Business Segments

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Business Segments

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 175 properties with 55,879 units at December 31, 2012. Our affordable real estate operations consisted of 90 properties with 12,098 units at December 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 years ended December 31, 2012, 2011 and 2010 (in thousands):

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Year Ended December 31, 2012:
Rental and other property revenues (2)	$	811,741	$	101,524	$	77,683	$	480		$	991,428
Tax credit and asset management revenues	—		—		—		41,769			41,769
Total revenues	811,741		101,524		77,683		42,249			1,033,197
Property operating expenses (2)	294,715		39,968		29,695		37,847			402,225
Investment management expenses	—		—		—		12,008			12,008
Depreciation and amortization (2)	—		—		—		345,077			345,077
Provision for real estate impairment losses (2)	—		—		—		8,349			8,349
General and administrative expenses	—		—		—		49,602			49,602
Other expenses, net	—		—		—		15,776			15,776
Total operating expenses	294,715		39,968		29,695		468,659			833,037
Operating income (loss)	517,026		61,556		47,988		(426,410		)	200,160
Other items included in continuing operations	—		—		—		(215,066		)	(215,066		)
Income (loss) from continuing operations	$	517,026	$	61,556	$	47,988	$	(641,476	)	$	(14,906	)

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Year Ended December 31, 2011:
Rental and other property revenues (2)	$	769,931	$	97,793	$	74,340	$	1,194		$	943,258
Tax credit and asset management revenues	—		—		—		38,661			38,661
Total revenues	769,931		97,793		74,340		39,855			981,919
Property operating expenses (2)	284,649		38,453		29,917		52,847			405,866
Investment management expenses	—		—		—		10,459			10,459
Depreciation and amortization (2)	—		—		—		342,820			342,820
Provision for real estate impairment losses (2)	—		—		—		915			915
General and administrative expenses	—		—		—		50,906			50,906
Other expenses, net	—		—		—		17,796			17,796
Total operating expenses	284,649		38,453		29,917		475,743			828,762
Operating income (loss)	485,282		59,340		44,423		(435,888		)	153,157
Other items included in continuing operations (3)	—		—		—		(288,760		)	(288,760		)
Income (loss) from continuing operations	$	485,282	$	59,340	$	44,423	$	(724,648	)	$	(135,603	)

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Year Ended December 31, 2010:
Rental and other property revenues (2)	$	751,123	$	93,469	$	75,543	$	2,775		$	922,910
Tax credit and asset management revenues	—		—		—		35,630			35,630
Total revenues	751,123		93,469		75,543		38,405			958,540
Property operating expenses (2)	287,761		40,051		32,627		55,074			415,513
Investment management expenses	—		—		—		14,477			14,477
Depreciation and amortization (2)	—		—		—		363,261			363,261
Provision for real estate impairment losses (2)	—		—		—		65			65
General and administrative expenses	—		—		—		53,374			53,374
Other expenses, net	—		—		—		9,267			9,267
Total operating expenses	287,761		40,051		32,627		495,518			855,957
Operating income (loss)	463,362		53,418		42,916		(457,113		)	102,583
Other items included in continuing operations (3)	—		—		—		(263,360		)	(263,360		)
Income (loss) from continuing operations	$	463,362	$	53,418	$	42,916	$	(720,473	)	$	(160,777	)

(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 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), depreciation and amortization and provision for real estate impairment losses. 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 years ending December 31, 2011 and 2010, the Aimco Operating Partnership recognized $1.3 million and $0.9 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.

During the years ended December 31, 2012, 2011 and 2010, for continuing operations, our rental revenues include $97.9 million, $90.8 million and $85.4 million, respectively, of subsidies from government agencies, which exceeded 10% of the combined revenues of our conventional and affordable segments for each of the years presented.

The assets of our reportable segments on a proportionate basis, together with the proportionate adjustments to reconcile these amounts to the consolidated assets of our segments, and the consolidated assets not allocated to our segments are as follows (in thousands):

	2012		2011
Conventional	$	4,837,236	$	5,031,864
Affordable	466,678		683,307
Proportionate adjustments (1)	634,858		645,385
Corporate and other assets	462,608		511,306
Total consolidated assets	$	6,401,380	$	6,871,862

(1) Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the assets of our consolidated properties, which are excluded from our measurement of segment financial condition, and our share of the assets of our unconsolidated real estate partnerships, which are included in our measure of segment financial condition.

For the years ended December 31, 2012, 2011 and 2010 capital additions related to our conventional segment totaled $252.3 million, $191.6 million and $140.1 million, respectively, and capital additions related to our affordable segment totaled $19.8 million, $15.6 million and $35.2 million, respectively.