Significant Transactions

6 Months Ended

Jun. 30, 2023

Apartment Community Acquisitions

During the six months ended June 30, 2023, we acquired one apartment community in South Florida, with 495 apartment homes, and 29,000 square feet of commercial space. Summarized information regarding this acquisition is set forth in the table below (dollars in thousands):






Purchase price	$	298,000
Capitalized transaction costs	5,469
Total consideration (1)	$	303,469

Land	$	99,338
Building and improvements	187,427
Intangible assets (2)	12,077
Mark-to-market on debt assumed	7,370
Below-market lease liabilities (2)	(2,743)
Total consideration (1)	$	303,469

(1)Total consideration includes $101.2 million of debt assumed and the issuance of $22.4 million in common OP Units.

(2)Intangible assets and below-market lease liabilities have a weighted-average term of 1.4 years and 0.5 years, respectively.

Apartment Community Dispositions

During the three and six months ended June 30, 2023, we sold two apartment communities with 62 apartment homes included in our Other Real Estate segment.

During the three months ended June 30, 2022, we sold four apartment communities with 718 homes, three of which were included in our Same Store segment and one in our Other Real Estate segment, for a gain on disposition of $175.6 million. During the six months ended June 30, 2022, we sold 12 apartment communities with 2,050 homes, 10 of which were included in our Same Store segment and two included in our Other Real Estate segment, for a gain on disposition of $587.6 million.

At the end of each reporting period we evaluate whether such communities meet the criteria to be classified as held for sale. As of June 30, 2023, no communities were classified as held for sale.

Impairment

Real estate and other long-lived assets to be held and used are individually evaluated for impairment when conditions exist that may indicate the carrying amount of a long-lived asset may not be recoverable. Impairment indicators include significant fluctuations in rental and other property revenues less property operating expenses, occupancy changes, significant near-term lease expirations, current and historical cash flow losses, rental rates, and if applicable, a comparison of an asset’s carrying value to its estimated fair value. Upon determination that an impairment has occurred, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community.

During the three months ended June 30, 2023, we evaluated the expected hold period of two real estate assets in our Other Real Estate reporting segment. Given management’s assessment of the likelihood of the sale of these assets, we reduced the carrying value to their estimated fair value and recognized a non-cash impairment loss on real estate of $8.2 million. During the three months ended June 30, 2023, these two properties sold for their estimated carrying value.

Additionally, during the quarter we evaluated the expected hold period of one additional real estate asset in our Other Real Estate reporting segment. Given management’s assessment of the likelihood of its pending sale, we reduced the carrying value to its estimated fair value and recognized a non-cash impairment loss on real estate of $15.4 million. Subsequent to June 30, 2023, we received a non-refundable deposit on this community, which is expected to be sold by year end. This sale will complete our previously announced exit from the New York market.

During the three and six months ended June 30, 2022, we did not recognize any impairment losses.

Joint Venture Transactions

During the three months ended June 30, 2023, we formed an unconsolidated joint venture (the "Value-Add JV") with a global asset manager by selling a 70% interest in our Huntington Gateway property, a 443-unit property located in Virginia. Gross proceeds from this sale were $9 million and the joint venture assumed $94.1 million of debt. We recognized a gain of $6.4 million in connection with the transaction. AIR is the general partner with legal ownership of 30%, and AIR will receive 50% of the cash flows from operations, and various fees for providing property management, construction, and corporate services to the joint venture.

Subsequent to June 30, 2023, we formed a joint venture with a global institutional investor (the "Core JV") through selling a 47% interest in a portfolio of 10 of our Same Store properties in Philadelphia, Washington D.C., Denver, San Diego, and Miami with 3,093 apartment homes and average monthly revenues of $2,534. Eight of the ten properties are now closed. Our purchases of two are subject to regulatory approvals, expected before year-end.

In preparation for the joint venture, AIR borrowed $611.4 million in new non-recourse property debt. The properties were contributed to the Core JV subject to this debt. Specifically, the first eight properties contributed were subject to $584.8 million of debt, and AIR received $184.6 million in cash.

Assuming the completion of the two pending transactions, AIR will receive $17.3 million in additional cash, and the Core JV will be subject to an additional $59.6 million of the new non-recourse property debt. The net of these two transactions is that AIR will receive $813.3 million in cash, with proceeds used to prepay $292.0 million on the revolving credit facility and $325.0 million of term loans, with weighted-average interest rates of slightly less than 6%, and the remaining invested in short-term liquid investments.