensation Awards for 2024
Prior to the Merger and for the 2024 LTI program for executive officers, 2024 LTI was granted as follows: (1) on January 1, 2024, performance-based profit participation incentive units in our operating partnership (“LTIP I Units”) were granted to Mr. Considine, representing 100% of his 2024 LTI award, with the earned portion vesting 50% at the end of the three-year performance period and 50% one year later; (2) on January 1, 2024, performance-based restricted stock was granted to Messrs. Beldin, Kimmel, and Minix, and Ms. Cohn, representing two-thirds of their 2024 LTI awards, with the earned portion vesting 50% at the end of the three-year performance period and 50% one year later; and (3) time-based restricted stock was granted to Messrs. Beldin, Kimmel, and Minix, and Ms. Cohn, representing one-third of their 2024 LTI awards, vesting ratably over four years. Had Mr. Minix continued with AIR, he would have had a portion of his cash compensation deferred subject to the performance of acquisitions as compared to underwriting. Any such compensation was included in his separation payment. Following the Merger, all outstanding restricted stock, whether vested or unvested, were cancelled and converted to cash.
The performance-based LTIP I Units, and the performance-based restricted stock, are referred to as “performance-based LTI awards,” because the number of such LTIP I Units, and restricted stock, that vest, if any, was determined based on relative TSR performance during a forward looking, three-year performance period, as described in detail below. The amount of performance based LTI awards granted in 2024 was determined in accordance with the following TSR performance metrics:
Metric and Performance Level(1)
(relative performance stated as
basis points above or below index performance)(2)
Threshold
50% Payout
Target
100% Payout
Maximum
200% Payout
Relative to Nareit Equity Apartments Index (30% Weighting)
-250 bps
+50 bps
+400 bps
Relative to MSCI US REIT Index (20% Weighting)
-350 bps
+50 bps
+500 bps
Threshold
50% Payout
Target
100% Payout
Maximum
300% Payout
Relative to Nareit Equity Apartments Index with Multifamily Peer Ranking
(50% Weighting)
*The maximum payout is 300% if AIR's 3-yr TSR ranks 1st among its peers and AIR's unitholders have received at least a 25% absolute TSR. Nothing will be paid on this portion of the LTI if AIR's TSR ranks last among its peers
-250 bps
+50 bps
+400 bps
(1)The relative metrics above reflect the metrics used for the awards made in 2024 for the three-year forward-looking performance period ending on December 31, 2026.
(2)If absolute TSR for the three-year forward-looking performance period is negative, any portion of the LTI award achieved above target will not vest until absolute TSR is once again positive.
Table of Content
For the purpose of calculating the number of LTIP I Units and, Restricted Stock granted, the target LTI dollar amount was divided by the valuation prices indicated below that were calculated by a third-party financial firm with particular expertise in the valuation of such equity instruments.
Metric and Valuation per Instrument
LTIP I Units
Restricted Stock
Relative to Nareit Equity Apartments Index (30% Weighting)
$37.13 $37.03
Relative to MSCI US REIT Index (20% Weighting)
$38.37 $38.26
Relative to Nareit Equity Apartments Index with Multifamily Peer Ranking
(50% Weighting)
*The maximum payout is 300% if AIR's 3-yr TSR ranks 1st among its peers and AIR's unitholders have received at least a 25% absolute TSR. Nothing will be paid on this portion of the LTI if AIR's TSR ranks last among its peers
$44.08 $43.75
The share award agreements to which the performance-based restricted shares were granted do not provide for the payment of dividends until the shares are earned. Dividends accrue during the performance period.
Although the above metrics were used to award LTI, as a result of the Merger, all restricted stock and stock option awards, whether vested or unvested, were cancelled and converted to cash.
Determination Regarding 2022, 2023, and 2024 Performance Based Awards
As part of the LTI program, AIR granted performance-share awards that might be earned based on relative TSR as compared to the Nareit Equity Apartment Index with Multifamily Peer Ranking (50% weighting), Nareit Equity Apartments Index (30% weighting), and the MSCI US REIT Index (20% weighting) over a three-year performance period ending on June 28, 2024, which was truncated due to the Merger.
Pursuant to the terms and conditions of the Merger Agreement, immediately prior to the June 28, 2024, each award of restricted stock and stock options that were outstanding immediately prior to June 28, 2024, whether vested or unvested, were automatically cancelled and converted into an amount in cash, without interest and less any applicable withholding taxes. The Merger Agreement also provided that upon a change of control, all performance goals applicable to restricted stock awards for 2022, 2023, and 2024 be measured at the greater of target level performance and actual TSR performance through the closing date of the transaction, June 28, 2024. For the 2022 awards, performance was determined to be at 109.35%, and for the 2023 and 2024 awards, performance was determined to be at 200%.
The Merger provided that the issued and outstanding Partnership units awards (LTIP I and LTIP II Units, and collectively “LTIP Units”) would remain issued and outstanding and continue to have the rights and privileges set forth in the LTIP unit agreement and the Partnership Agreement, as amended in connection with the Merger. As documented in Mr. Considine’s Separation Agreement, certain of Mr. Considine’s LTIP Units vested in accordance with their terms as of the October 2, 2024 (the “Separation Date”) as a result of Mr. Considine’s departure within one year following a change in control of AIR.
For purposes of determining the number of LTIP Units that vested as of the Separation Date, the performance goals applicable to any such LTIP Units were measured at the greater of target level performance and actual performance through the closing date of the Merger, June 28, 2024, resulting in the vesting of 246,356 LTIP I Units and 2,562,284 LTIP II Units as of the Separation Date. Mr. Considine’s OP Units (including OP Units received upon conversion of Mr. Considine's LTIP I Units) and vested LTIP II Units, remain subject to their existing terms. LTIP Units held by Mr. Considine that remained unvested after such accelerated vesting were forfeited as of the Separation Date. Within two days following the Separation Date, the Operating Partnership paid Mr. Considine an aggregate amount of $2,993,225, related to distributions retained with respect to certain LTIP Units that vested as of the Separation Date.
How the Committee determined the amount of target total compensation for executive officers
In addition to reviewing the performance of, and determining the compensation for the CEO, the Committee also reviewed the decisions made by the CEO as to the compensation of the other executive officers. Base salary, target STI, and target LTI are generally set near the median base salary, target STI, and target LTI for peer comparators.
Prior to the Merger, the 2024 target compensation and incentive compensation for 2024 for NEOs is summarized as follows:
Table of Content
Target Total Incentive 2024 Incentive Compensation ($)
Compensation STI LTI
Target Total Compensation
($) Annual Base Salary
($) (1)
STI/Investment Based Compensation
($)
LTI
($) (3)
($) (4)
Time-Based
LTI
($)(5)
Performance-
Based Equity-
Stock
($)(6)
Performance-
Based Equity-
Stock Options
($)
Mr. Considine 8,000,000 800,000 2,200,000 5,000,000 2,390,300 - 5,000,000 -
Ms. Cohn 2,400,000 450,000 550,000 (2)
1,400,000 837,438 466,667 933,333 -
Mr. Kimmel 2,250,000 450,000 800,000 (2)
1,000,000 988,688 1,253,333 666,667 -
Mr. Beldin 1,500,000 450,000 425,000 625,000 548,782 208,333 416,667 -
Mr. Minix
1,000,000 (7)
450,000 (7) 200,000 (7) 350,000 - 116,667 233,333 -
(1)Amounts shown are annual base salaries as of January 1, 2024. Both Ms. Cohn's and Mr. Kimmel's base increased to $550,000 in October 2024.
(2)Amounts shown for Ms. Cohn is target STI Compensation as of January 1, 2024. Amounts shown for Mr. Kimmel is target STI Compensation as of March 17, 2024, when the Committee determined to increase his target compensation. Both Ms. Cohn's and Mr. Kimmel's STI targets increased to $850,000 in October 2024, in connection with their appointments as Co-Principal Executive Officers.
(3)Amounts shown are target LTI as of January 1, 2024, prior to the Merger. Amounts shown for Mr. Kimmel is target LTI Compensation as of March 17, 2024, when the Committee determined to increase his target compensation.
(4)Amounts shown reflect the 2024 STI paid to each of Messrs. Considine, Beldin, Kimmel and Ms. Cohn. The STI amounts are pro-rated to 113% for the first-half of 2024 and 110% for the second-half of 2024.
(5)For Messrs. Beldin, Kimmel, Minix and Ms. Cohn, time-based LTI comprises one-third of the LTI target, vesting ratably over four years, and is for the purpose of attracting and retaining key talent integral AIR’s success. For Messrs. Beldin, Kimmel, and Minix, and Ms. Cohn, time-based LTI was in the form of restricted stock. All restricted stock awards, whether vested or unvested, were cancelled and converted to cash, as a result of the Merger. Amounts shown for Mr. Kimmel includes his additional time-based grant on March 17, 2024.
(6)Amounts shown reflect a 100% payout of the performance-based shares resulting from achieving “target” performance. Actual payouts were to be determined in a range of 0% to 250% of these amounts, depending on performance results for the three-year performance period from January 1, 2024, through December 31, 2026. For Mr. Considine, the Merger provided that the issued and outstanding Partnership units awards (LTIP I) would remain issued and outstanding and continue to have the rights and privileges set forth in the Operating Partnership Agreement, as amended in connection with the Merger. For Messrs. Beldin, Kimmel, Minix and Ms. Cohn, performance-based equity represents two-thirds of their 2024 LTI awards, with the earned portion scheduled to vest 50% at the end of the three-year performance period and 50% one year later. Following the Merger, all restricted stock and stock option awards, whether vested or unvested, were cancelled and converted to cash. The Merger Agreement provides that upon a change of control, all performance goals applicable to restricted stock awards for 2022, 2023 and 2024 were measured at the greater of target level performance and actual performance through the closing date of the transaction, June 28, 2024. For the 2022 awards, performance was determined to be at 109.35%, and for the 2023 and 2024 awards, performance was determined to be at 200%.
(7)Mr. Minix was responsible for the AIR Operating Partnership's portfolio management and led the AIR investment team and was expected to be fully compensated based on transactions, had he remained with AIR. In connection with Mr. Minix’s resignation, he was paid $1,629,254 as set forth in his Separation Agreement.
How peer comparators were identified
The Committee considered enterprise Gross Asset Value (“GAV”), as reported by Green Street Advisors, to be an imprecise, but reasonable representation and useful reference point of the size or complexity of a real estate business and of the responsibilities of its leaders. In addition to GAV, the Committee also reviewed other factors, including gross revenues, number of properties, and number of employees, to determine if these factors provided any additional insight into the work and requirements of its leaders. Based on this analysis, we included as “peers” for 2024 compensation the following 20 real estate companies:
Peer Group
Agree Realty Corporation Independence Realty Trust
Americold Realty Trust Kilroy Realty Corp.
Brixmor Property Group, Inc. Kite Realty Group
Cousins Properties Macerich
CubeSmart National Storage
Douglas Emmett NNN Reit
EastGroup Properties Omega Healthcare Investors
Federal Realty Park Hotels
First Industrial Realty Spirit Realty Capital, Inc.
Healthcare Realty Trust STAG Industrial
Table of Content
At the time 2024 compensation targets were established, approximately half of these real estate companies had a larger GAV, and approximately half of these real estate companies had a smaller GAV, than AIR.
Following the Merger, the Operating Partnership no longer identifies a peer group.
Risk analysis of compensation programs
The Operating Partnership has reviewed and considered its executive compensation program and non-executive compensation programs (pre- and post-merger) and it does not believe that its compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the organization. The Operating Partnership believes that our compensation programs align management incentives with AIR’s long-term interests.
The AIR Operating Partnership's - Compensation Program Discourages Excessive Risk-Taking
Limits on STI. The compensation of executive officers and other teammates is not overly weighted toward STI. Moreover, STI is capped.
Use of LTI. LTI was included in target total compensation and typically vested over a period of four years. The vesting period encouraged officers to focus on sustaining the AIR Operating Partnership’s long-term performance. Executive officers with more responsibility for strategic and operating decisions had a greater percentage of their target total compensation allocated to LTI. LTI was capped at 2.5 times target, or 250%, for the CEO, and 2 times target, or 200%, for the other NEOs. Subsequent to the Merger, the Operating Partnership has stipulated, and may continue to stipulate, a vesting period for long-term incentive compensation.
Stock ownership guidelines and required holding periods after vesting. Prior to the Merger, AIR’s stock ownership guidelines required all executive officers to hold a specified amount of AIR equity. Any executive officer who had not yet satisfied the stock ownership requirements for his or her position must have retained LTI awards after vesting until stock ownership requirements were met. These policies ensured each executive officer had a substantial amount of personal wealth tied to long-term holdings in AIR stock. Following the Merger, these guidelines are no longer applicable.
Shared performance metrics across the organization. A portion of 2024 STI for AIR NEOs was based upon our performance against our publicly communicated corporate goals, which were core to the long-term strategy of our business and were reviewed and approved by the Committee. Fifty percent of Mr. Considine’s 2024 STI, and up to 75% of the STI for the other NEOs, was based upon our performance against our corporate goals. In addition, having shared performance metrics across the organization reinforced our focus on a collegial and collaborative environment.
LTI based on TSR. A portion of 2024 LTI for all the NEOs was based on relative TSR. In general, the more senior level the officer, the greater the percentage of LTI that is based on relative TSR rather than time-vesting. One hundred percent of Mr. Considine’s LTI, and a substantial proportion of the LTI for the other NEOs, was based on relative TSR.
Multiple performance metrics. We had five corporate goals for 2024. In addition, through our performance management program, Managing AIR Performance, or MAP, which set and monitored performance objectives for every team member, each team member had several different individual performance goals that are set at the beginning of the year and approved by management. Each of the NEOs had an average of eight individual goals for 2024. Having multiple performance metrics inherently reduced excessive or unnecessary risk-taking, as incentive compensation is spread among a number of metrics rather than concentrated in a few.
Post-Employment Compensation and Employment and Severance Arrangements
401(k) Plan
We provide a 401(k) plan that is offered to all teammates. In 2024, we matched 25% of participant contributions to the extent of the first 4% of the participant’s eligible compensation. For 2024, the maximum match was $3,450, which was the amount matched for each of Messrs. Considine, Beldin, Kimmel, Minix, and Ms. Cohn’s 401(k) contributions. We provided an additional discretionary match in the amount of $647 to all active team members in 2024 for our achievement of 111.5% on our 2024 corporate goals.
Other than the 401(k) plan, we do not provide post-employment benefits. Additionally, we do not maintain a defined benefit pension plan, a supplemental executive retirement plan or any other similar arrangements.
Executive Employment Arrangements
Employment Agreement for Mr. Considine
On December 21, 2017, Aimco entered into an employment agreement with Mr. Considine (as amended, the “2017 Employment Agreement”). From 2019 through 2023, Mr. Considine's employment agreement was amended annually primarily to extend the term of the agreement and adjust his base salary, target STI, and long-term incentive target.
Pursuant to the 2017 Employment Agreement, upon termination of Mr. Considine’s employment by AIR without cause, or by Mr. Considine for good reason, Mr. Considine was generally entitled to severance payments as described below in the Executive Severance Arrangements section.
Table of Content
Under the 2017 Employment Agreement, Mr. Considine was not entitled to any additional or special payments upon the occurrence of a change in control.
The 2017 Employment Agreement also contained customary confidentiality provisions, a limited mutual non-disparagement provision, and non-competition, non-solicitation, and no-hire provisions.
Upon Mr. Considine's departure, the Board appointed both Ms. Cohn and Mr. Kimmel, as Co-Principal Executive Officers of the Operating Partnership. Ms. Cohn will also continue serving as President, General Counsel, and Secretary and a director of the Board, and Mr. Kimmel will also continue serving as President of Property Operations.
Offer Letters for both Ms. Cohn and Mr. Kimmel
Offer Letter with Ms. Cohn
The Operating Partnership entered into an offer letter with Ms. Cohn, effective as of October 18, 2024, which provides for (i) an annual base salary of $550,000, (ii) eligibility for annual performance bonuses in a target amount equal to $850,000, (iii) participation in the AIR Operating Partnership’s long term incentive plan with an annual cash grant valued at $1,750,000, that will vest over a three-year period (with the initial grant vesting 25% at the end of 2025 and 2026 and 50% at the end of 2027), and in future years, Ms. Cohn is expected to receive an annual LTI grant with a target grant date value equal to $1,750,000, with the same vesting schedule as noted above, subject to her continued employment, (iv) participation in the AIR Operating Partnership’s promote pool with an initial grant representing the right to receive 8% of the AIR Operating Partnership’s promote pool and eligibility for additional grants upon future AIR investments and investments managed by the AIR Operating Partnership, (v) a cash sign-on award equal to $778,965, (vi) paid time off and (vii) participation in the Operating Partnership’s employee benefit plans. For performance year 2024, pursuant to her offer letter, Ms. Cohn will be eligible to receive, subject to achievement of individual and AIR performance goals, (A) for the period between January 1, 2024 and June 28, 2024, a pro-rata portion of her target bonus as in effect prior to June 28, 2024, equal to $550,000 and (B) for the period between June 29, 2024 and December 31, 2024, a pro-rata portion of her target bonus as now in effect, which total amount for the 2024 performance year will not be less than $550,000.
Offer Letter with Mr. Kimmel
The Operating Partnership entered into an offer letter with Mr. Kimmel, effective as of October 18, 2024, which provides for (i) an annual base salary of $550,000, (ii) eligibility for annual performance bonuses in a target amount equal to $850,000, (iii) participation in the AIR Operating Partnership’s long term incentive plan with an annual cash grant date valued at $1,750,000, which will vest over a three-year period (with the initial grant vesting 25% at the end of 2025 and 2026, and 50% at the end of 2027), and in future years, Mr. Kimmel is expected to receive an annual LTI grant with a target grant date value equal to $1,750,000, with the same vesting schedule as noted above, subject to his continued employment, (iv) participation in the AIR Operating Partnership’s promote pool with an initial grant representing the right to receive 12% of the AIR Operating Partnership’s promote pool and eligibility for additional grants upon future AIR investments and investments managed by the AIR Operating Partnership, (v) a cash sign-on award equal to $690,215, (vi) paid time off and (vii) participation in the Operating Partnership’s employee benefit plans. For performance year 2024, pursuant to his offer letter, Mr. Kimmel will be eligible to receive, subject to achievement of individual and the AIR Operating Partnership performance goals, (A) for the period between January 1, 2024 and June 28, 2024, a pro-rata portion of his target bonus as in effect prior to June 28, 2024, equal to $800,000 and (B) for the period between June 29, 2024 and December 31, 2024, a pro-rata portion of his target bonus as now in effect, which total amount for the 2024 performance year will not be less than $800,000.
Messrs. Beldin and Minix do not have an employment agreement.
Executive Severance Arrangements
Executive Severance Policy. In connection with the separation from Aimco, AIR adopted the Apartment Income REIT Corp. Executive Severance Policy (the “Executive Severance Policy”). The Executive Severance Policy supersedes and replaces any employment agreement or other plan, policy or practice involving the payment of severance benefits to participants under the Executive Severance Policy. AIR’s Presidents and Executive Vice Presidents as determined on the records of AIR and any other entities through which the operations of AIR are conducted, are eligible to participate in the Executive Severance Policy. Mr. Considine was not a participant of the Executive Severance Policy but was subject to the terms of the Considine Separation Agreement as described further below. As a result of Mr. Cohn's and Mr. Kimmel's appointments to Co-Principal Executive Officers, neither of them are participants in the Executive Severance Policy. Their severance arrangements are described further below. Mr. Beldin is a participant under the Executive Severance Policy. Mr.
Table of Content
Minix was a participant under the Executive Severance Policy up until the time of his voluntary departure on October 7, 2024.
Executive Severance Policy
The Executive Severance Policy, which is currently applicable for only Mr. Beldin, provides that if AIR terminates a participant’s employment without “Cause,” or if the participant terminates his or her employment for “Good Reason” (each as defined in the Executive Severance Policy), then the participant will be eligible to receive the following benefits:
•a lump sum payment equal to the sum of (i) the annual base salary for the calendar year of the date of termination, and (ii) the average annual bonus paid to the participant in the most recent three years; and
•18 months of continued health benefits coverage at AIR’s expense.
The vesting and exercise of any Equity Awards held by a participant on the date of termination will be determined in accordance with the applicable incentive plan and award agreement.
Pursuant to the terms of the Executive Severance Policy, if AIR terminates a participant’s employment without Cause, or if the participant terminates his or her employment for Good Reason, in either case, within the period commencing six months prior to and ending 12 months following a “Change in Control” (as defined in the Executive Severance Policy), then in lieu of the severance benefits described above the participant will be eligible to receive the following benefits:
•a lump sum payment equal to two times the sum of (i) the annual base salary for the calendar year of the date of termination, and (ii) the average annual bonus paid to the Eligible Executive in the most recent three years;
•18 months of continued health benefits coverage at AIR’s expense; and
•100% accelerated vesting of any unvested Equity Awards then-held by the participant.
The Executive Severance Policy provides that if the employment of the participant is terminated by reason of the participant’s death or disability, then the participant will be eligible to receive a pro-rated bonus for the year of termination. In addition, the vesting and exercise of any Equity Awards held by the participant at the time of his or her death or disability will be determined in accordance with the applicable incentive plan and award agreement.
In the event that any payment or benefit payable to a participant under the Executive Severance Policy would result in the imposition of excise taxes under the “golden parachute” provisions of Section 280G of the Code, then such payments and benefits will either be made and/or provided in full or will be reduced such that the excise tax under Section 280G is not applicable, whichever is least economically disadvantageous to the participant. The Executive Severance Policy does not provide for any excise tax or other tax “gross-up” payment.
All severance payments and benefits under the Executive Severance Policy are subject to applicable withholding obligations, the participant’s execution and non-revocation of a release of claims, and compliance with certain non-competition, non-disclosure and non-solicitation covenants set forth in a restrictive covenant agreement that is appropriate for the participant’s position.
The Executive Severance Policy will remain in effect, subject to amendment, until terminated by the Board. The Board may terminate or amend the Executive Severance Policy at any time, so long as at least 90 days’ prior notice is provided to any participant if the termination or amendment of the Executive Severance Policy would materially or adversely affect the rights of the participant.
Departure of Mr. Considine
On October 2, 2024 (the “Separation Date”), Mr. Considine voluntarily stepped down as CEO of the Operating Partnership and as a director of the Board of AIR.
In connection with Mr. Considine’s decision to depart, the Operating Partnership, AIR and Mr. Considine entered into a separation agreement, dated as of the Separation Date (the “Considine Separation Agreement”). The Considine Separation Agreement, in exchange for a release of claims and other agreements, acknowledgments and representations of Mr. Considine set forth therein, provides for the payment of the following severance benefits following the Separation Date
Table of Content
that are generally consistent with the severance benefits provided for in connection with a separation without cause under the 2017 Employment Agreement: (i) payment, on January 7, 2025, of an amount equal to the sum of (x) three times Mr. Considine’s base salary of $800,000 plus (y) Mr. Considine’s target STI for 2024 of $2,200,000; (ii) payment, on or before November 29, 2024, of a pro-rata portion of Mr. Considine’s STI for 2024 in the amount of $2,569,370; (iii) continued medical coverage at the Operating Partnership’s expense of Mr. Considine and his spouse and other eligible dependents until 18 months following the Separation Date or, if earlier, the date Mr. Considine becomes eligible for medical coverage under a subsequent employer’s plans, plus, if Mr. Considine and his dependents did not become eligible for coverage earlier, within 30 days of the end of the 18-month period following the Separation Date, a lump sum payment equal to six times the monthly COBRA premium amount; and (iv) payment, on January 7, 2025, of an amount equal to $15,385 in consideration of Mr. Considine’s release of certain claims. The Considine Separation Agreement also provides for payment, on or before November 29, 2025, of an amount equal to $1,250,000, in exchange for a release of claims and modifications of certain of the restrictive covenants to which Mr. Considine is subject.
The following arrangement below applies to both Ms. Cohn and Mr. Kimmel.
As of October 18, 2024, both Ms. Cohn and Mr. Kimmel’s offer letters provide that, if either Ms. Cohn's or Mr. Kimmel’s employment is terminated by the Operating Partnership without “cause” or by Ms. Cohn and Mr. Kimmel for “good reason” (each as defined in both Ms. Cohn and Mr. Kimmel’s offer letters) within 12 months of the effective date of the offer letter, or due to death or incapacity at any time, Ms. Cohn and Mr. Kimmel will be eligible to receive the following severance payments: (i) an amount equal to 12 months of base salary, (ii) an amount equal to target annual bonus, (iii) any earned and unpaid annual bonuses not yet received, (iv) the amount of the Operating Partnership’s share of healthcare insurance premiums for 18 months, and (v) in the case of death or incapacity only, pro-rata vesting of long-term incentive and AIR promote grants.
Departure of Joshua Minix
In connection with Mr. Minix’s departure, the Operating Partnership, AIR and Mr. Minix entered into a separation agreement and general release, dated as of October 7, 2024 (the “Minix Separation Agreement”). The Minix Separation Agreement, in exchange for a release of claims and other agreements, acknowledgements and representations of Mr. Minix set forth therein, among other items, provides for the payment of the following severance benefits following execution of the Minix Separation Agreement: (i) a separation payment of $1,620,600; and (ii) payment of an amount equal to $8,654 in consideration of Mr. Minix’s release of certain claims.
Restrictive Covenants
Mr. Considine’s employment agreement included customary confidentiality provisions and a limited mutual non-disparagement provision and is also subject to non-competition, non-solicitation, and no-hire provisions that generally are in effect during, and for 24 months following termination of, Mr. Considine’s employment. In the Considine Separation Agreement, the Operating Partnership and Mr. Considine each agreed to certain modifications to obligations owed to one another under the restrictive covenants contained in the Employment Agreement, including waiving Mr. Considine’s non-solicitation and no-hire covenants with respect to certain employees of the Operating Partnership.
The following applied to both Ms. Cohn and Mr. Kimmel prior to their appointments as Co-Principal Executive Officers on October 18, 2024, and currently applies to Mr. Beldin. It also applied to Mr. Minix prior to his departure in October 2024.
We are party to a restrictive covenant agreement (which we refer to as a “restrictive agreement”) with each of our executive officers (other than Mr. Considine). If an executive officer breaches the restrictive agreement, the executive will forfeit any right to separation pay or separation benefits under the Executive Severance Policy, will not be entitled to any further payment or right under the Executive Severance Policy and, with respect to any separation payment that has been made to or on behalf of the executive officer under the Executive Severance Policy, the executive officer will repay to AIR the amount of any such prior payment plus interest.
The restrictive agreements include customary confidentiality provisions and non-disparagement provisions and also include non-competition, non-solicitation, and no-hire provisions that generally are in effect during, and for 24 months following termination of, the executive’s employment with respect to Messrs. Beldin and Kimmel and Ms. Cohn and for 18 months following termination of the executive’s employment with respect to Mr. Minix (except that the non-competition provision in Mr. Minix’s restrictive agreement extends to 12 months following termination of employment).
Table of Content
As of October 18, 2024, the restrictive covenant agreement attached to both Ms. Cohn’s and Mr. Kimmel’s offer letters includes covenants in respect of confidentiality of information, assignment of certain intellectual property, non-competition, non-solicitation and non-disparagement. The confidentiality and mutual non-disparagement covenants have an indefinite term, and the non-competition and non-solicitation covenants are effective during both Ms. Cohn’s and Mr. Kimmel’s employment and until the first anniversary of his or her termination of employment.
Equity Award Agreements
Double Trigger Vesting Upon Change in Control
Prior to the Merger, the award agreements pursuant to which restricted stock, LTIP Unit, or stock option awards were granted to Messrs. Considine, Beldin, Kimmel, and Minix, and Ms. Cohn, as applicable, provided that if (i) a change in control occurs and (ii) the executive’s employment with AIR is terminated either by AIR without cause or by the executive for good reason, in either case, within 12 months following the change in control, then (a) for time-based options or restricted stock, all outstanding shares of restricted stock or unvested stock options shall become immediately and fully vested and exercisable, and all vested options will remain exercisable for the remainder of the term of the option, and (b) for performance-based options, restricted stock and/or LTIP Unit awards, shares, unvested options and/or units will vest based on the higher of actual or target performance through the truncated performance period ending on the date of the change in control, and all vested options will remain exercisable for the remainder of the term of the option. As a result of the Merger, all restricted stock and stock option awards were cancelled and converted to cash, so this would not apply.
Accelerated Vesting Upon Termination of Employment Due to Death or Disability
In the case of Mr. Considine, the 2017 Employment Agreement provided for accelerated vesting in the event of termination due to his death or disability. Additionally, the award agreements pursuant to which restricted stock, LTIP Unit or stock option awards were granted to Messrs. Considine, Beldin, Kimmel, and Minix, and Ms. Cohn, as applicable, provided for accelerated vesting upon a termination of employment due to death or disability. These provisions are inoperative as a result of Mr. Considine’s separation and cancellation and conversion of the foregoing awards in connection with the Merger.
Other Benefits; Perquisite Philosophy
Our executive officer benefit programs are substantially the same as for all other eligible officers and employees. AIR does not provide executives with more than minimal perquisites, such as reserved parking places.
Role of Outside Consultants
Prior to the Merger, the Committee had the authority under its charter to engage the services of outside advisors, experts, and others to assist the Committee. In 2024, the Committee engaged FPL Associates, L.P. (“FPL”) to review our executive compensation plan. FPL did not provide other services to AIR. The Committee instructed FPL to compile and provide data on both total pay and individual elements of compensation among companies in the peer groups, as well as trends in compensation practices that they observed within the peer groups and generally among public companies. The Committee assessed the independence of FPL pursuant to SEC rules and concluded that FPL was independent. Following the Merger, AIR has not engaged FPL or any other outside consultant.
Base Salary, Incentive Compensation, and Equity Grant Practices
Prior to the Merger, base salary adjustments typically took effect on January 1. The Committee (for Mr. Considine) and Mr. Considine, in consultation with the Committee (for the other executive officers), determined incentive compensation in late January or early February. STI is typically paid in February or March.
Prior to the Merger, with respect to LTI, the Committee set the grant date for restricted stock, LTIP Unit, and stock option grants at the time of its final compensation determination, generally in late January or early February, although for 2024 determined to make those grants on January 1, 2024. The date of determination and date of award were not selected based on share price. In the case of new-hire packages that included Equity Awards, grants were made on the employee’s start date or on a date designated in advance based on the passage of a specific number of days after the employee’s start date. For non-executive officers, the Committee delegated the authority to make Equity Awards, up to certain limits, to the Chief Financial Officer (Mr. Beldin) and/or Corporate Secretary (Ms. Cohn). Although, we did not have a formal policy, the Committee and Mr. Beldin and Ms. Cohn made grants without regard to the share price or the timing of the release of material non-public information and did not make grants for the purpose of affecting the value of
Table of Content
executive compensation. Subsequent to the Merger, the Operating Partnership does not expect to grant any Equity Awards: accordingly, it does not have a policy on the timing of Equity Awards in relation to material non-public information.
2025 Compensation Targets
In October 2024, the Board, set target total compensation (base compensation, STI, and LTI) for 2025 for Ms. Cohn at $3,150,000 and Mr. Kimmel at $3,150,000. Ms. Cohn and Mr. Kimmel set Mr. Beldin's total compensation at $1,500,000. In February 2025, Ms. Cohn and Mr. Kimmel increased Mr. Beldin's total compensation, from the previous amount set in October 2024, from $1,500,000 to $1,625,000.
The AIR Operating Partnership's performance and individual performance will determine the amounts paid for 2025 STI. The LTI granted to Ms. Cohn and Messrs. Beldin and Kimmel was granted in the form of time-based deferred cash, which vests over a 3-year period, 25% per year at the end of 2025 and 2026, and 50% at the end of 2027, subject to continued service. STI that is ultimately earned may be less than, or in excess of, these target amounts.
Compensation Committee Report
Our Board does not have a compensation committee. The entire Board has reviewed and discussed with management the foregoing Compensation Discussion & Analysis. Based upon such review, the related discussions and such other matters deemed relevant and appropriate by the Board, the Board has recommended that the "Compensation Discussion & Analysis" be included in this filing.
LISA COHN
ASIM HAMID
SCOTT MCCALLUM
RICHARD REYES
JACOB WERNER
The above report will not be deemed to be incorporated by reference into any filing by the AIR Operating Partnership under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the AIR Operating Partnership specifically incorporates the same by reference.
Table of Content
Summary Compensation Table
The table below summarizes the compensation of the NEOs for the years 2024, 2023, and 2022.
Name and
Principal Position Year Salary
($) Bonus
($) Stock
Awards
($)(1)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)
All Other
Compensation
($)(4)
Total
($)
Terry Considine -
630,770 (5)
- 5,000,093 (5)
- 2,569,370 (5)
5,869,842 (5)
14,070,075
Former Chief
800,000 - 7,390,311 - - 4,567 8,194,878
Executive Officer
(6)
400,000 (6)
- 3,400,008 (6)
- 1,611,720 (6)
4,300 5,416,028 (6)
Lisa R. Cohn - 2024
488,462 (7)
889,483 (7) 1,402,610 (7)
(8)
- 837,438 (7) 4,097 3,622,090
President, General Counsel and
450,000 - 1,398,580
- 721,875 4,567 2,575,022
Secretary (Co-Principal Executive Officer)
450,000 - 1,194,658 - 719,029 4,300 2,367,987
Keith M. Kimmel - 2024
488,462 (9) 345,108 (9) 1,921,950 (8)
(9)
- 988,688 (9) 4,097 3,748,305
President of Property
450,000 - 999,024 - 776,875 4,567 2,230,466
Operations (Co-Principal Executive Officer
450,000 - 814,576 - 666,163 4,300 1,935,039
Paul L. Beldin - 2024
450,000 (10) 500,000 (10)
626,211 (8) (10)
- 548,782 (10)
4,097 2,129,090
Executive Vice 2023
450,000 - 532,270 92,507 547,188 4,567 1,626,532
President and Chief
Financial Officer 2022
450,000 - 401,913 - 364,331 4,300 1,220,544
Joshua Minix -
12,115 (11) - 350,700 (8)
(11)
- - 1,633,351 (11) 1,996,166
Former Executive Vice President and
450,000 - - - 1,190,000 324,567 1,964,567
Chief Investment Officer
(1)This column represents the aggregate grant date fair value of stock awards in the year granted computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions with respect to the grants reflected in this column for 2024, refer to Note 2 to the consolidated financial statements in Item 8 for discussion regarding share-based compensation.
The amounts shown in this column for 2024 include the grant date fair value of the performance-based restricted stock awards or performance-based LTIP I Unit awards, as applicable, granted in 2024 based on the probable outcome of the performance condition to which such awards are subject, which was calculated by a third-party consultant using a Monte Carlo valuation model in accordance with FASB ASC Topic 718.
Metric and Valuation per Instrument
LTIP I Units
Restricted Stock
Relative to Nareit Equity Apartments Index (30% Weighting)
$37.13 $37.03
Relative to MSCI US REIT Index (20% Weighting)
$38.37 $38.26
Relative to Nareit Equity Apartments Index with Multifamily Peer Ranking
(50% Weighting)
*The maximum payout is 300% if AIR's 3-yr TSR ranks 1st among its peers and the AIR Operating Partnership unitholders have received at least a 25% absolute TSR. Nothing will be paid on this portion of the LTI if the AIR Operating Partnership's TSR ranks last among its peers
$44.08 $43.75
The grant date fair value of the performance-based LTIP II Unit award, assuming achievement at the maximum level of performance, is $12,500,227 for Mr. Considine. The grant date fair value of the performance-based restricted stock awards, assuming achievement at the maximum level of performance, was $1,251,269 for Mr. Beldin, $2,802,664 for Ms. Cohn, $2,922,072 for Mr. Kimmel, and $700,763 for Mr. Minix. Following the Merger, all restricted stock awards, whether vested or unvested, were cancelled and converted to cash. The Merger Agreement also provided that upon a change of control, all performance goals applicable to restricted stock awards for 2022, 2023, and 2024 be measured at the greater of target level performance and actual performance through the closing date of the transaction, June 28, 2024. As documented in Mr. Considine’s Separation Agreement, certain “LTIP units” in the Operating Partnership held by Mr.
Table of Content
Considine vested in accordance with their terms as of the October 2, 2024 as a result of Mr. Considine’s departure within one year following a change in control of AIR, which resulted in the vesting of 246,356 LTIP I Units and 2,562,284 LTIP II Units as of the Separation Date. Mr. Considine’s OP Units (including OP Units received upon conversion of Mr. Considine's LTIP I Units) and vested LTIP II Units, remain subject to their existing terms.
(2)This column represents the aggregate grant date fair value of the option awards in the year granted computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions with respect to the grants reflected in this column for 2023, refer to Note 2 to the consolidated financial statements in Item 8 for discussion regarding share-based compensation.
The amounts shown in this column for 2023 include the grant date fair value of the performance-based stock options granted in 2023 based on the probable outcome of the performance condition to which such option is subject, which was calculated by a third-party consultant using a Monte Carlo valuation model. The grant date fair value of the options assuming achievement at the maximum level of performance is $277,521 for Mr. Beldin. Following the Merger, all stock options, whether vested or unvested, were cancelled and converted to cash.
(3)The 2024 amounts shown for Messrs. Considine, Beldin, and Kimmel, and Ms. Cohn represent the STI amounts that were earned in the fiscal year. For Mr. Considine, the amount represents his 2024 prorated STI.
(4)Includes discretionary matching contributions and discretionary employer contributions under AIR’s 401(k) plan. For Messrs. Considine and Minix, these amounts also include separation pay. For Mr. Considine, his separation pay is $4,615,385 (3 times base pay of $800,000, 2024 target STI of $2,200,000, ADEA of $15,385) and the restrictive covenants payment is $1,250,000. For Mr. Minix, his separation pay is $1,629,254.
(5)Amounts in this table reflect Mr. Considine’s compensation paid through his departure date. Mr. Considine’s base salary was $630,770. Mr. Considine’s 2024 LTI award consisted of 123,178 performance-based LTIP I Units (at target) for the forward looking, three-year performance period from January 1, 2024, through December 31, 2026, with the number of units earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later. His target STI award was $2,200,000. Pursuant to the terms of the Considine Separation Agreement, Mr. Considine was paid $2,569,370. The “All Other Compensation” amount includes a separation payment of $4,615,385 to Mr. Considine that was paid on January 7, 2025, and a cash payment of $1,250,000 for his timely execution and non-revocation of the Considine Separation Agreement, which is described below.
(6)The amounts shown for Mr. Considine reflect his voluntary reduction of his compensation to offset the compensation he received directly from Aimco. For 2022, Mr. Considine’s: base compensation was $400,000, reduced by him from $700,000; STI target was $1,200,000, reduced by him from $1,800,000; LTI target was $3,400,000, reduced by him from $4,300,000.
(7)Amounts in this table reflect Ms. Cohn’s pre-Merger compensation as well as the changes to her compensation in connection with her October 2024 appointment as Co-Principal Executive Officer. Her base salary target increased from $450,000 to $550,000, and the amount shown is her actual pay. The $889,483 represents a $500,000 bonus paid in connection with the Merger and a $389,483 sign on bonus paid in 2024 (which represents 50% of a total award of $837,438, with the other 50% scheduled to be paid in 2025). Equity Awards for Ms. Cohn in 2024 include a 2024 LTI award consisting of the following: (i) 13,511 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 23,108 shares of performance-based restricted stock (at target) for the forward looking, three-year performance period from January 1, 2024, through December 31, 2026, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later. The STI amount of $837,438 is prorated based on Ms. Cohn’s target prior to becoming Co-Principal Executive officer and after such appointment, with the performance metrics on KPI and MAP as described above.
(8)2024 LTI performance was determined to be at a 200% payout for the truncated performance period from January 1, 2024, through June 28, 2024, which was the closing date of the Merger. In connection with the Merger, all restricted stock and stock options awards, whether vested or unvested, were cancelled and converted to cash.
(9)Amounts in this table reflect Mr. Kimmel’s pre-Merger compensation as well as the changes to his compensation in connection with his October 2024 appointment as Co-Principal Executive Officer. His base salary target increased from $450,000 to $550,000, and the amount shown is his actual pay. The $345,108 represents a sign on bonus paid in 2024 (which represents 50% of a total award of $837,438, with the other 50% scheduled to be paid in 2025). Equity Awards for Mr. Kimmel in 2024 include a 2024 LTI award consisting of the following: (i) 38,619 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 16,507 shares of performance-based restricted stock (at target) for the forward looking, three-year performance period from January 1, 2024, through December 31, 2026, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later. The STI target amount of $988,688 is prorated based on Mr. Kimmel’s target prior to becoming Co-Principal Executive officer and after such appointment, with the performance metrics on KPI and MAP as described above.
(10)Amounts in this table reflect Mr. Beldin’s compensation. His base compensation is $450,000. The $500,000 was paid in connection with the Merger. Equity Awards for Mr. Beldin in 2024 include 2024 LTI award consisting of the following: (i) 6,032 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 10,317 shares of performance-based restricted stock (at target) for the forward looking three-year performance period from January 1, 2024, through December 31, 2026, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later. The STI amount is $548,782.
(11)Amounts in this table reflect Mr. Minix’s compensation. His base pay, which excludes the $450,000 for his draw, was $12,115. Mr. Minix was responsible for AIR’s portfolio management and led the AIR investment team and was expected to be fully compensated based on transactions, had he remained with the AIR Operating Partnership. Equity Awards for Mr. Minix in 2024 include 2024 LTI award consisting of the following: (i) 3,378 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 5,778 shares of performance-based restricted stock (at target)for the forward looking three-year performance period from January 1, 2024, through December 31, 2026, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later. At the time of his departure on October 7, 2024, Mr. Minix earned $1,629,254 which includes his deferred compensation in respect to transaction close in previous years, a pro-rated portion of his transaction bonus granted in connection with the Merger, his remaining make whole cash grant, and his transaction based STI for 2024.
Grants of Plan-Based Awards in 2024
The following table provides details regarding plan-based awards granted to the NEOs during the year ended December 31, 2024. As of June 28, 2024, all restricted stock and stock option grants, whether vested or unvested, were
Table of Content
cancelled and converted to cash in connection with the Merger. 2024 LTI performance was determined to be at a 200% payout, based on a truncated performance period from January 1, 2024, through June 28, 2024, which was the closing date of the Merger. The determination is further described above under the Determination Regarding 2022, 2023, and 2024 Performance Share Awards section. Subsequent to the Merger, no grants of plan-based awards were made.
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
All Other Stock Awards: Number of Shares of Stock or Units (#)(3)
All other Option Awards
Number of Securities
Underlying Options Exercise or Base Price of Option
Awards
($/Sh) Grant Date Fair Value of Stock and Option Awards ($)(4)
Name Grant
Date Threshold
($) Target
($) Maximum
($) Threshold
(#) Target
(#) Maximum
(#) Threshold
(#) Target
(#) Maximum
(#)
Terry Considine
1/1/24 1,100,000 2,200,000 4,400,000
1/1/24 61,589 123,178 307,945 5,000,093
Lisa R. Cohn
1/1/24 350,000 700,000 1,400,000
1/1/24 13,511 469,237
1/1/24 11,554 23,108 57,770 933,373
Keith M. Kimmel
1/1/24 412,500 825,000 1,650,000
1/1/24 9,651 335,179
1/1/24 8,254 16,507 41,268 666,747
3/17/24 28,968 920,024
Paul L. Beldin 1/1/24 212,500 425,000 850,000
1/1/24 6,032 209,491
1/1/24 5,159 10,317 25,793 416,719
Joshua Minix
1/1/24 100,000 200,000 400,000
1/1/24 3,378 117,318
1/1/24 2,889 5,778 14,445 233,382
(1)On January 1, 2024, the Committee made determinations of target total incentive compensation for 2024 based on achievement of our five corporate goals for 2024, and achievement of specific individual objectives. Approximate target total incentive compensation amounts were as follows: Mr. Considine - $7.2 million; Mr. Beldin - $1.05 million; Ms. Cohn - $2.1 million; Mr. Kimmel - $2.75 million (which target amount was adjusted on March 17, 2024); Mr. Minix - $0.6 million. The awards in this column indicate the 2024 STI portion of these target total incentive amounts - at threshold, target, and maximum performance levels. The actual 2024 STI awards earned by each of Messrs. Considine, Beldin, Kimmel, Minix, and Ms. Cohn are as disclosed in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” Ms. Cohn's non-equity incentive plan compensation is an average of her January 1, 2024, target STI and October 18, 2024, target STI. Mr. Kimmel's non-equity incentive plan compensation is an average of his March 17, 2024, target STI and October 18, 2024 target STI. On March 17, 2024, Mr. Kimmel's target STI was changed from $550,000 to $800,000. On October 18, 2024, each of Ms. Cohn and Mr. Kimmel's target STI changed to $850,000.
See the discussion above under "CD&A - How the Committee determined the amount of target total compensation for executive officers."
(2)The amounts in this column include the number of shares underlying LTIP I Units for Mr. Considine, and restricted stock for Messrs. Beldin, Kimmel, and Minix and Ms. Cohn. These awards were granted on January 1, 2024, pursuant to their 2024 LTI award that may be earned - at threshold, target and maximum performance levels - based on relative TSR (50% of each award is based on the AIR’s TSR relative to the Nareit Equity Apartments Index with Multifamily Peer Ranking, 30% of each award is based on our TSR relative to the Nareit Equity Apartments Index and 20% of each award is based on AIR's TSR relative to the MSCI US REIT Index) over a three-year period from January 1, 2024, to December 31, 2026, with the number of units or shares earned, if any, vesting 50% on the later of the third anniversary of the grant date or the date on which performance is determined (but no later than March 15, 2027), and 50% on the fourth anniversary of the grant date.
(3)The amounts in this column reflect the number of shares of time-based restricted stock granted pursuant to the 2024 LTI award, vesting 25% on each anniversary of the grant date. The number of shares of restricted stock was determined based on the five trading days up to and including the grant date, or $34.54 for the January 1, 2024, grant date for Messrs. Beldin, Kimmel, and Minix and Ms. Cohn and $31.76 for Mr. Kimmel's additional grant on March 17, 2024.
(4)This column represents the aggregate grant date fair value of Equity Awards in the year granted computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions with respect to the grants reflected in this column, refer to Note 2 to the consolidated financial statements in Item 8 for discussion regarding share-based compensation for the year ended December 31, 2024. The amounts shown in this column include the grant date fair value of the performance-based restricted stock awards, and LTIP I Unit awards, as applicable, based on the probable outcome of the performance condition to which such awards are subject, which was calculated by a third-party consultant using a Monte Carlo valuation model in accordance with FASB ASC Topic 718.
Table of Content
Metric and Valuation per Instrument
LTIP I Units
Restricted Stock
Relative to Nareit Equity Apartments Index (30% Weighting)
$37.13 $37.03
Relative to MSCI US REIT Index (20% Weighting)
$38.37 $38.26
Relative to Nareit Equity Apartments Index with Multifamily Peer Ranking
(50% Weighting)
*The maximum payout is 300% if AIR's 3-yr TSR ranks 1st among its peers and the AIR Operating Partnership unitholders have received at least a 25% absolute TSR. Nothing will be paid on this portion of the LTI if the AIR Operating Partnership's TSR ranks last among its peers
$44.08 $43.75
The grant date fair value of the performance based LTIP I Unit award, assuming achievement at the maximum level of performance, is $12,500,227 for Mr. Considine. The grant date fair value of the performance-based restricted stock awards, assuming achievement at the maximum level of performance, is $1,251,269 for Mr. Beldin, $2,802,664 for Ms. Cohn, $700,763 for Mr. Minix, and $2,922,072 for Mr. Kimmel. Following the Merger, all restricted stock awards, whether vested or unvested, were cancelled and converted to cash.
Outstanding Equity Awards at Fiscal Year-End 2024
As of December 31, 2024, there are no outstanding Equity Awards due to the Merger, as all restricted stock and stock option awards, whether vested or unvested were cancelled and converted to cash. In connection with Mr. Considine’s decision to resign, certain LTIP units held by him vested, with all remaining unvested LTIP units being forfeited, resulting in the acceleration of share-based compensation. All vested LTIP I units were converted into common OP Units during the fourth quarter of 2024. As of December 31, 2024, there are 2,562,284 vested LTIP II units outstanding at a weighted-average grant date fair value of $9.81 per unit.
Option Exercises and Stock Vested in 2024
The following table sets forth certain information regarding options and stock awards exercised and vested, respectively, during the year ended December 31, 2024, for the persons named in the Summary Compensation Table above.
Option Awards Stock Awards (1)
Name Number of Shares Acquired on Exercise (#) Value Realized
on Exercise ($)(2)
Number of Shares Acquired on Vesting (#) Value Realized
on Vesting ($)(3)
Terry Considine
2,855,692 (4)
72,461,392
Lisa R. Cohn - - 7,226 237,325
Keith M. Kimmel - - 5,029 165,153
Paul L. Beldin - - 2,206 72,487
Joshua Minix
- - - -
(1)Amounts reflected in the table exclude cash consideration received pursuant to the terms of the Merger Agreement upon cancellation of outstanding Equity Awards, as all restricted stock and stock option awards, in connection with Closing.
(2)Amounts reflect the difference between the exercise price of the option and the market price at the time of exercise.
(3)Amounts reflect the closing market price of AIR’s Common Stock on the day the equity instrument vested. The closing price was $33.08 on January 25, 2024, $33.16 on January 28, 2024, $32.92 on January 29, 2024, $32.69 on January 30, 2024, $33.03 on January 31, 2024, $32.80 on February 1, 2024, and $39.12 on June 28, 2024.
(4)This is comprised of 293,408 LTIP II Units. Had those LTIP II Units been converted on the date of vesting, the LTIP II Units value would have been $0.00; however, that amount does not reflect the value of having the ability to control the timing of conversion and the ultimate value that may be realized. Once vested and until the 10-year anniversary of the grant date, the LTIP II Units may be converted at the holder’s election into a number of OP Units determined based on a market value formula less the conversion price. In addition, all vested LTIP I units were converted into common OP Units during the fourth quarter of 2024. As of December 31, 2024, there are 2,562,284 vested LTIP II units outstanding at a weighted-average grant date fair value of $9.81 per unit.
Departure of Mr. Considine
On October 2, 2024, Mr. Considine voluntarily stepped down as CEO of the Operating Partnership and as a director of the Board of AIR. In accordance with Mr. Considine’s employment agreement, he received a lump sum payment for the following amounts (i) payment, on January 7, 2025, of an amount equal to the sum of (x) three times Mr. Considine’s base salary of $800,000 plus (y) Mr. Considine’s target STI for 2024 of $2,200,000; (ii) payment, on or before November 29, 2024, of a pro-rata portion of Mr. Considine’s STI for 2024 in the amount of $2,569,370; (iii) continued medical coverage at the Operating Partnership’s expense of Mr. Considine and his spouse until 18 months following the
Table of Content
Separation Date (iv) payment, on January 7, 2025, of an amount equal to $15,385 in consideration of Mr. Considine’s release of certain claims.
Potential Payments Upon Termination or Change in Control
The NEOs are entitled to certain severance payments and benefits upon a qualifying termination of employment or, in the case of a change in control, double trigger accelerated vesting of Equity Awards in the event of a qualifying termination of employment that occurs within one year following a change in control. Severance payments are calculated differently for Mr. Beldin than for Ms. Cohn and Mr. Kimmel. The terms of these arrangements are described under “CD&A - Post-Employment Compensation and Employment and Severance Arrangements - Executive Employment Arrangements, Executive Severance Arrangements and Equity Award Agreements” above.
In the table that follows, potential payments and other benefits payable upon termination of employment and change in control situations are set out as if the conditions for payments had occurred and/or the terminations took place on December 31, 2024. In setting out such payments and benefits, amounts that had already been earned as of the termination date are not shown. Also, benefits that are available to all full-time regular employees when their employment terminates are not shown. The amounts set forth below are estimates of the amounts that could be paid out to the NEOs upon their termination. The actual amounts to be paid out can only be determined at the time of such NEOs’ separation from AIR. The following table summarizes the potential payments under various scenarios if they had occurred on December 31, 2024.
Value of Accelerated Stock and Stock Options ($)(1)
Severance ($)
Name Change in Control
Only Double
Trigger
Change in Control Death or
Disability Termination
Without
Cause Termination
For Good
Reason Death Disability Termination
Without
Cause Termination For Good Reason Termination Without Cause or For Good
Reason in Connection with a Change in
Control Non- Competition Payments
($)(2)
Lisa R. Cohn - - - - - - 3,184,113 (3)
1,434,113 (4)
1,434,113 (4)
1,434,113 (4)
-
Keith M. Kimmel - - - - - - 3,186,554 (3)
1,436,554 (4)
1,436,554 (4)
1,436,554 (4)
-
Paul L. Beldin - - - - - - 548,782 (5)
903,271 (6)
903,271 (6)
1,733,996 (7)
600,000
(1)As of December 31, 2024, there are no outstanding Equity Awards, as all restricted stock and stock option awards were cancelled and converted to cash as a result of the Merger.
(2)Amounts assume the agreements were enforced by the AIR Operating Partnership and that non-competition payments in an aggregate amount equal to two-thirds of the executive’s monthly base salary would be payable for 24 months following the executive’s termination of employment by AIR without cause.
(3)For each of Mr. Kimmel and Ms. Cohn, the amount consists of (i) a lump sum cash payment equal to the sum of (a) one times the base salary of $550,000, (b) target STI of $850,000 (c) target LTI of $1,750,000, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $35,333.
(4)For each of Mr. Kimmel and Ms. Cohn, the amount consists of (i) a lump sum cash payment equal to the sum of (a) one times the base salary of $550,000, (b) target STI of $850,000, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $35,333, as payable pursuant to the terms of their offer letters.
(5)For Mr. Beldin, the amount consists of a lump sum cash payment equal to the amount of 2024 STI paid, as payable pursuant to the Executive Severance Policy.
(6)For Mr. Beldin, the amount consists of (i) a lump sum cash payment equal to the sum of base salary and the average of the amount of STI paid for the previous three years, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $36,273, as payable pursuant to the Executive Severance Policy.
(7)Amount consists of (i) a lump sum cash payment equal to two times the sum of base salary and the average of the amount of STI paid for the previous three years, as payable pursuant to the Executive Severance Policy.
Pay Ratio Disclosure
We believe that executive pay should be internally consistent and equitable to motivate our teammates to create stockholder value. Our Co-Principal Executive Officers as of December 31, 2024, were Ms. Cohn and Mr. Kimmel. The average annual total compensation for 2024 for Ms. Cohn and Mr. Kimmel was $3,682,927, as reported under the heading “Summary Compensation Table.” Our median employee’s total compensation for 2024 was $88,861. As a result, we estimate that the average of Ms. Cohn's and Mr. Kimmel’s 2024 total compensation, was approximately 41.45 times that of our median employee.
Our PEOs to median employee pay ratio was calculated in accordance with Item 402(u) of Regulation S-K. We identified the median employee by examining 2024 total compensation, consisting of base salary, annual bonus amounts, stock-based compensation (based on the grant date fair value of awards granted during 2024) and other incentive payments for all individuals who were employed by AIR on December 31, 2024, other than our PEOs. Our measuring date of
Table of Content
December 31 remained the same as last year. We included all active employees. We did annualize employee compensation for any employees who were not employed by AIR for the full 2024 calendar year and found no material difference in identifying the median employee from the prior year’s methodology. After identifying the median employee based on 2024 total compensation, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the “Total” column in the Summary Compensation Table. The above foregoing pay ratio represents a reasonable good faith estimate, calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.
Director Compensation
Prior to the Merger, AIR’s independent directors were compensated in accordance with the terms of AIR’s compensation policies, which reflected status as a publicly traded company; any equity held by such former independent directors was cancelled pursuant to the terms of the Merger Agreement. In connection with the Company Conversion, the Board of Directors was reconstituted, and none of the current directors receive compensation for serving as directors. Mr. Considine, who was not an independent director, did not receive any additional compensation for serving on the Board (before his departure). Mr. Considine's compensation as a named executive officer is detailed elsewhere in this report.
Table of Content

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The Operating Partnership does not have any voting securities. As of March 10, 2025, Blackstone Real Estate Partners X L.P controlled 144,568,877 common OP Units through its indirect control of the General Partner and Special Limited Partner, which directly holds such units.
The following table sets forth certain information available to the AIR Operating Partnership, as of March 10, 2025, with respect to the Partnership Units beneficially owned by (i) each director and named executive officer, and (ii) all directors and executive officers as a group. The business address of each of the following directors and executive officers is 345 Park Avenue, New York, New York, 10154, unless otherwise specified.
Name of Beneficial Owner
Number of
Partnership Units
Percentage Ownership
of the AIR Operating Partnership
Directors and Named Executive Officers:
Terry Considine 5,083,416 (1)
3.24 %
Lisa R. Cohn - -
Keith M. Kimmel - -
Paul L. Beldin - -
Joshua Minix
- -
Asim Hamid
- -
Scott McCallum
- -
Richard Reyes
- -
Jacob Werner
- -
All directors and current executive officers as a group (7 persons)
- - %
(1)The 5,083,416 OP Units and equivalents held by Mr. Considine is comprised of 2,562,284 vested LTIP II Units, 557,303 OP Units directly held by Mr. Considine, 179,735 OP Units held by an entity in which Mr. Considine has sole voting and investment power, 1,591,672 OP Units and equivalents held by Titahotwo Limited Partnership RLLLP, a registered limited liability limited partnership for which Mr. Considine serves as the general partner and holds a 0.5% ownership interest, and 192,422 OP Units held by Mr. Considine’s spouse, for which Mr. Considine disclaims beneficial ownership.
Equity Compensation Plan Information Table
As of December 31, 2024, there are no outstanding restricted stock and stock option awards due to the Merger, as all restricted stock and stock option awards, whether vested or unvested, were cancelled and converted to cash. There are outstanding LTIPs for Mr. Considine as reflected in the table below.
Plan Category
Number of Securities to be issued upon exercise or vesting of outstanding options, warrants, and stock rights (a)(1)
Weighted-Average exercise price of outstanding options, warrants, and stock rights (b)(1)
Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(2)
Equity compensation plans approved by unitholders
2,562,284 $ 28.28 -
Equity compensation plans not approved by unitholders
- - -
Total
2,562,284 $ 28.28 -
(1)During 2024, we granted LTIP I units with a weighted-average grant date fair value of $40.59, and we did not grant any LTIP II units during 2024. In connection with Mr. Considine’s decision to resign, certain LTIP units held by Mr. Considine vested, with all remaining unvested LTIP units being forfeited, resulting in the acceleration of share-based compensation. All vested LTIP I units were converted into common OP Units during the fourth quarter of 2024. As of December 31, 2024, there are 2,562,284 vested LTIP II units outstanding at a weighted-average grant date fair value of $9.81 per unit.
(2)In connection with the Merger, the Apartment Income REIT Corp. 2020 Stock Award and Incentive Plan was terminated; accordingly, no new equity awards may be issued under such plan.
Table of Content

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Policies and Procedures for Review, Approval or Ratification of Related Person Transactions
The AIR Operating Partnership recognizes that related person transactions can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of the AIR Operating Partnership and its unitholders. Accordingly, as a general matter, it is our preference to avoid related person transactions. Nevertheless, we recognize that there are situations where related person transactions may be in, or may not be inconsistent with, the best interests of the AIR Operating Partnership and its unitholders. Our executives have oversight for related person transactions. They will review transactions, arrangements or relationships in which (1) the aggregate amount involved will or may be expected to exceed $100,000 in the aggregate in any calendar year, (2) the AIR Operating Partnership (or any Operating Partnership entity) is a participant, and (3) any related party has or will have a direct or indirect interest. The Board has also given its standing approval for certain types of related person transactions, including certain employment arrangements and transactions in which all unitholders receive pro rata benefits. Since the beginning of 2024, there have been no related person transactions that were required to be disclosed under the SEC rules.
Independence of Directors
As a privately-held company with no securities listed on a national securities exchange, we are not required to have independent directors on our Board. Accordingly, we have not made any determinations of independence with respect to any of our directors.
Table of Content

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Below is information on the fees billed for services rendered by Deloitte & Touche LLP, our independent registered public accounting firm, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) during the years ended December 31, 2024 and 2023.
Year Ended December 31,
2024 2023
DELOITTE ENTITIES FEES
Aggregate fees billed for services $5.5 million $4.9 million
Audit Fees: Including fees associated with the audit of our annual financial statements, internal controls, and interim reviews of financial statements $2.7 million
$2.5 million
Audit-Related Fees: Including fees related to benefit plan audits, registration statements, comfort letters, and consents $0.2 million $0.3 million
Tax Fees:
Tax Compliance Fees (1) $1.6 million $1.6 million
Tax Consulting Fees (2) $1.0 million $0.5 million
Total Tax Fees $2.6 million $2.1 million
(1)Tax compliance fees consist primarily of income tax return preparation and income tax return review fees related to the income tax returns of AIR, the AIR Operating Partnership, and certain of the AIR Operating Partnership’s subsidiaries and affiliates.
(2)Tax consulting fees consist primarily of amounts attributable to routine advice related to various transactions, and assistance related to income tax return examinations by governmental authorities.
BOARD OF DIRECTORS' PRE-APPROVAL POLICIES
The Operating Partnership has not established an audit committee nor adopted an audit committee charter. Rather, it is the responsibility of the entire Board of Directors to serve the functions of an audit committee, with designated members assigned to pre-approve all audit and permissible non-audit services to be performed by the Deloitte Entities, with such approval occurring in advance of such services when required by law, regulation, or rule, subject to the de minimis exceptions for non-audit services. All of the services described in the Principal Accountant Fees and Services section above were approved pursuant to the annual engagement letter or in accordance with the pre-approval policy (including the former pre-approval policy that applied prior to the Merger).
Table of Content
PART IV

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) The financial statements listed in the Index to Financial Statements on Page of this report are filed as part of this report and incorporated herein by reference.
(a)(2) The financial statement schedule listed in the Index to Financial Statements on Page of this report is filed as part of this report and incorporated herein by reference.
(a)(3) Exhibits.
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1
Agreement and Plan of Merger, dated as of April 7, 2024, by and among Apartment Income REIT Corp., Apex Purchaser LLC, Aries Purchaser LLC, Astro Purchaser LLC, and Astro Merger Sub Inc. (Exhibit 2.1 to the registrant's Current Report on Form 8-K filed on April 8, 2024 is incorporated herein by this reference)
3.1
Amendment to Certificate of Limited Partnership of Apartment Income REIT, L.P. (Exhibit 3.2 to the registrant's Current Report on Form 8-K filed on July 1, 2024 is incorporated herein by this reference)
3.2
Seventh Amended and Restated Partnership Agreement of Apartment Income REIT, L.P. (Exhibit 10.1 to AIR’s Quarterly Report on Form 10-Q dated May 4, 2022 is incorporated herein by this reference)
3.3
Amendment No. 1 To The Seventh Amended And Restated Agreement Of Limited Partnership Of Apartment Income REIT, L.P., Dated June 25, 2024 (Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on June 25, 2024 is incorporated herein by this reference)
3.4
Amendment No. 2 to the Seventh Amended and Restated Agreement of Limited Partnership of Apartment Income REIT, L.P., Dated June 25, 2024 (Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on July 1, 2024 is incorporated herein by this reference)
4.1
Description of Apartment Income REIT, L.P.'s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
10.1
Loan Agreement, dated as of July 26, 2024, among Wells Fargo Bank, National Association, Morgan Stanley Mortgage Capital Holdings LLC, Société Générale Financial Corporation, Bank of Montreal, JPMorgan Chase Bank, National Association, Barclays Capital Real Estate Inc., Goldman Sachs Bank USA, Bank of America, N.A., and German American Capital Corporation, collectively, as the lenders, and the borrower entities identified on Exhibit A attached thereto, as the borrowers (Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on August 1, 2024 is incorporated herein by this reference)
10.2
Loan Agreement, dated as of September 18, 2024, among Wells Fargo Bank, National Association, Morgan Stanley Mortgage Capital Holdings LLC, Société Générale Financial Corporation, Bank of Montreal, JPMorgan Chase Bank, National Association, Barclays Capital Real Estate Inc., Goldman Sachs Bank USA, Bank of America, N.A., and German American Capital Corporation, collectively, as the lenders, and the borrower entities identified on Exhibit A attached thereto, as the borrowers (Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on September 20, 2024 is incorporated herein by this reference)
10.3
Form of Apartment Income REIT Corp. 2020 Stock Award and Incentive Plan (Exhibit 10.11 to AIR’s Current Report on Form 8-K filed December 15, 2020 is incorporated herein by this reference)*
10.4
Form of Performance Vesting LTIP II Unit Agreement (2020 Stock Award and Incentive Plan) (Exhibit 10.20 to AIR’s Registration Statement on Form 10-12B/A, filed November 24, 2020, is incorporated herein by this reference)*
10.5
Form of Apartment Income REIT Corp. Executive Severance Policy (Exhibit 10.8 to AIR’s Annual Report on Form 10-K, filed March 1, 2022, is incorporated herein by this reference)*
Table of Content
10.6
Employment Agreement, dated December 21, 2017, by and between Terry Considine and Apartment Income REIT, L.P. (f/k/a AIMCO Properties, L.P.) (Exhibit 10.1 to Aimco’s Current Report on Form 8-K filed December 21, 2017, is incorporated herein by this reference)*
10.7
Amendment, dated December 22, 2023, to the Employment Agreement by and between Terry Considine and Apartment Income REIT, L.P. (Exhibit 10.1 to AIR’s Current Report on Form 8-K filed December 27, 2023, is incorporated herein by this reference)*
10.8
Amendment to Performance Vesting LTIP II Unit Agreement, dated as of June 28, 2024 between Apartment Income REIT Corp., Apartment Income REIT, L.P. and Terry Considine (Exhibit 10.2 to the registrant's Current Report on Form 10-Q filed on August 9, 2024 is incorporated herein by this reference)*
10.9
Separation Agreement, dated as of October 2, 2024, by and among Terry Considine, Apartment Income REIT, L.P. and Apartment Income REIT LLC (Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on October 8, 2024 is incorporated herein by this reference)*
10.10
Separation Agreement and General Release, dated as of October 8, 2024, by and among Joshua Minix, Apartment Income REIT, L.P. and Apartment Income REIT LLC (Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on October 8, 2024 is incorporated herein by this reference)*
10.11
Offer Letter, effective as of October 18, 2024, by and between Lisa Cohn and Apartment Income REIT, L.P. (Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on October 24, 2024 is incorporated herein by this reference)*
10.12
Offer Letter, effective as of October 18, 2024, by and between Keith Kimmel and Apartment Income REIT, L.P. (Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on October 24, 2024 is incorporated herein by this reference)*
21.1
List of Subsidiaries
31.1
Certification of Co-Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Co-Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of Co-Principal Executive Officers and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1
Section 13(r) Disclosure
101 The following materials from the AIR Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) consolidated balance sheets; (ii) consolidated statements of operations; (iii) consolidated statements of comprehensive (loss) income; (iv) consolidated statements of partners’ (deficit) capital; (v) consolidated statements of cash flows; (vi) notes to the consolidated financial statements; and (vii) Schedule III
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
*Management contract or compensatory plan or arrangement