Agreements and Transactions With AIR	9 Months Ended
Sep. 30, 2022
Related Party Transactions [Abstract]
Agreements and Transactions With AIR	Note 5 — Agreements and Transactions With AIR In conjunction with the Separation in December 2020, we entered into the following agreements with AIR that have significant operational and financial impacts to us. Master Services Agreement Under the Master Services Agreement with AIR, AIR provides us with customary administrative and support services. We are obligated to pay AIR the fully burdened costs in performing those services. We may terminate any or all services on 60 days’ prior written notice, and AIR may terminate individual services at any time after December 31, 2023. During the three and nine months ended September 30, 2022, we incurred administrative and support fees of $0.6 million and $1.5 million, respectively, compared to $0.7 million and $1.8 million during the three and nine months ended September 30, 2021, respectively. These administrative support fees are included in General and administrative expenses in our Condensed Consolidated Statements of Operations. Property Management Agreements Under the Property Management Agreements with AIR, AIR provides us with certain property management, property accounting and related services for the majority of our operating properties. We pay AIR a property management fee equal to 3% of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services. The initial term of each Property Management Agreement is one year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’ prior written notice to the other party before the end of the term. Neither party is obligated to pay a termination fee or other penalty upon such termination. During the three and nine months ended September 30, 2022, we incurred property management and property accounting fees of $1.4 million and $4.1 million, respectively, compared to $1.3 million and $3.8 million during the three and nine months ended September 30, 2021, respectively. These fees are included in Property operating expenses in our Condensed Consolidated Statements of Operations. Master Leasing Agreement The Master Leasing Agreement, as amended on June 14, 2022, governs the current and any future leasing arrangements between us, as lessee, and AIR, as lessor. Under the amendments to the Master Leasing Agreement, AIR's purchase option to acquire completed development and redevelopment properties was replaced with a right of first offer on development and redevelopment assets that have achieved stabilization and that we choose to bring to market within one year thereafter. Each time the parties wish to execute a new lease for a particular property, they will execute a stand-alone lease. In September 2022, we received final payment from AIR, pursuant to the lease termination agreement entered into in June 2022. The leases with respect to four properties were terminated, and we relinquished control of the associated properties. See Note 9 for further information. Notes Payable to AIR In July 2022, we completed the prepayment of the $534.1 million of Notes Payable to AIR. As a result of the prepayment, we incurred $17.4 million of spread maintenance costs, which were fully accrued as of June 30, 2022. For the three and nine months ended September 30, 2022, we recognized interest expense on the Notes Payable to AIR of $0.4 million and $13.7 million, respectively, compared to $6.9 million and $20.8 million for the three and nine months ended September 30, 2021, respectively. Other In June 2022, for $7.2 million, we acquired from AIR the common noncontrolling interest in the entity that indirectly holds a portfolio of assets that previously secured the Notes Payable to AIR. Due to and from AIR As of September 30, 2022, we have amounts due to and from AIR of $6.7 million and $1.0 million, respectively. As of December 31, 2021 we had amounts due to and from AIR of $15.7 million and $4.8 million, respectively. The amounts due to AIR primarily consist of invoices paid on our behalf and other reimbursements owed to AIR. The amounts due from AIR primarily consist of net cash flows generated by our operating properties. Terry Considine Service Agreement/AIR Reimbursement As contemplated by the Separation and by Aimco and AIR, Terry Considine, an Aimco board member and our former Chief Executive Officer, has specific responsibilities to us as a non-executive employee during 2022 to support the establishment and growth of our business, reporting directly to our board of directors (the "Board"). These responsibilities, separate from Mr. Considine’s services as a board member, include: (i) short and long-term strategic direction and advice; (ii) transition and executive support to officers; and (iii) advice and consultation with respect to strategic growth and acquisition activities. The independent directors of the Board set Mr. Considine’s 2022 target total compensation (including base compensation, short-term incentive, and long-term incentive) for these responsibilities at $2.1 million, to be paid in equity. Mr. Considine does not receive any additional compensation for serving on the Board. Additionally, we are obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr. Considine for the calendar year 2022 under the terms of his employment agreement with AIR that are in excess of $1.0 million, collectively. As of September 30, 2022, we estimate the total 2022 reimbursement to AIR, pursuant to this arrangement, will be $4.5 million. We estimate compensation associated with these arrangements to total $6.6 million for 2022. For the three and nine months ended September 30, 2022, we recognized $1.7 million and $4.6 million of expense related to the arrangements, respectively, compared to $1.2 million and $4.1 million for the three and nine months ended September 30, 2021, respectively. This expense is included in General and administrative expenses in our Condensed Consolidated Statements of Operations.

Agreements and Transactions With AIR

9 Months Ended

Sep. 30, 2022

Note 5 — Agreements and Transactions With AIR

In conjunction with the Separation in December 2020, we entered into the following agreements with AIR that have significant operational and financial impacts to us.

Master Services Agreement

Under the Master Services Agreement with AIR, AIR provides us with customary administrative and support services. We are obligated to pay AIR the fully burdened costs in performing those services. We may terminate any or all services on 60 days’ prior written notice, and AIR may terminate individual services at any time after December 31, 2023. During the three and nine months ended September 30, 2022, we incurred administrative and support fees of $0.6 million and $1.5 million, respectively, compared to $0.7 million and $1.8 million during the three and nine months ended September 30, 2021, respectively. These administrative support fees are included in General and administrative expenses in our Condensed Consolidated Statements of Operations.

Property Management Agreements

Under the Property Management Agreements with AIR, AIR provides us with certain property management, property accounting and related services for the majority of our operating properties. We pay AIR a property management fee equal to 3% of each respective property’s revenue collected and such other fees as may be mutually agreed upon for various other services. The initial term of each Property Management Agreement is one year, with automatic one-year renewal periods, unless either party elects to terminate upon delivery of 60 days’ prior written notice to the other party before the end of the term. Neither party is obligated to pay a termination fee or other penalty upon such termination.

During the three and nine months ended September 30, 2022, we incurred property management and property accounting fees of $1.4 million and $4.1 million, respectively, compared to $1.3 million and $3.8 million during the three and nine months ended September 30, 2021, respectively. These fees are included in Property operating expenses in our Condensed Consolidated Statements of Operations.

Master Leasing Agreement

The Master Leasing Agreement, as amended on June 14, 2022, governs the current and any future leasing arrangements between us, as lessee, and AIR, as lessor. Under the amendments to the Master Leasing Agreement, AIR's purchase option to acquire completed development and redevelopment properties was replaced with a right of first offer on development and

redevelopment assets that have achieved stabilization and that we choose to bring to market within one year thereafter. Each time the parties wish to execute a new lease for a particular property, they will execute a stand-alone lease.

In September 2022, we received final payment from AIR, pursuant to the lease termination agreement entered into in June 2022. The leases with respect to four properties were terminated, and we relinquished control of the associated properties. See Note 9 for further information.

Notes Payable to AIR

In July 2022, we completed the prepayment of the $534.1 million of Notes Payable to AIR. As a result of the prepayment, we incurred $17.4 million of spread maintenance costs, which were fully accrued as of June 30, 2022. For the three and nine months ended September 30, 2022, we recognized interest expense on the Notes Payable to AIR of $0.4 million and $13.7 million, respectively, compared to $6.9 million and $20.8 million for the three and nine months ended September 30, 2021, respectively.

Other

In June 2022, for $7.2 million, we acquired from AIR the common noncontrolling interest in the entity that indirectly holds a portfolio of assets that previously secured the Notes Payable to AIR.

Due to and from AIR

As of September 30, 2022, we have amounts due to and from AIR of $6.7 million and $1.0 million, respectively. As of December 31, 2021 we had amounts due to and from AIR of $15.7 million and $4.8 million, respectively. The amounts due to AIR primarily consist of invoices paid on our behalf and other reimbursements owed to AIR. The amounts due from AIR primarily consist of net cash flows generated by our operating properties.

Terry Considine Service Agreement/AIR Reimbursement

As contemplated by the Separation and by Aimco and AIR, Terry Considine, an Aimco board member and our former Chief Executive Officer, has specific responsibilities to us as a non-executive employee during 2022 to support the establishment and growth of our business, reporting directly to our board of directors (the "Board"). These responsibilities, separate from Mr. Considine’s services as a board member, include: (i) short and long-term strategic direction and advice; (ii) transition and executive support to officers; and (iii) advice and consultation with respect to strategic growth and acquisition activities. The independent directors of the Board set Mr. Considine’s 2022 target total compensation (including base compensation, short-term incentive, and long-term incentive) for these responsibilities at $2.1 million, to be paid in equity. Mr. Considine does not receive any additional compensation for serving on the Board.

Additionally, we are obligated for all base salary, short-term incentive amounts and long-term incentive amounts payable to Mr. Considine for the calendar year 2022 under the terms of his employment agreement with AIR that are in excess of $1.0 million, collectively. As of September 30, 2022, we estimate the total 2022 reimbursement to AIR, pursuant to this arrangement, will be $4.5 million.

We estimate compensation associated with these arrangements to total $6.6 million for 2022. For the three and nine months ended September 30, 2022, we recognized $1.7 million and $4.6 million of expense related to the arrangements, respectively, compared to $1.2 million and $4.1 million for the three and nine months ended September 30, 2021, respectively. This expense is included in General and administrative expenses in our Condensed Consolidated Statements of Operations.