Business Segments |
NOTE 11 — Business Segments We have two reportable segments: conventional real estate operations and affordable real estate operations. Our conventional real estate operations consist of market-rate apartments with rents paid by the residents and included 183 properties with 57,744 units at September 30, 2012. Our affordable real estate operations consisted of 136 properties with 17,097 units at September 30, 2012, with rents that are generally paid, in whole or part, by a government agency. Our chief executive officer, who is our chief operating decision maker, uses various generally accepted industry financial measures to assess the performance and financial condition of the business, including: Net Asset Value, which is the estimated fair value of our assets, net of liabilities and preferred equity; Funds From Operations, which represents net income or loss computed in accordance with GAAP, excluding gains from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures; Pro forma Funds From Operations, which is Funds From Operations excluding preferred equity redemption related amounts; Adjusted Funds From Operations, which is Pro forma Funds From Operations less spending for capital replacements, which represents our estimation of the capital additions required to maintain the value of our portfolio during our ownership period; property net operating income, which is rental and other property revenues less direct property operating expenses, including real estate taxes; proportionate property net operating income, which reflects our share of property net operating income of our consolidated and unconsolidated properties that we manage; same store property operating results; Free Cash Flow, which is net operating income less spending for Capital Replacements; Free Cash Flow internal rate of return; financial coverage ratios; and leverage as shown on our balance sheet. Our chief operating decision maker emphasizes proportionate property net operating income as a key measurement of segment profit or loss. The following tables present the revenues, net operating income (loss) and income (loss) from continuing operations of our conventional and affordable real estate operations segments on a proportionate basis for the three and nine months ended September 30, 2012 and 2011 (in thousands): | | | | | | | | | | | | | | | | | | | | | | Conventional Real Estate Operations | | Affordable Real Estate Operations | | Proportionate Adjustments (1) | | Corporate and Amounts Not Allocated to Segments | | Consolidated | Three Months Ended September 30, 2012: | | | | | | | | | | Rental and other property revenues (2) | $ | 209,013 |
| | $ | 28,277 |
| | $ | 19,334 |
| | $ | 128 |
| | $ | 256,752 |
| Asset management and tax credit revenues | — |
| | — |
| | — |
| | 10,696 |
| | 10,696 |
| Total revenues | 209,013 |
| | 28,277 |
| | 19,334 |
| | 10,824 |
| | 267,448 |
| Property operating expenses (2) | 77,078 |
| | 11,161 |
| | 8,110 |
| | 10,113 |
| | 106,462 |
| Investment management expenses | — |
| | — |
| | — |
| | 2,817 |
| | 2,817 |
| Depreciation and amortization (2) | — |
| | — |
| | — |
| | 87,444 |
| | 87,444 |
| Provision for real estate impairment losses (2) | — |
| | — |
| | — |
| | 2,453 |
| | 2,453 |
| General and administrative expenses | — |
| | — |
| | — |
| | 12,311 |
| | 12,311 |
| Other expenses, net | — |
| | — |
| | — |
| | 5,230 |
| | 5,230 |
| Total operating expenses | 77,078 |
| | 11,161 |
| | 8,110 |
| | 120,368 |
| | 216,717 |
| Net operating income (loss) | 131,935 |
| | 17,116 |
| | 11,224 |
| | (109,544 | ) | | 50,731 |
| Other items included in continuing operations | — |
| | — |
| | — |
| | (46,162 | ) | | (46,162 | ) | Income (loss) from continuing operations | $ | 131,935 |
| | $ | 17,116 |
| | $ | 11,224 |
| | $ | (155,706 | ) | | $ | 4,569 |
|
| | | | | | | | | | | | | | | | | | | | | | Conventional Real Estate Operations | | Affordable Real Estate Operations | | Proportionate Adjustments (1) | | Corporate and Amounts Not Allocated to Segments | | Consolidated | Three Months Ended September 30, 2011: | | | | | | | | | | Rental and other property revenues (2) | $ | 196,411 |
| | $ | 27,073 |
| | $ | 18,897 |
| | $ | 193 |
| | $ | 242,574 |
| Asset management and tax credit revenues | — |
| | — |
| | — |
| | 11,885 |
| | 11,885 |
| Total revenues | 196,411 |
| | 27,073 |
| | 18,897 |
| | 12,078 |
| | 254,459 |
| Property operating expenses (2) | 74,447 |
| | 10,514 |
| | 7,925 |
| | 13,572 |
| | 106,458 |
| Investment management expenses | — |
| | — |
| | — |
| | 2,311 |
| | 2,311 |
| Depreciation and amortization (2) | — |
| | — |
| | — |
| | 87,687 |
| | 87,687 |
| General and administrative expenses | — |
| | — |
| | — |
| | 12,741 |
| | 12,741 |
| Other expenses, net | — |
| | — |
| | — |
| | 3,838 |
| | 3,838 |
| Total operating expenses | 74,447 |
| | 10,514 |
| | 7,925 |
| | 120,149 |
| | 213,035 |
| Net operating income (loss) | 121,964 |
| | 16,559 |
| | 10,972 |
| | (108,071 | ) | | 41,424 |
| Other items included in continuing operations (3) | — |
| | — |
| | — |
| | (65,695 | ) | | (65,695 | ) | Income (loss) from continuing operations | $ | 121,964 |
| | $ | 16,559 |
| | $ | 10,972 |
| | $ | (173,766 | ) | | $ | (24,271 | ) |
| | | | | | | | | | | | | | | | | | | | | | Conventional Real Estate Operations | | Affordable Real Estate Operations | | Proportionate Adjustments (1) | | Corporate and Amounts Not Allocated to Segments | | Consolidated | Nine Months Ended September 30, 2012: | | | | | | | | | | Rental and other property revenues (2) | $ | 613,944 |
| | $ | 84,367 |
| | $ | 61,463 |
| | $ | 381 |
| | $ | 760,155 |
| Asset management and tax credit revenues | — |
| | — |
| | — |
| | 27,681 |
| | 27,681 |
| Total revenues | 613,944 |
| | 84,367 |
| | 61,463 |
| | 28,062 |
| | 787,836 |
| Property operating expenses (2) | 224,156 |
| | 33,075 |
| | 24,356 |
| | 27,928 |
| | 309,515 |
| Investment management expenses | — |
| | — |
| | — |
| | 9,445 |
| | 9,445 |
| Depreciation and amortization (2) | — |
| | — |
| | — |
| | 264,978 |
| | 264,978 |
| Provision for real estate impairment losses (2) | — |
| | — |
| | — |
| | 10,801 |
| | 10,801 |
| General and administrative expenses | — |
| | — |
| | — |
| | 37,491 |
| | 37,491 |
| Other expenses, net | — |
| | — |
| | — |
| | 11,514 |
| | 11,514 |
| Total operating expenses | 224,156 |
| | 33,075 |
| | 24,356 |
| | 362,157 |
| | 643,744 |
| Net operating income (loss) | 389,788 |
| | 51,292 |
| | 37,107 |
| | (334,095 | ) | | 144,092 |
| Other items included in continuing operations | — |
| | — |
| | — |
| | (167,861 | ) | | (167,861 | ) | Income (loss) from continuing operations | $ | 389,788 |
| | $ | 51,292 |
| | $ | 37,107 |
| | $ | (501,956 | ) | | $ | (23,769 | ) |
| | | | | | | | | | | | | | | | | | | | | | Conventional Real Estate Operations | | Affordable Real Estate Operations | | Proportionate Adjustments (1) | | Corporate and Amounts Not Allocated to Segments | | Consolidated | Nine Months Ended September 30, 2011: | | | | | | | | | | Rental and other property revenues (2) | $ | 584,428 |
| | $ | 81,093 |
| | $ | 58,520 |
| | $ | 1,049 |
| | $ | 725,090 |
| Asset management and tax credit revenues | — |
| | — |
| | — |
| | 28,772 |
| | 28,772 |
| Total revenues | 584,428 |
| | 81,093 |
| | 58,520 |
| | 29,821 |
| | 753,862 |
| Property operating expenses (2) | 218,918 |
| | 31,947 |
| | 24,894 |
| | 41,184 |
| | 316,943 |
| Investment management expenses | — |
| | — |
| | — |
| | 7,397 |
| | 7,397 |
| Depreciation and amortization (2) | — |
| | — |
| | — |
| | 259,069 |
| | 259,069 |
| General and administrative expenses | — |
| | — |
| | — |
| | 36,370 |
| | 36,370 |
| Other expenses, net | — |
| | — |
| | — |
| | 12,328 |
| | 12,328 |
| Total operating expenses | 218,918 |
| | 31,947 |
| | 24,894 |
| | 356,348 |
| | 632,107 |
| Net operating income (loss) | 365,510 |
| | 49,146 |
| | 33,626 |
| | (326,527 | ) | | 121,755 |
| Other items included in continuing operations (3) | — |
| | — |
| | — |
| | (219,360 | ) | | (219,360 | ) | Income (loss) from continuing operations | $ | 365,510 |
| | $ | 49,146 |
| | $ | 33,626 |
| | $ | (545,887 | ) | | $ | (97,605 | ) |
| | (1) | Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of our consolidated properties and the results of consolidated properties that we do not manage, which are excluded from our measurement of segment performance but included in the related consolidated amounts, and our share of the results of operations of our unconsolidated real estate partnerships that we manage, which are included in our measurement of segment performance but excluded from the related consolidated amounts. |
| | (2) | Proportionate property net operating income, our key measurement of segment profit or loss, excludes provision for operating real estate impairment losses, property management revenues (which are included in rental and other property revenues), property management expenses and casualty gains and losses (which are included in property operating expenses) and depreciation and amortization. Accordingly, we do not allocate these amounts to our segments. |
| | (3) | In addition to the other items included in continuing operations presented in the table for the three and nine months ended September 30, 2011, the Aimco Operating Partnership recognized $0.8 million and $1.3 million, respectively, of interest income on its notes receivable from Aimco. These notes were repaid by Aimco during the three months ended December 31, 2011. |
For the nine months ended September 30, 2012 and 2011, capital additions related to our conventional segment totaled $174.7 million and $111.2 million, respectively, and capital additions related to our affordable segment totaled $11.1 million and $12.2 million, respectively. |