ITEM 7.01. Regulation FD.
Apartment Investment and Management Company ("Aimco") Press Release
On September 22, 2020, Aimco issued a press release with details regarding the
potential tax consequences of the planned spin-off, announced on September 14,
2020. The press release is furnished herewith as Exhibit 99.1.
Aimco Properties, L.P. ("Aimco OP") Information to Unitholders
Aimco OP furnishes the following information regarding the potential tax impacts
of the planned spin-off to its unitholders:
Aimco announced its plan to separate its business into two, separate and
distinct, publicly traded companies, Apartment Income REIT ("AIR") and Aimco,
which we call "New Aimco" in this communication. In this transaction, AIR will
be separated from Aimco by a spin-off. The spin-off will have implications to
both holders of Aimco common stock and holders of partnership units issued by
Aimco OP. The below addresses the expected treatment of holders of partnership
units issued by Aimco OP, however, your actual tax treatment will depend on your
specific situation and on factors that are not within our control.
In connection with the proposed spin-off, holders of Aimco OP common units and
equivalents ("Aimco OP common units") are expected to receive New OP common
units ("New OP common units") in the spin-off such that after the spin-off, each
holder of Aimco OP common units will hold its current Aimco OP common units in
the existing Aimco OP (which will be the post-spin AIR OP) and New OP common
units in New OP (which will be the post-spin New Aimco OP).
You will generally not recognize taxable gain in connection with the receipt of
New OP common units.
The tax basis in the New OP common units is determined with reference to the tax
basis that Aimco OP has in those units. In general, you will have a tax basis in
the New OP common units you receive equal to the tax basis that the current
Aimco OP has in such units immediately prior to the distribution of New OP
common units to you (but not to exceed your tax basis in Aimco OP common units
prior to the distribution). The tax basis you will have in your Aimco OP common
units following the spin-off will generally equal the tax basis you had in Aimco
OP common units immediately prior to the spin-off reduced by the tax basis
attributable to the New OP common units you receive. Thus, your combined tax
basis in your Aimco OP and New OP common units will equal your tax basis in your
pre-distribution Aimco OP common units (as adjusted by activities of the
Holders of preferred units in Aimco OP will not receive units in the New OP but
will continue to hold their preferred units in Aimco OP, which as described
above will be the AIR OP following the effectiveness of the spin-off.
Although there will be little or no taxable income associated with the spin-off,
substantial taxable income is expected from approximately $2B in property sales,
most of which have already closed or are under contract to close.
The actual tax consequences of the spin-off depend on your specific situation
and on factors that are not within our control. We urge you to consult with your
tax advisor as to the particular tax consequences of the spin-off to you.
For more information regarding the intended spin-off transaction, please see our
investor website at investors.aimco.com.
Forward Looking Statements
This document contains forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements include all statements that
are not historical statements of fact and those regarding our intent, belief, or
expectations, including, but not limited to: the anticipated timing, structure
and benefits of the spin-off; tax treatment and tax consequences of the
spin-off, including factors related thereto, such as any amount of income,
basis, gain or other financial metrics; and any statements or assumptions
regarding holder tax situations. In addition, we may not complete the spin-off
at all. We caution investors not to place undue reliance on any such
Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s),"
"believe(s)," "plan(s)," "may," "will," "would," "could," "should," "seek(s),"
and similar expressions, or the negative of these terms, are intended to
identify such forward-looking statements. These statements are based on
management's current expectations and beliefs and are subject to a number of
risks and uncertainties that
could lead to actual results differing materially from those projected,
forecasted or expected. Although we believe that the assumptions underlying the
forward-looking statements are reasonable, we can give no assurance that our
expectations will be attained.
Risks and uncertainties that could cause actual results to differ materially
from our expectations include, but are not limited to: the effects of the
coronavirus pandemic on Aimco's and AIR's business and on the global and U.S.
economies generally; real estate and operating risks, including fluctuations in
real estate values and the general economic climate in the markets in which we
operate and competition for residents in such markets; national and local
economic conditions, including the pace of job growth and the level of
unemployment; the amount, location and quality of competitive new housing
supply; the timing and effects of acquisitions, dispositions, redevelopments and
developments; changes in operating costs, including energy costs; negative
economic conditions in our geographies of operation; loss of key personnel;
Aimco's or AIR's ability to maintain current or meet projected occupancy, rental
rate and property operating results; Aimco's or AIR's ability to meet budgeted
costs and timelines, and, if applicable, achieve budgeted rental rates related
to redevelopment and development investments; expectations regarding sales of
apartment communities and the use of proceeds thereof; the ability to
successfully operate as two separate companies each with more narrowed focus;
insurance risks, including the cost of insurance, and natural disasters and
severe weather such as hurricanes; financing risks, including the availability
and cost of financing; the risk that cash flows from operations may be
insufficient to meet required payments of principal and interest; the risk that
earnings may not be sufficient to maintain compliance with debt covenants,
including financial coverage ratios; legal and regulatory risks, including costs
associated with prosecuting or defending claims and any adverse outcomes; the
terms of laws and governmental regulations that affect us and interpretations of
those laws and regulations; possible environmental liabilities, including costs,
fines or penalties that may be incurred due to necessary remediation of
contamination of apartment communities presently or previously owned by Aimco;
Aimco's and AIR's relationship with each other after the consummation of the
business separation; the ability and willingness of Aimco and AIR and their
subsidiaries to meet and/or perform their obligations under any contractual
arrangements that are entered into among the parties in connection with the
business separation and any of their obligations to indemnify, defend and hold
the other party harmless from and against various claims, litigation and
liabilities; and the ability to achieve some or all the benefits that we expect
to achieve from the business separation.
In addition, Aimco's current and continuing qualification as a real estate
investment trust involves the application of highly technical and complex
provisions of the Internal Revenue Code and depends on Aimco's ability to meet
the various requirements imposed by the Internal Revenue Code, through actual
operating results, distribution levels and diversity of stock ownership.
Readers should carefully review Aimco's financial statements and the notes
thereto, as well as the section entitled "Risk Factors" in Item 1A of Aimco's
Annual Report on Form 10-K for the year ended December 31, 2019 and in Item 1A
of Aimco's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 2020 and June 30, 2020, and the other documents Aimco files from time to
time with the SEC. Readers should also carefully review the "Risk Factors"
section of the registration statements relating to the business separation,
which are expected to be filed by AIR and a new operating partnership with the
SEC. These filings identify and address other important risks and uncertainties
that could cause actual events and results to di?er materially from those
contained in the forward-looking statements.
These forward-looking statements reflect management's judgment as of this date,
and Aimco assumes no (and disclaims any) obligation to revise or update them to
reflect future events or circumstances.
ITEM 9.01. Financial Statements and Exhibits.
(d) The following exhibits are furnished with this report:
Exhibit Number Description
September 22, 2020, Press Release - Apartment Investment and
99.1 Management Company
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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