Apartment Investment & Management (AIV) risk factors, FY2024 10-K

Other

1. 01Development, redevelopment, and construction risks could affect our profitability
2. 02Failure to generate sufficient net operating income may adversely affect our liquidity, limit our ability to fund necessary capital expenditures, or adversely affect our ability to pay dividends or distributions
3. 03Our business and operations would suffer in the event of significant disruptions or cyberattacks of our information technology systems or our failure to comply with laws, rules and regulations related to privacy and data protection
4. 04If the Aimco Operating Partnership were to fail to qualify as a partnership for federal income tax purposes, Aimco would fail to qualify as a REIT and suffer other adverse consequences

RISKS RELATED TO BUSINESS

1. 05our ability to complete developments and redevelopments and other construction projects as planned
2. 06environmental, social, governance and other sustainability matters and our responses to these matters could impact development
3. 07Our business and financial results could be adversely affected by significant inflation, higher interest rates or deflation
4. 08Our ability to continue to grow or maintain our pipeline of development and redevelopment opportunities may be constrained
5. 09Our properties are geographically concentrated in Florida, Chicago, the Washington, D.C. Metro Area, and in the Northeast region of the United States, which makes us more susceptible to regional and local adverse economic and other conditions than if we owned a more geographically diversified portfolio
6. 10Our development projects may subject us to certain liabilities, and we are subject to risks associated with developing properties in partnership with others
7. 11a partner may not fulfill its contractual obligations
8. 12Further, disputes between us and a partner may result in litigation or arbitration that may increase our expenses and prevent our management from focusing their time and attention on our business
9. 13Development of properties may entail a lengthy, uncertain, and costly entitlement process
10. 14Government regulations and legal challenges may delay the start or completion of the development of our communities, increase our expenses or limit our building of apartments or other activities
11. 15Competition could limit our ability to lease apartment homes, increase or maintain rents or execute our development strategy
12. 16Because real estate investments are relatively illiquid, we may not be able to sell apartment communities or other assets when appropriate
13. 17Climate change may adversely affect our business
14. 18Potential liability or other expenditures associated with potential environmental contamination may be costly
15. 19Rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability
16. 20Laws benefiting disabled persons may result in our incurrence of unanticipated expenses
17. 21Moisture infiltration and resulting mold remediation may be costly
18. 22Although we are insured for certain risks, the cost of insurance, increased claims activity, or losses resulting from casualty events may affect our financial condition and results of operations
19. 23Natural disasters and severe weather may affect our financial condition and results of operations
20. 24We depend on our senior management
21. 25We rely on our property managers to manage our properties. If our property managers fail to efficiently manage our properties, tenants may not renew their leases, or we may become subject to unforeseen liabilities
22. 26We do not have control over the operations of our alternative and equity method investments, which could adversely affect our financial condition and results of operations
23. 27In 2024, we recognized a non-cash impairment of $48.6 million on our passive equity investment in IQHQ reducing the carrying value to $11.1 million
24. 28There may be, or there may be the appearance of, conflicts of interest in our relationship with AIR
25. 29Our business could be negatively affected as a result of the actions of activist stockholders
26. 30We are seeking to maximize shareholder value by exploring strategic alternatives. There can be no assurance that we will be successful in executing a strategic transaction

RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING

1. 31Our debt financing could result in foreclosure of our apartment communities, prevent us from making distributions on our equity, or otherwise adversely affect our liquidity
2. 32Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity
3. 33Increases in interest rates would increase our interest expense and reduce our profitability and could adversely affect our business, operating results, and financial condition
4. 34Covenant restrictions may limit our operations and impact our ability to make payments to our investors
5. 35We may increase leverage in executing our development plan, which could further exacerbate the risks associated with our indebtedness

RISKS RELATED TO TAX LAWS AND REGULATIONS

1. 36Aimco may fail to qualify as a REIT
2. 37REIT distribution requirements limit our available cash
3. 38Aimco may be subject to federal, state, and local income taxes in certain circumstances
4. 39Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends
5. 40Complying with the REIT requirements may cause Aimco to forgo otherwise attractive business opportunities
6. 41Changes to United States federal income tax laws could materially and adversely affect Aimco and Aimco’s stockholders

RISKS RELATED TO AIMCO OPERATING PARTNERSHIP UNITS

1. 42There are restrictions on the ability to transfer and redeem Aimco Operating Partnership Units, there is no public market for Aimco Operating Partnership Units and holders of Aimco Operating Partnership Units are subject to dilution
2. 43Cash distributions by Aimco Operating Partnership are not guaranteed and may fluctuate with partnership performance
3. 44Holders of OP Units have limited voting rights and are limited in their ability to effect a change of control
4. 45Holders of OP Units may not have limited liability in specific circumstances
5. 46Aimco may have conflicts of interest with holders of OP Units
6. 47Provisions in the Aimco Operating Partnership agreement may limit the ability of a holder of OP Units to challenge actions taken by the general partner

RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

1. 48Aimco Operating Partnership and its subsidiaries may be prohibited from making distributions and other payments
2. 49Limits on ownership of shares specified in Aimco’s charter may result in the loss of economic and voting rights by purchasers that violate those limits
3. 50the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more charitable organizations designated by Aimco
4. 51Aimco’s charter may limit the ability of a third-party to acquire control of Aimco
5. 52The Maryland General Corporation Law may limit the ability of a third-party to acquire control of Aimco
6. 53has at least three directors who are not officers or employees of the entity or related to an acquiring person; and
7. 54the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting, even if the procedure is contrary to the charter or bylaws