Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt

Note 7 —Debt

Revolving Credit Facility

On December 16, 2020, we entered into a credit agreement with PNC Bank. The credit agreement provides for a new $150.0 million secured credit facility, a $20.0 million swingline loan sub-facility and a $30.0 million letter of credit sub-facility. We can request incremental commitments under the credit agreement up to an aggregate principal amount of $300.0 million. The credit facility expires on December 2023, but can be extended, at our option, by up to two twelve-month periods, subject to the satisfaction of certain events and covenant metrics. The revolving loans (other than the swingline) will bear interest, at our option, at a per annum rate equal to (a) LIBOR plus a margin of 2.00% or (b) a base rate plus a margin of 1.00%. Swingline loans made under the Revolving Credit Facility will bear interest at a per annum rate equal to the base rate plus a margin of 1.00%. The base rate is defined as a fluctuating per annum rate of interest equal to the highest of (x) the overnight bank funding rate as reported by the Federal Reserve Bank of New York, plus 0.5%, (y) PNC Bank, National Association’s prime rate and (z) the daily LIBOR Rate plus 1.00%. If the LIBOR Rate determined under any referenced method would be less than 0.25%, such rate shall be deemed 0.25%. Aimco may terminate or, from time to time, reduce the aggregate amount of commitments.

   As of December 31, 2021, we had no outstanding balance related to the credit facility, the swingline sub-facility or the letter of credit Sub-facility. Total debt issuance costs of approximately $1.9 million were deferred and are presented net of amortization recognized over the term of the facility within other assets, net in our consolidated balance sheets. Under our revolving secured credit facility, we are required to maintain a fixed charge coverage ratio of 1.25x, minimum adjusted tangible net worth of $625.0 million, and maximum leverage of 60% as defined in the credit agreement, among other customary covenants. We are currently in compliance with these covenants.

Notes Payable to AIR

On December 14, 2020, our subsidiary, Aimco JO Intermediate Holdings LLC (“Aimco JO”) entered into two notes aggregating to $534.1 million in exchange for an equity interest in James-Oxford Limited Partnership (“James Oxford”) a consolidated subsidiary of Aimco that indirectly owns a portfolio of consolidated real estate assets. The notes are secured by a pledge of the equity interests in James Oxford, however, certain of James Oxford’s assets secure existing senior loans of $242.6 million as of December 31, 2021. The notes mature on January 31, 2024 and bear interest at 5.2%, with accrued interest payable quarterly on January 1, April 1, July 1 and October 1, commencing on April 1, 2021. For the years ended December 31, 2021 and 2020, we recognized interest expense of $27.8 million and $1.3 million, respectively, associated with the Notes Payable to AIR, which is included in interest expense on the consolidated statements of operations and $6.9 million and $1.3 million, respectively, in due to affiliates on the consolidated balance sheets.

Upon a disposition, consolidation, or similar event or transaction, Aimco JO is obligated to prepay the Notes in an amount equal to the net cash proceeds received in connection with such transaction or casualty event. Any such prepayment shall be accompanied by accrued and unpaid interest and a make-whole amount representing all remaining unpaid interest over the term of the Notes. However, if after giving effect to such transaction or casualty event, the fair market value of all real estate assets owned by James Oxford and its subsidiaries, less senior secured indebtedness (e.g., nonrecourse property debt), exceeds the then-outstanding principal balance of the Notes, we have the option to reinvest the net cash proceeds within 180 days of such transaction or casualty event by acquiring, leasing, constructing, or improving real property useful in the business of Aimco JO or its subsidiaries that we believe in good faith will enhance or create value. We are not otherwise permitted to prepay the Notes prior to the maturity date.

The Notes Payable to AIR are senior secured obligations of Aimco JO and rank senior to all other senior obligations of Aimco JO to the extent of the value of the underlying collateral and rank pari passu with all other senior unsubordinated obligations of Aimco JO to the extent the amount of such obligations exceed the value of the underlying collateral. The Notes are not guaranteed and as a result, recourse is limited to Aimco JO, its assets and the underlying collateral pledged to secure Aimco JO’s obligations under the Notes. The Notes also contain customary representations, warranties, non-financial covenants and events of default.  

Construction Loans

During the year ended December 31, 2021, the Company entered into a $150.0 million variable-rate non-recourse construction loan collateralized by our leasehold interest and AIR’s fee ownership interest in Flamingo North Tower. The initial term of the loan is three years and bears interest at one month LIBOR plus 360 basis points subject to a minimum all-in per annum interest rate of 3.85%. As of December 31, 2021, we had $130.3 million of principal outstanding. Certain consolidated subsidiaries have indemnified AIR for any losses it incurs as a result of a default on the loan by Aimco.

Also, during the year ended December 31, 2021, we entered into a $100.7 million variable-rate non-recourse construction loan collateralized by our fee ownership interest in The Hamilton. The initial term of the loan is three years and bears interest at one month LIBOR plus 320 basis points subject to a minimum all-in per annum interest rate of 3.45%. As of December 31, 2021, we had $38.1 million of principal outstanding.

If LIBOR ceases to exist during the term of these agreements, the documents associated with these agreements contain language to address a transition to another benchmark rate. It is anticipated LIBOR will be replaced with SOFR, however, if SOFR were to not be available the agreements contain alternate provisions.

Upton Construction Loan

On December 23, 2020, our Upton Place joint venture entered into a construction loan with Bank OZK for up to $174.2 million, which was undrawn at December 31, 2021. The construction loan is secured by the 99-year leasehold interest in the development site and by improvements to be constructed on the development site. Interest will accrue on the construction loan only when the funds are drawn upon. Funds drawn upon will bear interest at a rate equal to one month LIBOR plus 450 basis points subject to a minimum all-in per annum interest rate of 4.75%. The initial term of the construction loan is fifty-four months, beginning December 23, 2020. The Upton Place joint venture has the option to extend the term for two additional periods of one year each, subject to the satisfaction of certain events and covenant metrics.

Total debt issuance costs of approximately $7.5 million have been deferred and are presented within other assets, net in our consolidated balance sheets.

Non-Recourse Property Debt

We finance apartment communities in our portfolio primarily using property-level, non-recourse, long-dated, fixed-rate, amortizing debt. The following table summarizes non-recourse property debt as of December 31, 2021 and 2020 (in thousands):

				Outstanding Balance as of December 31,
	Latest Maturity Date	Interest Rate Range	Weighted-Average Interest Rate	2021			2020
Fixed-rate property debt	November 22, 2032	1.00% to 4.20%	3.32%	$	429,883		$	394,510
Variable-rate property debt	December 31,2023	1.28%	1.28%		55,000			55,000
Total non-recourse property debt				$	484,883		$	449,510
Assumed debt fair value adjustment,    net of accumulated amortization					1,536			1,850
Debt issuance costs, net of    accumulated amortization					(3,282	)		(3,393	)
Non-recourse property debt, net				$	483,137		$	447,967

Principal and interest on our non-recourse property debt are generally payable monthly. As of December 31, 2021, our property debt was secured by 11 apartment communities. These debt instruments contain no financial covenants.

As of December 31, 2021, the scheduled principal amortization and maturity payments for the non-recourse property debt were as follows (in thousands):

	Amortization		Maturities		Total
2022	$	8,832	$	—	$	8,832
2023		9,143		55,000		64,143
2024		7,098		81,940		89,038
2025		7,360		—		7,360
2026		6,153		73,983		80,136
Thereafter		11,191		224,183		235,374
Total	$	49,777	$	435,106	$	484,883