Business Segments

3 Months Ended

Mar. 31, 2012

Business Segments [Abstract]

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 196 properties with 62,420 units at March 31, 2012. Our affordable real estate operations consisted of 165 properties with 19,947 units at March 31, 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 months ended March 31, 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 March 31, 2012:
Rental and other property revenues (2)	$	208,328	$	30,922	$	26,341	$	137		$	265,728
Asset management and tax credit revenues		—		—		—		8,071			8,071
Total revenues		208,328		30,922		26,341		8,208			273,799
Property operating expenses (2)		76,499		12,994		10,023		9,126			108,642
Investment management expenses		—		—		—		3,388			3,388
Depreciation and amortization (2)		—		—		—		94,317			94,317
Provision for real estate impairment losses (2)		—		—		—		6,364			6,364
General and administrative expenses		—		—		—		11,624			11,624
Other expenses, net		—		—		—		6,269			6,269
Total operating expenses		76,499		12,994		10,023		131,088			230,604
Net operating income (loss)		131,829		17,928		16,318		(122,880	)		43,195
Other items included in continuing operations		—		—		—		(67,419	)		(67,419	)
Income (loss) from continuing operations	$	131,829	$	17,928	$	16,318	$	(190,299	)	$	(24,224	)

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three Months Ended March 31, 2011:
Rental and other property revenues (2)	$	200,793	$	30,037	$	23,394	$	579		$	254,803
Asset management and tax credit revenues		—		—		—		9,236			9,236
Total revenues		200,793		30,037		23,394		9,815			264,039
Property operating expenses (2)		76,448		12,426		10,554		15,919			115,347
Investment management expenses		—		—		—		2,976			2,976
Depreciation and amortization (2)		—		—		—		93,967			93,967
General and administrative expenses		—		—		—		11,181			11,181
Other expenses, net		—		—		—		3,897			3,897
Total operating expenses		76,448		12,426		10,554		127,940			227,368
Net operating income (loss)		124,345		17,611		12,840		(118,125	)		36,671
Other items included in continuing operations (3)		—		—		—		(68,342	)		(68,342	)
Income (loss) from continuing operations	$	124,345	$	17,611	$	12,840	$	(186,467	)	$	(31,671	)

(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 months ending March 31, 2011, the Aimco Operating Partnership recognized $0.2 million 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 three months ended March 31, 2012 and 2011, capital additions related to our conventional segment totaled $45.5 million and $22.9 million, respectively, and capital additions related to our affordable segment totaled $3.0 million and $4.3 million, respectively.