AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 2002
REGISTRATION NO. 333-101735
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Exact name of registrant as specified in its charter)
MARYLAND 84-1259577
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2000 SOUTH COLORADO BOULEVARD, TOWER TWO, SUITE 2-1000
DENVER, COLORADO 80222-7900
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
PETER K. KOMPANIEZ
PRESIDENT AND VICE-CHAIRMAN OF THE BOARD OF DIRECTORS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
2000 SOUTH COLORADO BOULEVARD, TOWER TWO, SUITE 2-1000
DENVER, COLORADO 80222-7900
(303) 757-8101
(Name, Address, Including Zip Code, and Telephone number,
including Area Code, of Agent For Service)
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Copies to:
JOSEPH A. COCO JONATHAN L. FRIEDMAN
Skadden, Arps, Slate, Meagher & Flom LLP Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square 300 South Grand Avenue
New York, New York 10036 Los Angeles, California 90071
(212) 735-2040 (213) 687-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If the Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]If delivery of the prospectus is expected to
be made pursuant to Rule 434, please check the following box [ ]
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CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
Class A Common Stock, par value
$.01 per share 194,683 shares $37.19(1) $7,240,260.77 $666.10(2)
Class A Common Stock, par value
$.01 per share 54,854 shares $36.98(3) $2,028,500.97 $186.62
(1) Calculated pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, based on the closing price on December 6, 2002.
(2) Previously paid.
(3) Calculated pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, based on the closing price on December 16, 2002.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PROSPECTUS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
2000 South Colorado Boulevard, Tower Two, Suite 2-1000
Denver, Colorado 80222-7900 (303) 757-8101
249,537 SHARES OF CLASS A COMMON STOCK
Apartment Investment and Management Company is a self-administered and
self-managed real estate investment trust engaged in the ownership, acquisition,
development, expansion and management of multi-family apartment properties.
This Prospectus relates to:
o The offer and sale from time to time by certain stockholders of up to
179,746 shares of Class A Common Stock issued in exchange for
Partnership Common Units of AIMCO Properties, L.P. ("Common Units");
o The offer and sale from time to time by certain stockholders of up to
69,791 shares of Class A Common Stock issued in exchange for 146,566
Class Nine Preferred Units of AIMCO Properties, L.P. ("Class Nine
Preferred Units").
The registration of the shares covered by this Prospectus does not
necessarily mean that any of the shares will be offered or sold by the selling
stockholders. We will receive no proceeds from any sales of the shares, but will
incur expenses in connection with the offering. See "Selling Stockholders" and
"Plan of Distribution."
The selling stockholders may sell the Class A Common Stock offered
hereby from time to time on the New York Stock Exchange or such other national
securities exchange or automated interdealer quotation system on which shares of
Class A Common Stock are then listed or quoted, through negotiated transactions
or otherwise at market prices prevailing at the time of the sale or at
negotiated prices.
The Class A Common Stock is listed and traded on the New York Stock
Exchange under the symbol "AIV." On December 17, 2002, the closing sale price of
the Class A Common Stock on the NYSE was $36.85 per share.
INVESTING IN THE CLASS A COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 1.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
December 18, 2002
TABLE OF CONTENTS
THE COMPANY........................................................................... 1
RISK FACTORS.......................................................................... 1
USE OF PROCEEDS....................................................................... 9
SELLING STOCKHOLDERS.................................................................. 9
PLAN OF DISTRIBUTION.................................................................. 9
CERTAIN FEDERAL INCOME TAXATION CONSEQUENCES.......................................... 11
WHERE YOU CAN FIND MORE INFORMATION................................................... 20
LEGAL MATTERS......................................................................... 21
EXPERTS............................................................................... 21
PART II INFORMATION NOT REQUIRED IN PROSPECTUS........................................ II-I
THE COMPANY
Apartment Investment and Management Company ("AIMCO"), a Maryland
corporation incorporated on January 10, 1994, is a self-administered and
self-managed real estate investment trust, or REIT, engaged in the acquisition,
ownership, redevelopment, expansion and management of multi-family apartment
properties.
As of September 30, 2002, we owned or managed 326,870 apartment units
in 1,830 apartment properties located in 47 states, the District of Columbia and
Puerto Rico comprised of:
o 179,663 units in 694 apartment properties in which we owned a
controlling equity interest and all of which we managed (we refer to
these properties as "consolidated");
o 122,149 units in 933 apartment properties in which we owned a
non-controlling equity interest and of which we also managed 78,413
units (we refer to these properties as "unconsolidated"); and
o 25,058 units in 203 apartment properties for which we provided services
to, or managed for, third party owners.
We conduct substantially all of our operations through our operating
partnership, AIMCO Properties, L.P. Through a wholly owned subsidiary, we act as
the sole general partner of the AIMCO operating partnership. As of September 30,
2002, we owned approximately an 88% interest in the AIMCO operating partnership.
Generally, when we refer to "we," "us" or the "Company" in this prospectus, we
are referring to AIMCO, the AIMCO operating partnership, and AIMCO's
consolidated corporate subsidiaries and consolidated real estate partnerships.
EquiServe Trust Company, N.A. serves as transfer agent and registrar of
our Class A Common Stock.
Our principal executive offices are located at 2000 South Colorado
Boulevard, Tower Two, Suite 2-1000, Denver, Colorado 80222-7900, and our
telephone number is (303) 757-8101. Our internet address is www.AIMCO.com. The
information contained on our website is not incorporated by reference into this
prospectus.
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all of the other information included or
incorporated by reference in this prospectus before you decide to purchase our
securities.
Some of the information in this prospectus may contain forward-looking
statements. These statements can be identified by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue" or
other similar words. These statements discuss future expectations, contain
projections of results of operations or financial condition or state other
"forward-looking" information. When considering forward-looking statements, you
should keep in mind the risk factors and other cautionary statements included or
incorporated by reference in this prospectus. The risk factors noted in this
section and other factors noted throughout this prospectus, including certain
risks and uncertainties, could cause our actual results to differ materially
from those contained in any forward-looking statement.
IF WE ARE NOT ABLE TO SUCCESSFULLY ACQUIRE, OPERATE, REDEVELOP AND
EXPAND APARTMENT PROPERTIES, OUR GROWTH AND RESULTS OF OPERATIONS WILL BE
ADVERSELY AFFECTED.
The selective acquisition, redevelopment and expansion of apartment
properties is one component of our growth strategy. However, we may not be able
to complete successfully transactions in the future. Although we seek to
acquire, operate, develop and expand properties only when such activities
increase our net income on a per share basis, such transactions may fail to
perform in accordance with our expectations. When we develop or expand
properties, we are subject to the risks that:
o costs may exceed original estimates;
o occupancy and rental rates at the property may be below our
projections;
o financing may not be available on favorable terms or at all;
o redevelopment and leasing of the properties may not be completed on
schedule; and
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o we may experience difficulty or delays in obtaining necessary zoning,
land-use, building, occupancy and other governmental permits and
authorizations.
WE MAY HAVE DIFFICULTY INTEGRATING ANY ACQUIRED BUSINESSES OR
PROPERTIES.
We have grown rapidly. Since our initial public offering in July 1994,
we have completed numerous acquisition transactions, expanding our portfolio of
owned or managed properties from 132 apartment properties with 29,343 units to
1,830 apartment properties with 326,870 units as of September 30, 2002. These
acquisitions have included purchases of properties and interests in entities
that own or manage properties, as well as corporate mergers. Our ability to
integrate successfully acquired businesses and properties depends, among other
things, on our ability to:
o attract and retain qualified personnel;
o integrate the personnel and operations of the acquired businesses;
o maintain standards, controls, procedures and policies; and
o maintain adequate accounting and information systems.
We can provide no assurance that we will be able to accomplish these
goals and successfully integrate any acquired businesses or properties. If we
fail to integrate successfully such businesses, our results of operations could
be adversely affected.
AS OUR SIZE INCREASES, IT BECOMES MORE DIFFICULT FOR US TO ACHIEVE
COMPARABLY RAPID GROWTH IN ASSETS.
Our rapid growth since our initial public offering in July 1994 was
achieved when we were a smaller company. As a result of our current size, future
acquisitions of the same size and magnitude will have a smaller effect on us. It
may also be more difficult for us to identify and complete acquisitions of
greater size that are consistent with our growth strategy.
WE ARE SUBJECT TO LITIGATION ASSOCIATED WITH PARTNERSHIP ACQUISITIONS
THAT COULD INCREASE OUR EXPENSES AND PREVENT COMPLETION OF BENEFICIAL
TRANSACTIONS.
We have engaged in, and intend to continue to engage in, the selective
acquisition of interests in limited partnerships that own apartment properties.
In some cases, we have acquired the general partner of a partnership and then
made an offer to acquire the limited partners' interests in the partnership. In
these transactions, we may be subject to litigation based on claims that we, as
the general partner, have breached our fiduciary duty to our limited partners or
that the transaction violates the relevant partnership agreement. Although we
intend to comply with our fiduciary obligations and relevant partnership
agreements, we may incur additional costs in connection with the defense or
settlement of this type of litigation. In some cases, this type of litigation
may adversely affect our desire to proceed with, or our ability to complete, a
particular transaction. Any litigation of this type could also have a material
adverse effect on our results of operations.
OUR EXISTING AND FUTURE DEBT FINANCING COULD RENDER US UNABLE TO
OPERATE, RESULT IN FORECLOSURE ON OUR PROPERTIES OR PREVENT US FROM MAKING
DISTRIBUTIONS ON OUR EQUITY.
Our strategy is generally to incur debt to increase the return on our
equity while maintaining acceptable interest coverage ratios. We seek to
maintain a ratio of free cash flow to combined interest expense and preferred
stock dividends of between 2:1 and 3:1. For the nine months ended September 30,
2002, we had a ratio of free cash flow to combined interest expense and
preferred stock dividends of 1.82:1, and this ratio in prior periods has also
deviated from our goal. In addition, our Board of Directors could change this
strategy at any time and increase our leverage. Our organizational documents do
not limit the amount of debt that we may incur, and we have significant amounts
of debt outstanding. Payments of principal and interest may leave us with
insufficient cash resources to operate our properties or pay distributions
required to be paid in order to maintain our qualification as a REIT. We are
also subject to the risk that our cash flow from operations will be insufficient
to make required payments of principal and interest, and the risk that existing
indebtedness may not be refinanced or that the terms of any refinancing will not
be as favorable as the terms of existing indebtedness. If we fail to make
required payments of principal and interest on any debt, our lenders could
foreclose on the properties securing such debt that would result in loss of
income and asset value to us. As of September 30, 2002, substantially all of the
properties that we owned or controlled were encumbered by debt. As of September
30, 2002, we had $5.9 billion of indebtedness outstanding on a consolidated
basis, approximately 93% of which was secured by our properties.
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INCREASES IN INTEREST RATES MAY INCREASE OUR INTEREST EXPENSE.
As of September 30, 2002, approximately $1,291.3 million of our debt
(21.9% of total debt outstanding) was subject to variable interest rates. Of the
total debt subject to variable interest rates, the major components were
floating rate tax-exempt bond financing ($790.7 million), floating rate secured
notes ($80.6 million), the loan secured by us to complete certain acquisitions
($145.0 million) and our credit facility ($275.0 million). Based on this level
of debt, an increase in interest rates of 1% would result in our income and cash
flows being reduced by $12.9 million on an annual basis and could impair our
ability to service our indebtedness and make dividends or other distributions.
Historically, changes in tax-exempt interest rates have been at a ratio less
than 1:1 with changes in taxable interest rates. Variable rate tax-exempt bond
financing is benchmarked against the Bond Market Association Municipal Swap
Index (the "BMA Index"). Since 1981, the BMA Index has averaged 54.5% of the
10-year Treasury Yield. Therefore, if this relationship continues and based on
this level of debt, a Treasury Yield increase of 1% would result in our income
and cash flows being reduced by $9.3 million on an annual basis.
COVENANT RESTRICTIONS MAY LIMIT OUR ABILITY TO MAKE PAYMENTS TO OUR
INVESTORS.
Some of our debt and other securities contain covenants that restrict
our ability to make distributions or other payments to our investors unless
certain financial tests or other criteria are satisfied. Our credit facilities
provide that we may make distributions to our investors during any 12-month
period in an aggregate amount that does not exceed the greater of 80% of our
funds from operations for such period or such amount as may be necessary to
maintain our REIT status. The credit facilities prohibit all distributions if
our:
o fixed charge coverage ratio (excludes scheduled amortization of the
loan secured by us to complete certain acquisitions) is less than 1.60
to 1 through June 30, 2003; 1.65 to 1 from July 1, 2003 through
December 31, 2003; and 1.70 to 1 from and after January 1, 2004;
o adjusted fixed charge coverage ratio (includes scheduled amortization
of the loan secured by us to complete certain acquisitions) is less
than 1.45 to 1;
o interest coverage ratio is less than 2.25 to 1;
o unsecured debt service coverage ratio is less than 3.00 to 1;
o total combined debt to gross asset value ratio exceeds 0.55 to 1;
o total obligations to gross asset value ratio exceeds 0.65 to 1;
o encumbered property debt coverage ratio is less than 1.60 to 1; or
o consolidated net worth is less than the sum of $2.7 billion and 85% of
the net proceeds of any securities issuances after June 30, 2001.
Our outstanding classes of preferred stock prohibit the payment of
dividends on our common stock or equity stock if we fail to pay the dividends to
which the holders of the preferred stock are entitled. In addition, our 6-1/2%
convertible debentures prohibit the payment of dividends on our capital stock if
we elect to defer payments of interest on these convertible debentures, which we
may have the right to do for up to 60 months. If we are unable to pay dividends,
we may fail to qualify as a REIT. This would subject us to corporate taxation
and reduce our ability to make distributions to you.
WE DEPEND ON DISTRIBUTIONS AND OTHER PAYMENTS FROM OUR SUBSIDIARIES
THAT THEY MAY BE PROHIBITED FROM MAKING TO US.
All of our properties are owned, and all of our operations are
conducted, by the AIMCO operating partnership and our other subsidiaries. As a
result, we depend on distributions and other payments from our subsidiaries in
order to satisfy our financial obligations and make payments to our investors.
The ability of our subsidiaries to make such distributions and other payments
depends on their earnings and may be subject to statutory or contractual
limitations. As an equity investor in our subsidiaries, our right to receive
assets upon their liquidation or reorganization will be effectively subordinated
to the claims of their creditors. To the extent that we are recognized as a
creditor of such subsidiaries, our claims may still be subordinate to any
security interest in or other lien on their assets and to any of their debt or
other obligations that are senior to our claims.
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CHANGES IN THE REAL ESTATE MARKET MAY LIMIT OUR ABILITY TO GENERATE
FUNDS FROM OPERATIONS.
Our ability to make payments to our investors depends on our ability to
generate funds from operations in excess of required debt payments and capital
expenditure requirements. Funds from operations and the value of our properties
may be adversely affected by events or conditions beyond our control, including:
o the general economic climate;
o competition from other apartment communities and alternative housing;
o local conditions, such as an increase in unemployment or an increase in
the supply of apartments, that might adversely affect apartment
occupancy or rental rates;
o changes in governmental regulations and the related cost of compliance;
o increases in operating costs (including real estate taxes) due to
inflation and other factors, which may not necessarily be offset by
increased rents;
o changes in tax laws and housing laws, including the enactment of rent
control laws or other laws regulating multifamily housing;
o changes in interest rates and the availability of financing; and
o the relative illiquidity of real estate investments.
WE MAY BE SUBJECT TO COSTLY ENVIRONMENTAL LIABILITIES THAT COULD
ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
Various Federal, state and local laws subject property owners or
operators to liability for the costs of removal or remediation of certain
hazardous substances released on a property. These laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release of the hazardous substances. The presence of, or the failure to
properly remediate, hazardous substances may adversely affect occupancy at
contaminated apartment communities and our ability to sell or borrow against
these properties. In addition to the costs associated with investigation and
remediation actions brought by governmental agencies, the presence of hazardous
wastes on a property could result in personal injury or similar claims by
private plaintiffs. Various laws also impose liability for the cost of removal
or remediation of hazardous or toxic substances at the disposal or treatment
facility. Anyone who arranges for the disposal or treatment of hazardous or
toxic substances is potentially liable under these laws. These laws often impose
liability whether or not the person arranging for the disposal ever owned or
operated the disposal facility.
LAWS BENEFITING DISABLED PERSONS MAY RESULT IN OUR INCURRENCE OF
UNANTICIPATED EXPENSES.
Under the Americans with Disabilities Act of 1990, or ADA, all places
intended to be used by the public are required to meet certain Federal
requirements related to access and use by disabled persons. Likewise, the Fair
Housing Amendments Act of 1988, or FHAA, requires apartment properties first
occupied after March 13, 1990 to be accessible to the handicapped. These and
other Federal, state and local laws may require modifications to our properties,
or restrict renovations of the properties. Noncompliance with these laws could
result in the imposition of fines or an award of damages to private litigants
and also could result in an order to correct any non-complying feature, which
could result in substantial capital expenditures. Although we believe that our
properties are substantially in compliance with present requirements, we may
incur unanticipated expenses to comply with the ADA and the FHAA.
AFFORDABLE HOUSING REGULATIONS MAY LIMIT RENT INCREASES AT SOME OF OUR
PROPERTIES, REDUCING OUR REVENUE AND, IN SOME CASES, CAUSING US TO SELL
PROPERTIES THAT WE MIGHT OTHERWISE CONTINUE TO OWN.
As of September 30, 2002, we owned a controlling equity interest in 129
properties, held a non-controlling equity interest in 759 properties and managed
for third parties and affiliates 184 properties that benefit from governmental
programs intended to provide housing to people with low or moderate incomes.
These programs, which are usually administered by the U.S. Department of Housing
and Urban Development, or HUD, or state housing finance agencies, typically
provide mortgage insurance,
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favorable financing terms or rental assistance payments to the property owners.
As a condition to the receipt of assistance under these programs, the properties
must comply with various requirements, which typically limit rents to
pre-approved amounts. If permitted rents on a property are insufficient to cover
costs, a sale of the property may become necessary, which could result in a loss
of management fee revenue. We usually need to obtain the approval of HUD in
order to manage, or acquire a significant interest in, a HUD-assisted property.
We may not always receive such approval.
WE DEPEND ON OUR CHIEF EXECUTIVE OFFICER AND PRESIDENT; OUR OPERATIONS
WOULD BE HARMED IF WE LOST THEIR SERVICES.
Although we have entered into employment agreements with our Chairman
and Chief Executive Officer, Terry Considine, and our President, Peter K.
Kompaniez, the loss of either of their services could have a material adverse
effect on our operations.
WE MAY FAIL TO QUALIFY AS A REIT.
We believe that we operate, and have always operated, in a manner that
enables us to meet the requirements for qualification as a REIT for Federal
income tax purposes. Both the validity of the opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, and our continued qualification as a REIT will depend on our
satisfaction of certain asset, income, organizational, distribution, stockholder
ownership and other requirements on a continuing basis, the results of which
will not be monitored by Skadden, Arps, Slate, Meagher & Flom LLP. Our ability
to satisfy the asset tests depends upon our analysis of the fair market values
of our assets, some of which are not susceptible to a precise determination, and
for which we will not obtain independent appraisals. Our compliance with the
REIT income and quarterly asset requirements also depends upon our ability to
manage successfully the composition of our income and assets on an ongoing
basis. Moreover, the proper classification of an instrument as debt or equity
for Federal income tax purposes may be uncertain in some circumstances, which
could affect the application of the REIT qualification requirements.
Accordingly, there can be no assurance that the Internal Revenue Service (the
"IRS") will not contend that our interests in subsidiaries or other issuers will
not cause a violation of the REIT requirements. Moreover, future economic,
market, legal, tax or other considerations may cause us to fail to qualify as a
REIT, or our Board of Directors may determine to revoke our REIT status. If we
fail to qualify as a REIT, we will not be allowed a deduction for dividends paid
to our stockholders in computing our taxable income, and we will be subject to
Federal income tax at regular corporate rates, including any applicable
alternative minimum tax. This would substantially reduce our funds available for
payment to our investors. Unless entitled to relief under certain provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), we would also be
disqualified from taxation as a REIT for the four taxable years following the
year during which we ceased to qualify as a REIT. See "Certain Federal Income
Tax Consequences."
In addition, our failure to qualify as a REIT would trigger the
following consequences:
o we would be obligated to repurchase a material amount of our preferred
stock, plus accrued and unpaid dividends to the date of repurchase; and
o we would be in default under our primary credit facilities and certain
other loan agreements.
REIT DISTRIBUTION REQUIREMENTS LIMIT OUR AVAILABLE CASH.
As a REIT, we are subject to annual distribution requirements, which
limit the amount of cash we retain for other business purposes, including
amounts to fund our growth. We generally must distribute annually at least 90%
of our net REIT taxable income, excluding any net capital gain, in order for
corporate income tax not to apply to earnings that we distribute. We intend to
make distributions to our stockholders to comply with the requirements of the
Code. However, differences in timing between the recognition of taxable income
and the actual receipt of cash could require us to sell assets or borrow funds
on a short-term or long-term basis to meet the 90% distribution requirement of
the Code.
LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS COULD HAVE A NEGATIVE
EFFECT ON US.
The rules dealing with Federal income taxation are constantly under
review by persons involved in the legislative process and by the IRS and the
U.S. Treasury Department. Changes to the tax laws (which may have retroactive
application) could adversely affect our investors. We cannot predict how changes
in the tax laws might affect us or our investors. For example, under legislation
effective January 1, 2001, if any of our management companies were deemed to
operate or manage a health care or lodging facility, we would fail to qualify as
a REIT. Although we believe that, since January 1, 2001, none of the management
companies have operated or managed any health care or lodging facilities, the
statute provides little guidance as to the definition of a health care or
lodging facility. Accordingly, we cannot assure you that the IRS will not
contend that any of our management companies operate or manage a health care or
lodging facility, resulting in our disqualification as a REIT.
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WE MAY BE SUBJECT TO OTHER TAX LIABILITIES.
Even if we qualify as a REIT, we and our subsidiaries may be subject to
certain Federal, state and local taxes on our income and property. Any such
taxes would reduce our operating cash flow.
THE FBI HAS ISSUED AN ALERT REGARDING POTENTIAL TERRORIST THREATS
INVOLVING APARTMENT BUILDINGS -- A RISK FOR WHICH WE GENERALLY ARE NOT INSURED.
On May 6, 2002, the Federal Bureau of Investigation issued an alert
regarding potential terrorist threats involving apartment buildings.
Specifically, the FBI announced that there are indications that discussions were
held about the possibility of renting apartment units in various areas of the
United States and rigging them with explosives. The FBI advised that it has no
information indicating such plans had advanced beyond the discussion stage. The
information has been characterized as a non-specific, general threat to the
industry - with no details on location, timing or suspects. Threats of future
terrorist attacks, such as the one announced by the FBI on May 6, 2002, could
have a negative effect on rent and occupancy levels at our properties. The
effect that future terrorist activities or threats of such activities could have
on our business cannot presently be determined. If we incur a loss at a property
as a result of an act of terrorism, we could lose all or a portion of the
capital we have invested in the property, as well as the anticipated future
revenue from the property. The recent enactment by the United States Congress of
the Terrorism Risk Insurance Act or TRIA has resulted in terrorism coverage
exclusions being invalidated, pending formal mandated notice from our carriers
of terrorism coverage pricing. However, we have no assurance at present what the
new pricing will be and if the cost will be economically feasible. Prior to the
enactment of TRIA, and because we have a highly diversified and geographically
dispersed portfolio of residential properties, our lenders have generally not
required purchase of terrorism coverage. If we decide in the future to purchase
such insurance, or if our lenders now require us to purchase such insurance, the
cost could have a negative effect on our results of operations.
INSURANCE COVERAGE IS BECOMING MORE EXPENSIVE AND MORE DIFFICULT TO
OBTAIN.
The current insurance market is characterized by rising premium rates,
increased deductibles, and more restrictive coverage language. Recent
developments have resulted in or are expected to result in significant increases
in our insurance premiums and have made or are expected to make it more
difficult to obtain certain types of insurance. Insurance policy coverages
continue to narrow. As an example, many insurance carriers are excluding
mold-related risks from their policy coverages, or are adding significant
restrictions to such coverage. Furthermore, we may not be able to purchase
policies in the future with deductibles similar to those previously available.
Although we make use of many alternative methods of risk financing that enable
us to insulate ourselves to some degree from variation in coverage language and
cost, continued deterioration in insurance market place conditions may have a
negative effect on our operating results.
LIMITS ON OWNERSHIP OF SHARES IN OUR CHARTER MAY RESULT IN THE LOSS OF
ECONOMIC AND VOTING RIGHTS BY PURCHASERS THAT VIOLATE THOSE LIMITS.
Our charter limits ownership of our Class A Common Stock by any single
stockholder to 8.7% of our outstanding shares of Class A Common Stock, or 15% in
the case of certain pension trusts, registered investment companies and Mr.
Considine. Our charter also limits ownership of our common stock, equity stock,
and preferred stock by any single stockholder to 8.7% of the value of the
outstanding common stock, equity stock, and preferred stock, or 15% in the case
of certain pension trusts, registered investment companies and Mr. Considine.
The charter also prohibits anyone from buying shares of our capital stock if the
purchase would result in us losing our REIT status. This could happen if a
transaction results in fewer than 100 persons owning all of our shares of
capital stock or results in five or fewer persons, applying certain attribution
rules of the Code, owning 50% or more of the value of all of our shares of
capital stock. If you or anyone else acquires shares in excess of the ownership
limit or in violation of the ownership requirements of the Internal Revenue Code
for REITs:
o the transfer will be considered null and void;
o we will not reflect the transaction on our books;
o we may institute legal action to enjoin the transaction;
o we may demand repayment of any dividends received by the affected
person on those shares;
o we may redeem the shares;
o the affected person will not have any voting rights for those shares;
and
6
o the 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 us.
We may purchase the shares of capital stock held in trust at a price
equal to the lesser of the price paid by the transferee of the shares or the
then current market price. If the trust transfers any of the shares of capital
stock, the affected person will receive the lesser of the price paid for the
shares or the then current market price. An individual who acquires shares of
capital stock that violate the above rules bears the risk that the individual:
o may lose control over the power to dispose of such shares;
o may not recognize profit from the sale of such shares if the market
price of the shares increases;
o may be required to recognize a loss from the sale of such shares if the
market price decreases; and
o may be required to repay to us any distributions received from us as a
result of his or her ownership of the shares.
OUR CHARTER MAY LIMIT THE ABILITY OF A THIRD PARTY TO ACQUIRE CONTROL
OF US.
The 8.7% ownership limit discussed above may have the effect of
precluding acquisition of control of us by a third party without the consent of
our Board of Directors. Our charter authorizes our Board of Directors to issue
up to 510,587,500 shares of capital stock. As of November 30, 2002, 454,962,738
shares were classified as Class A Common Stock and 55,624,762 shares were
classified as preferred stock. Under the charter, our Board of Directors has the
authority to classify and reclassify any of our unissued shares of capital stock
into shares of capital stock with such preferences, rights, powers and
restrictions as our Board of Directors may determine. The authorization and
issuance of a new class of capital stock could have the effect of delaying or
preventing someone from taking control of us, even if a change in control were
in our stockholders' best interests.
MARYLAND BUSINESS STATUTES MAY LIMIT THE ABILITY OF A THIRD PARTY TO
ACQUIRE CONTROL OF US.
As a Maryland corporation, we are subject to various Maryland laws that
may have the effect of discouraging offers to acquire us and increasing the
difficulty of consummating any such offers, even if our acquisition would be in
our stockholders' best interests. The Maryland General Corporation Law restricts
mergers and other business combination transactions between us and any person
who acquires beneficial ownership of shares of our stock representing 10% or
more of the voting power without our Board of Directors' prior approval. Any
such business combination transaction could not be completed until five years
after the person acquired such voting power, and generally only with the
approval of stockholders representing 80% of all votes entitled to be cast and
66 2/3% of the votes entitled to be cast, excluding the interested stockholder,
or upon payment of a fair price. Maryland law also provides generally that a
person who acquires shares of our capital stock that represent 10% or more of
the voting power in electing directors will have no voting rights unless
approved by a vote of two-thirds of the shares eligible to vote. Additionally,
Maryland law provides, among other things, that the board of directors has broad
discretion in adopting stockholders' rights plans and has the sole power to fix
the record date, time and place for special meetings of the stockholders. In
addition, Maryland law provides that corporations that:
o have three directors who are not employees of the entity or related to
an acquiring person; and
o are subject to the reporting requirements of the Securities Exchange
Act of 1934,
may elect in their charter or bylaws or by resolution of the board of directors
to be subject to all or part of a special subtitle that provides that:
o the corporation will have a staggered board of directors;
o any director may be removed only for cause and by the vote of
two-thirds of the votes entitled to be cast in the election of
directors generally, even if a lesser proportion is provided in the
charter or bylaws;
o the number of directors may only be set by the board of directors, even
if the procedure is contrary to the charter or bylaws;
o vacancies may only be filled by the remaining directors, even if the
procedure is contrary to the charter or bylaws; and
7
o the 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.
To date, we have not made any of the elections described above.
8
USE OF PROCEEDS
We will not receive any cash proceeds upon any sale of Class A Common
Stock by the selling stockholders.
SELLING STOCKHOLDERS
This prospectus relates to periodic offers and sales of up to 249,537
shares of Class A Common Stock by the selling stockholders listed and described
below and their pledgees, donees and other successors in interest (collectively,
the "Selling Stockholders"). The following table sets forth certain information
with respect to the Selling Stockholders and their beneficial ownership of
shares of Class A Common Stock as of the date hereof. Except as indicated below,
none of the Selling Stockholders holds any position, office or has had any other
material relationship with us, or any of our predecessors or affiliates, during
the past three years. The shares owned by each group of Selling Stockholders
listed below represent less than 1% of the shares of Class A Common Stock
outstanding as of November 30, 2002. Because the Selling Stockholders may sell
some or all of the shares offered hereby, and because there are currently no
agreements, arrangements or understandings with respect to the sale of any of
such shares, no estimate can be given as to the number of shares that will be
held by the Selling Stockholders upon termination of any offering made hereby.
Amount Offered Hereby
---------------------
Shares Issuable Shares Issuable
Amount Owned in Exchange for in Exchange for
SELLING STOCKHOLDER Prior to Offering Common Units (1) Preferred Units (2)
------------------- ----------------- ---------------- -------------------
Persons or entities who acquired Common Units from
January 1, 2001 through October 17, 2002 (3) 255,968 (4)(5) 179,746 --
Persons or entities who acquired Class Nine Preferred
Units on July 1, 2002 481,597 (5)(6) -- 69,791
----------------
(1) Represents the number of shares of Class A Common Stock (rounded
downward to the nearest whole share) that may be issued by us from time to time
in exchange for an equal number of Common Units held by the selling
stockholders.
(2) Represents the number of shares of Class A Common Stock (rounded
downward to the nearest whole share) that may be issued by us from time to time
in exchange for Class Nine Preferred Units held by the selling stockholders at
an exchange ratio of 0.47619 shares of Class A Common Stock for each Class Nine
Preferred Unit.
(3) Includes 254 shares of Class A Common Stock (rounded downward to
the nearest whole share) currently owned or issuable in exchange for an equal
number of Common Units currently owned by J. Landis Martin, a member of our
Board of Directors.
(4) Represents shares of Class A Common Stock (rounded downward to the
nearest whole share) currently owned or issuable in exchange for an equal number
of Common Units currently owned by the selling stockholders.
(5) Represents less than 1% of the shares of Class A Common Stock
outstanding as of November 30, 2002.
(6) Represents shares of Class A Common Stock (rounded downward to the
nearest whole share) issuable in exchange for 1,011,356 Class Nine Preferred
Units currently owned by the selling stockholders at an exchange ratio of
0.47619 shares of Class A Common Stock for each Class Nine Preferred Unit.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
selling stockholders of up to 249,537 shares of Class A Common Stock. The
selling stockholders may sell shares from time to time in one or more
transactions, which may include underwritten offerings, sales in open market or
block transactions on the New York Stock Exchange, or such other national
securities exchange or automated interdealer quotation system on which shares of
Class A Common Stock are then listed or quoted, sales in the over-the-counter
market, privately negotiated transactions, put or call options transactions
relating to the shares, short sales of shares, hedging transactions, or in
transactions in which shares may be delivered in connection with issuance of
securities by issuers other than AIMCO that are exchangeable for or payable in
such shares, distributions to beneficiaries, partners, members, or stockholders
of the selling stockholders or a combination of such methods of sale or by any
other legally available means, at market prices prevailing at the time of sale,
at prices related to prevailing market prices at the time of the sale or at
negotiated prices. Such transactions may or may not involve brokers or dealers.
None of the selling stockholders have advised us that they have entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the securities offered hereby, nor is there
9
an underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling stockholders. In addition, any of the shares
covered by this prospectus that qualify for sale pursuant to Rule 144 under the
Securities Act of 1933 (the "Securities Act"), may be sold under Rule 144 rather
than pursuant to this prospectus.
The selling stockholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). In effecting sales,
such broker-dealers may arrange for other broker-dealers to participate.
The selling stockholders may enter into options or other transactions
with broker-dealers or other financial institutions who may resell the
securities offered hereby pursuant to this prospectus (as supplemented or
amended to reflect the transaction).
If shares are sold in an underwritten offering, the shares will be
acquired by the underwriters for their own accounts and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or prices at the time of the sale or at negotiated
prices. Any initial public offering price and any discounts or commissions
allowed or reallowed or paid to dealers may be changed from time to time.
Underwriters may sell shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters or the purchasers of shares for whom such
broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).
Depending upon the circumstances of any sale hereunder, the selling
stockholders and any underwriter or broker-dealer who acts in connection with
the sale of shares hereunder may be deemed to be "underwriters," within the
meaning of Section 2(11) of the Securities Act, and any compensation received by
them and any profit on any resale of shares sold by them while acting as
principals may be deemed to be underwriting discounts or commissions under the
Securities Act.
The selling stockholders will be subject to the prospectus delivery
requirements of the Securities Act, which may include delivery through the
facilities of the New York Stock Exchange pursuant to Rule 153 under the
Securities Act. The anti-manipulation provisions of Regulation M promulgated
under the Securities Exchange Act of 1934 may also apply to sales by the selling
stockholders in the market.
In order to comply with the securities laws of certain jurisdictions,
the securities offered hereby will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption or federal preemption from registration or qualification is available
and is complied with.
We have agreed to pay all expenses in connection with the registration
of the shares being offered hereby. Selling stockholders are responsible for
paying broker's commissions, underwriting discounts and any other selling
expenses, as well as fees and expenses of selling stockholders' counsel.
We have agreed to indemnify certain of the selling stockholders, and
their respective officers and directors and any person who controls such selling
stockholders, against certain liabilities and expenses arising out of or based
upon the information set forth or incorporated by reference in this prospectus,
and the registration statement of which this prospectus is a part, including
liabilities under the Securities Act. We or the selling stockholders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
Upon our being notified by a selling stockholder that any material
arrangement has been entered into with an underwriter or a broker-dealer for the
sale of shares through a special offering, block trade, exchange distribution or
a secondary distribution or a purchase by a broker or dealer, a supplement to
this prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus and (vi) other facts
material to the transaction. In addition, upon our being notified by a named
selling stockholder that a donee or pledgee intends to sell more than 500
shares, a supplement to this prospectus will be filed.
10
CERTAIN FEDERAL INCOME TAXATION CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
RESULTING FROM THE ACQUISITION OF, HOLDING, EXCHANGING, AND OTHERWISE DISPOSING
OF AIMCO CLASS A COMMON STOCK. THIS SUMMARY IS BASED UPON THE CODE, THE TREASURY
REGULATIONS (THE "REGULATIONS"), RULINGS ISSUED BY THE IRS, AND JUDICIAL
DECISIONS, ALL IN EFFECT AS OF THE DATE OF THIS PROSPECTUS AND ALL OF WHICH ARE
SUBJECT TO CHANGE OR DIFFERING INTERPRETATIONS, POSSIBLY RETROACTIVELY. THIS
SUMMARY IS ALSO BASED ON THE ASSUMPTIONS THAT THE OPERATION OF AIMCO, THE AIMCO
OPERATING PARTNERSHIP AND THE LIMITED LIABILITY COMPANIES AND LIMITED
PARTNERSHIPS IN WHICH THEY OWN CONTROLLING INTERESTS (COLLECTIVELY, THE
"SUBSIDIARY PARTNERSHIPS") WILL BE IN ACCORDANCE WITH THEIR RESPECTIVE
ORGANIZATIONAL DOCUMENTS AND PARTNERSHIP AGREEMENTS, THIS SUMMARY IS FOR GENERAL
INFORMATION ONLY AND DOES NOT PURPORT TO DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE IMPORTANT TO A PARTICULAR INVESTOR IN LIGHT OF ITS
INVESTMENT OR TAX CIRCUMSTANCES, OR TO CERTAIN TYPES OF INVESTORS SUBJECT TO
SPECIAL TAX RULES (INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, INSURANCE
COMPANIES, AND EXCEPT TO THE EXTENT DISCUSSED BELOW, TAX-EXEMPT ORGANIZATIONS
AND FOREIGN INVESTORS, AS DETERMINED FOR FEDERAL INCOME TAX PURPOSES). THIS
SUMMARY ASSUMES THAT INVESTORS WILL HOLD THEIR AIMCO STOCK AS CAPITAL ASSETS
(GENERALLY, PROPERTY HELD FOR INVESTMENT). NO ADVANCE RULING HAS BEEN OR WILL BE
SOUGHT FROM THE IRS REGARDING ANY MATTER DISCUSSED IN THIS PROSPECTUS. NO
ASSURANCE CAN BE GIVEN THAT THE IRS WOULD NOT ASSERT, OR THAT A COURT WOULD NOT
SUSTAIN, A POSITION CONTRARY TO ANY OF THE TAX ASPECTS SET FORTH BELOW.
THE FEDERAL INCOME TAX TREATMENT OF HOLDERS OF AIMCO STOCK DEPENDS IN
SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX
PROVISIONS OF FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY
MAY BE AVAILABLE. ACCORDINGLY, EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX
ADVISOR REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
ACQUIRING, HOLDING, EXCHANGING, OR OTHERWISE DISPOSING OF AIMCO CLASS A COMMON
STOCK AND OF AIMCO'S ELECTION TO BE SUBJECT TO TAX, FOR FEDERAL INCOME TAX
PURPOSES, AS A REAL ESTATE INVESTMENT TRUST.
IN GENERAL
The REIT provisions of the Code are highly technical and complex. The
following summary sets forth certain aspects of the provisions of the Code that
govern the Federal income tax treatment of a REIT and its stockholders. This
summary is qualified in its entirety by the applicable Code provisions,
Regulations, and administrative and judicial interpretations thereof, all of
which are subject to change, possibly retroactively.
AIMCO has elected to be taxed as a REIT under the Code commencing with
its taxable year ended December 31, 1994, and AIMCO intends to continue such
election. Although AIMCO believes that, commencing with AIMCO's initial taxable
year ended December 31, 1994, AIMCO was organized in conformity with the
requirements for qualification as a REIT, and its actual method of operation has
enabled, and its proposed method of operation will enable, it to meet the
requirements for qualification and taxation as a REIT under the Code, no
assurance can be given that AIMCO has been or will remain so qualified. Such
qualification and taxation as a REIT depend upon AIMCO's ability to meet,
through actual annual operating results, distribution levels requirements
regarding diversity of stock ownership, and the various qualification tests
imposed under the Code as discussed below. AIMCO's compliance with the REIT
income and quarterly asset requirements depends upon AIMCO's ability to
successfully manage the composition of its income and assets on an ongoing
basis. AIMCO's ability to qualify as a REIT also requires that it satisfies
certain asset tests, some of which depend upon the fair market value of assets
directly or indirectly owned by AIMCO. Such values may not be susceptible to a
precise determination, and AIMCO will not obtain independent appraisals. No
assurance can be given that the actual results of AIMCO's operation for any one
taxable year will satisfy such requirements. See "--Failure to Qualify." No
assurance can be given that the IRS will not challenge AIMCO's eligibility for
taxation as a REIT.
AIMCO has received an opinion, dated December 18, 2002, from the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP to the effect that, beginning
with its initial taxable year ended December 31, 1994, AIMCO was organized in
conformity with the requirements for qualification as a REIT under the Code and
that its actual method of operation has enabled, and its proposed method of
operation will enable, AIMCO to meet the requirements for qualification and
taxation as a REIT. The opinion is expressed as of its date, and Skadden, Arps,
Slate, Meagher & Flom LLP has no obligation to advise AIMCO of any change in
applicable law or of any change in matters stated, represented or assumed after
the date of such opinion.
You should be aware that opinions of counsel are not binding on the IRS
or any court. In preparing its opinion, Skadden, Arps, Slate, Meagher & Flom LLP
has assumed and relied on the accuracy and completeness of all information
provided by AIMCO, including information regarding its properties, assets,
income, distributions, stockholder ownership, organizational structure and other
requirements, and the past, present and future conduct of its business
operations. Skadden, Arps, Slate, Meagher & Flom LLP has not assumed any
responsibility for independently verifying such information nor has it
undertaken any independent review of such information. Furthermore, AIMCO's
opinion of counsel is conditioned on, and its qualification and taxation as a
REIT depend on, AIMCO's ability to meet, through actual annual operating
results, the various REIT qualification tests, the results of which are not
11
reviewed by Skadden, Arps, Slate, Meagher & Flom LLP. Accordingly, no assurance
can be given that the actual results of AIMCO's operations for any taxable year
satisfy such requirements. Such requirements are discussed in more detail under
the heading "Requirements for Qualification."
Provided AIMCO qualifies as a REIT, AIMCO will not be subject to
Federal corporate income tax on its net income that is currently distributed to
its stockholders. This treatment substantially eliminates the "double taxation"
(at the corporate and stockholder levels) that generally results from investment
in a corporation. Rather, income generated by a REIT generally is taxed only at
the stockholder level upon a distribution of dividends by the REIT. Net
operating losses, foreign tax credits and other tax attributes of a REIT
generally do not pass through to the stockholders of the REIT, subject to
special rules for certain items such as capital gains recognized by REITs.
However, notwithstanding AIMCO's qualification as a REIT, AIMCO will be subject
to Federal income tax as follows:
o First, AIMCO will be taxed at regular corporate rates on any
undistributed REIT taxable income, including undistributed net capital
gains.
o Second, under certain circumstances, AIMCO may be subject to the
"alternative minimum tax" on its items of tax preference, including any
deductions of net operating losses.
o Third, if AIMCO has net income from prohibited transactions (which are,
in general, certain sales or other dispositions of property held
primarily for sale to customers in the ordinary course of business,
other than foreclosure property), such income will be subject to a 100%
tax.
o Fourth, if AIMCO should fail to satisfy the 75% gross income test or
the 95% gross income test (as discussed below), but has nonetheless
maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on an
amount equal to (a) the gross income attributable to the greater of the
amount by which AIMCO fails the 75% or 95% test multiplied by (b) a
fraction intended to reflect AIMCO's profitability.
o Fifth, if AIMCO should fail to distribute during each calendar year at
least the sum of (i) 85% of its REIT ordinary income for such year,
(ii) 95% of its REIT capital gain net income for such year (other than
certain long-term capital gains that AIMCO elects to retain and pay the
tax thereon), and (iii) any undistributed taxable income from prior
periods, AIMCO would be subjected to a 4% excise tax on the excess of
such required distribution over the amounts actually distributed. o
Sixth, a 100% excise tax may be imposed on some items of income expense
that are directly or constructively paid between a REIT and a taxable
REIT subsidiary (as described below) if and to the extent that the IRS
successfully adjusts the reported amounts of these items.
o Seventh, if AIMCO acquires assets from a corporation that is not a REIT
(a "subchapter C corporation") in a transaction in which the adjusted
tax basis of the assets in the hands of AIMCO is determined by
reference to the adjusted tax basis of such assets in the hands of the
subchapter C corporation, under Temporary Treasury Regulations, the
subchapter C corporation would be required to recognize any net
Built-In Gain (as defined below) that would have been realized if the
subchapter C corporation had liquidated on the day before the date of
the transfer (i.e., as if it had sold its assets in a taxable
transaction). Pursuant to Regulations, AIMCO may elect, in lieu of the
treatment described above, to be subject to tax at the highest regular
corporate tax rate on any gain it recognizes on the disposition of any
such asset during the ten-year period beginning on the day on which
AIMCO acquires such asset to the extent of the excess, if any, of the
fair market value over the adjusted basis of such asset as of its
acquisition date ("Built-in Gain"). AIMCO intends to make such an
election and, therefore, will be taxed at the highest regular corporate
rate on such Built-in Gain if, and to the extent, such assets are sold
within the specified ten-year period. It should be noted that AIMCO has
acquired (and may acquire in the future) a significant amount of assets
with Built-in Gain and a taxable disposition by AIMCO of any of these
assets within ten years of their acquisitions would subject AIMCO to
tax under the foregoing rule.
o Eighth, AIMCO may be required to pay monetary penalties to the IRS in
certain circumstances, including if it fails to meet record keeping
requirements intended to monitor its compliance with rules relating to
the composition of a REIT's stockholders.
o Ninth, certain of AIMCO's subsidiaries are subchapter C corporations,
the earnings of which are subject to Federal corporate income tax.
o Tenth, AIMCO could be subject to foreign taxes on investments and
activities in foreign jurisdictions. In addition, AIMCO could also be
subject to tax in certain situations and on certain transactions not
presently contemplated.
12
Requirements for Qualification. The Code defines a REIT as a
corporation, trust or association:
o that is managed by one or more trustees or directors;
o the beneficial ownership of which is evidenced by transferable shares,
or by transferable certificates of beneficial interest,
o that would be taxable as a domestic corporation, but for the special
Code provisions applicable to REITs,
o that is neither a financial institution nor an insurance company
subject to certain provisions of the Code;
o the beneficial ownership of which is held by 100 or more persons;
o in which, during the last half of each taxable year, not more than 50%
in value of the outstanding stock is owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain
entities); and
o that meets certain other tests described below (including with respect
to the nature of its income and assets).
The Code provides that the first four conditions must be met during the
entire taxable year, and that the fifth condition must be met during at least
335 days of a taxable year of 12 months, or during a proportionate part of a
taxable year of less than 12 months. The charter provides certain restrictions
regarding transfers of its shares, which provisions are intended to assist AIMCO
in satisfying the share ownership requirements described in the fifth and sixth
conditions above.
To monitor AIMCO's compliance with the share ownership requirements,
AIMCO is required to maintain records regarding the actual ownership of its
shares. To do so, AIMCO must demand written statements each year from the record
holders of certain percentages of its stock in which the record holders are to
disclose the actual owners of the shares (i.e., the persons required to include
in gross income the REIT dividends). A list of those persons failing or refusing
to comply with this demand must be maintained as part of AIMCO's records.
Failure by AIMCO to comply with these record keeping requirements could subject
it to monetary penalties. A stockholder who fails or refuses to comply with the
demand must submit a statement with its tax return disclosing the actual
ownership of the shares and certain other information.
In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. AIMCO satisfies this requirement.
Ownership of Partnership Interests. In the case of a REIT that is a
partner in a partnership, the Regulations provide that the REIT is deemed to own
its proportionate share of the partnership's assets and to earn its
proportionate share of the partnership's income. In addition, the assets and
gross income of the partnership are deemed to retain the same character in the
hands of the REIT for purposes of the gross income and asset tests applicable to
REITs as described below. Thus, AIMCO's proportionate share of the assets,
liabilities and items of income of the Subsidiary Partnerships will be treated
as assets, liabilities and items of income of AIMCO for purposes of applying the
REIT requirements described herein. A summary of certain rules governing the
Federal income taxation of partnerships and their partners is provided below in
"--Tax Aspects of AIMCO's Investments in Partnerships."
Income Tests. In order to maintain qualification as a REIT, AIMCO
annually must satisfy two gross income requirements:
o First, at least 75% of AIMCO's gross income (excluding gross income
from "prohibited transactions," i.e., certain sales of property held
primarily for sale to customers in the ordinary course of business) for
each taxable year must be derived directly or indirectly from
investments relating to real property or mortgages on real property
(including "rents from real property," gains from the sale of real
estate assets and, in certain circumstances, interest) or from certain
types of temporary investments.
o Second, at least 95% of AIMCO's gross income (excluding gross income
from prohibited transactions) for each taxable year must be derived
from such real property investments, and from dividends, interest and
gain from the sale or disposition of stock or securities (or from any
combination of the foregoing).
Rents received by AIMCO through the Subsidiary Partnerships will
qualify as "rents from real property" in satisfying the gross income
requirements described above, only if several conditions are met, including the
following. Amounts received from the rental of up to 10% of a property to a
taxable REIT subsidiary will qualify as "rents from real property" so long as
the rents received from the taxable REIT subsidiary are substantially comparable
to rents received from other tenants of the property for comparable space. If
rent attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
"rents from real property."
13
Moreover, for rents received to qualify as "rents from real property," the REIT
generally must not furnish or render services to the tenants of such property,
other than through an "independent contractor" from which the REIT derives no
revenue or through a "taxable REIT subsidiary." AIMCO (or its affiliates) is
permitted to directly perform services that are "usually or customarily
rendered" in connection with the rental of space for occupancy only and are not
otherwise considered rendered to the occupant of the property. In addition,
AIMCO (or its affiliates) may directly or indirectly provide non-customary
services to tenants of its properties without disqualifying all of the rent from
the property if the payment for such services does not exceed 1% of the total
gross income from the property. For purposes of this test, the income received
from such non-customary services is deemed to be at least 150% of the direct
cost of providing the services.
If any amount of interest, rent, or other deductions of a taxable REIT
subsidiary for amounts paid to AIMCO is determined by the IRS to be other than
at arm's length, a 100% excise tax is imposed on the portion that is excessive.
AIMCO manages apartment properties for third parties and affiliates
through subsidiaries that AIMCO refers to as the "management companies." The
management companies receive management fees and other income. A portion of such
fees and other income accrue to AIMCO through distributions from the management
companies that are classified as dividend income to the extent of the earnings
and profits of the management companies. Such distributions will generally
qualify under the 95% gross income test but not under the 75% gross income test.
If AIMCO fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions will be generally available if AIMCO's failure to meet such tests was
due to reasonable cause and not due to willful neglect, AIMCO attaches a
schedule of the sources of its income to its return, and any incorrect
information on the schedule was not due to fraud with intent to evade tax. It is
not possible, however, to state whether in all circumstances AIMCO would be
entitled to the benefit of these relief provisions. If these relief provisions
are inapplicable to a particular set of circumstances involving AIMCO, AIMCO
will not qualify as a REIT. As discussed above in "-- General," even where these
relief provisions apply, a tax is imposed with respect to the excess net income.
Asset Tests. AIMCO, at the close of each quarter of its taxable year,
must also satisfy four tests relating to the nature of its assets:
o First, at least 75% of the value of AIMCO's total assets must be
represented by real estate assets (including its allocable share of
real estate assets held by the Subsidiary Partnerships), certain stock
or debt instruments purchased by AIMCO with new capital, cash, cash
items and U.S. government securities.
o Second, not more than 25% of AIMCO's total assets may be represented by
securities other than those in the 75% asset class.
o Third, of the investments included in the 25% asset class, the value of
any one issuer's securities owned by AIMCO may not exceed 5% of the
value of AIMCO's total assets, AIMCO may not own more than 10% of any
one issuer's outstanding voting securities, and AIMCO may not own more
than 10% of the total value of the outstanding securities of any one
issuer. The 5% and 10% asset limitations do not apply to securities of
"taxable REIT subsidiaries."
o The value of the securities held by AIMCO in taxable REIT subsidiaries
(including the management companies) will not exceed, in the aggregate,
20% of the value of AIMCO's total assets.
AIMCO believes that the value of securities held by AIMCO in its
taxable REIT subsidiaries (including the management companies) will not exceed,
in the aggregate, 20% of the value of AIMCO's total assets.
AIMCO indirectly owns interests in the management companies that have
elected to be taxable REIT subsidiaries. As set forth above, the ownership of
more than 10% of the total value or the total voting power of the outstanding
voting securities of any one issuer by a REIT, or the investment of more than 5%
of the REIT's total assets in any one issuer's securities, is prohibited by the
asset tests. AIMCO believes that its indirect ownership interests in the
management companies qualify under the asset tests set forth above. However, no
independent appraisals have been obtained to support AIMCO's conclusions as to
the value of the AIMCO operating partnership's total assets and the value of the
AIMCO operating partnership's interest in the management companies and these
values are subject to change in the future. Furthermore, under legislation
effective January 1, 2001, the operation or management of a health care or
lodging facility precludes qualification as a taxable REIT subsidiary, and
therefore precludes the REIT from relying upon this exception to the 10%
ownership limitation set forth above. Consequently, if any of the management
companies were deemed to operate or manage a health care or lodging facility,
such management companies would fail to qualify as taxable REIT subsidiaries,
and AIMCO would fail to qualify as a REIT. AIMCO believes that since January 1,
2001, none of the management companies operate or manage any health care or
lodging facilities. However, the statute provides little guidance as to the
definition of a health care or lodging facility. Accordingly, there can be no
assurance that the IRS will not contend that any of the
14
management companies operate or manage a health care or lodging facility,
disqualifying it from treatment as a taxable REIT subsidiary, thereby resulting
in the disqualification of AIMCO as a REIT.
Notwithstanding the general rule that a REIT is treated as owning its
share of the underlying assets of the partnership, for purposes of the REIT
income and asset tests, if a REIT holds indebtedness issued by a partnership,
the indebtedness will be subject to, and may cause a violation of the asset
tests, resulting in lost REIT status, unless it is a qualifying mortgage asset
or otherwise satisfies the rules for "straight debt." However, no independent
appraisals have been obtained to support AIMCO's conclusions as to the value of
the AIMCO operating partnership's total assets and the value of the AIMCO
operating partnership's interest in the taxable REIT subsidiaries and these
values are subject to change in the future. Furthermore, the proper
classification of an instrument as debt or equity for Federal income tax
purposes may be uncertain in some circumstances, which could affect the
application of the REIT asset test requirements. Accordingly, there can be no
assurance that the IRS will not contend that AIMCO's interests in its
subsidiaries or in the securities of other issuers will cause a violation of the
REIT asset requirements and loss of REIT status.
AIMCO believes that its holding of securities and other assets have
complied and will continue to comply with the foregoing REIT asset requirements
and it intends to monitor compliance on an ongoing basis.
AIMCO's indirect interests in the AIMCO operating partnership and other
Subsidiary Partnerships are held through wholly owned corporate subsidiaries of
AIMCO organized and operated as "qualified REIT subsidiaries" within the meaning
of the Code. Qualified REIT subsidiaries are not treated as separate entities
from their parent REIT for Federal income tax purposes. Instead, all assets,
liabilities and items of income, deduction and credit of each qualified REIT
subsidiary are treated as assets, liabilities and items of AIMCO. Each qualified
REIT subsidiary therefore is not subject to Federal corporate income taxation,
although it may be subject to state or local taxation. A qualified REIT
subsidiary is any corporation, other than a "taxable REIT subsidiary" that is
wholly-owned by a REIT, or by other disregarded subsidiaries, or by a
combination of the two. In addition, AIMCO's ownership of the voting stock of
each qualified REIT subsidiary does not violate the general restriction against
ownership of more than 10% of the voting securities of any issuer.
Annual Distribution Requirements. In order for AIMCO to qualify as a
REIT, AIMCO is required to distribute dividends (other than capital gain
dividends) to its stockholders in an amount at least equal to:
o the sum of
(i) 90% of AIMCO's "REIT taxable income" (computed without regard to
the dividends paid deduction and AIMCO's net capital gain, i.e., the
excess of net long-term capital gain over net short-term capital loss)
and
(ii) 90% of the net income (after tax), if any, from foreclosure
property, minus
o the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before AIMCO timely files
its tax return for such year and if paid with or before the first regular
dividend payment after such declaration. In order for distributions to be
counted for this purpose, and to give rise to a tax deduction by AIMCO, they
must not be "preferential dividends." A dividend is not a preferential dividend
if it is pro rata among all outstanding shares of stock within a particular
class, and is in accordance with the preferences among different classes of
stock as set forth in AIMCO organizational documents. To the extent that AIMCO
distributes at least 90%, but less than 100%, of its "REIT taxable income," as
adjusted, it will be subject to tax thereon at ordinary corporate tax rates. In
any year, AIMCO may elect to retain, rather than distribute, its net long-term
capital gains and pay tax on such gains. In such a case, AIMCO's stockholders
would include their proportionate share of such undistributed long-term capital
gains in income and receive a credit for their share of the tax paid by AIMCO.
AIMCO's stockholders would then increase the adjusted basis of their AIMCO
shares by the difference between the designated amounts included in their
long-term capital gains and the tax deemed paid with respect to their shares. If
AIMCO should fail to distribute during each calendar year at least the sum of:
(i) 85% of its REIT ordinary income for such year,
(ii) 95% of its REIT capital gain net income for such year
(excluding retained long-term capital gains), and
(iii) any undistributed taxable income from prior periods,
AIMCO would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. AIMCO believes that it has
made, and intends to make, timely distributions sufficient to satisfy these
annual distribution requirements.
15
It is possible that AIMCO, from time to time, may not have sufficient
cash to meet the 90% distribution requirement due to timing differences between
(i) the actual receipt of cash (including receipt of distributions from the
AIMCO operating partnership) and (ii) the inclusion of certain items in income
by AIMCO for Federal income tax purposes. In the event that such timing
differences occur, in order to meet the 90% distribution requirement, AIMCO may
find it necessary to arrange for short-term, or possibly long-term, borrowings,
or to pay dividends in the form of taxable distributions of property.
Under certain circumstances, AIMCO may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which may be included in AIMCO's deduction for
dividends paid for the earlier year. Thus, AIMCO may be able to avoid losing its
REIT status or being taxed on amounts distributed as deficiency dividends;
however, AIMCO will be required to pay interest and a penalty based on the
amount of any deduction taken for deficiency dividends.
Failure to Qualify. If AIMCO fails to qualify for taxation as a REIT in
any taxable year, and the relief provisions do not apply, AIMCO will be subject
to tax (including any applicable alternative minimum tax) on its taxable income
at regular corporate rates. Distributions to stockholders in any year in which
AIMCO fails to qualify will not be deductible by AIMCO nor will they be required
to be made. In such event, to the extent of current and accumulated earnings and
profits, all distributions to stockholders will be taxable as ordinary income,
and, subject to certain limitations of the Code, corporate distributees may be
eligible for the dividends received deduction. Unless AIMCO is entitled to
relief under specific statutory provisions, AIMCO would also be disqualified
from taxation as a REIT for the four taxable years following the year during
which qualification was lost. It is not possible to state whether in all
circumstances AIMCO would be entitled to such statutory relief.
TAX ASPECTS OF AIMCO'S INVESTMENTS IN PARTNERSHIPS
General. Substantially all of AIMCO's investments are held indirectly
through the AIMCO operating partnership. In general, partnerships are
"pass-through" entities that are not subject to Federal income tax. Rather,
partners are allocated their proportionate shares of the items of income, gain,
loss, deduction and credit of a partnership, and are potentially subject to tax
thereon, without regard to whether the partners receive a distribution from the
partnership. AIMCO will include in its income its proportionate share of the
foregoing partnership items for purposes of the various REIT income tests and in
the computation of its REIT taxable income. Moreover, for purposes of the REIT
asset tests, AIMCO will include its proportionate share of assets held by the
Subsidiary Partnerships. See "Certain Federal Income Taxation Considerations --
General."
Entity Classification. AIMCO's direct and indirect investment in
partnerships involves special tax considerations, including the possibility of a
challenge by the IRS of the status of any of the Subsidiary Partnerships as a
partnership (as opposed to as an association taxable as a corporation) for
Federal income tax purposes. If any of these entities were treated as an
association for Federal income tax purposes, it would be subject to an
entity-level tax on its income. In such a situation, the character of AIMCO's
assets and items of gross income would change and could preclude AIMCO from
satisfying the asset tests and the income tests (see "Federal Income Taxation
Considerations -- Asset Tests" and "Certain Federal Income Taxation
Considerations -- Income Tests"), and in turn could prevent AIMCO from
qualifying as a REIT. See "Certain Federal Income Taxation Considerations --
Failure to Qualify" above for a summary of the effect of AIMCO's failure to meet
such tests for a taxable year. In addition, any change in the status of any of
the Subsidiary Partnerships for tax purposes might be treated as a taxable
event, in which case AIMCO might incur a tax liability without any related cash
distributions.
Tax Allocations with Respect to the Properties. Under the Code and the
Regulations, income, gain, loss and deduction attributable to appreciated or
depreciated property that is contributed to a partnership in exchange for an
interest in the partnership must be allocated in a manner such that the
contributing partner is charged with, or benefits from, respectively, the
unrealized gain or unrealized loss associated with the property at the time of
the contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of the
contributed property at the time of contribution, and the adjusted tax basis of
such property at the time of contribution (a "Book-Tax Difference"). Such
allocations are solely for Federal income tax purposes and do not affect the
book capital accounts or other economic or legal arrangements among the
partners. The AIMCO operating partnership was formed by way of contributions of
appreciated property. Consequently, allocations must be made in a manner
consistent with these requirements. Where a partner contributes cash to a
partnership that holds appreciated property, the Regulations provide for a
similar allocation of such items to the other partners. These rules apply to the
contribution by AIMCO to the AIMCO operating partnership of the cash proceeds
received in any offerings of its stock.
In general, certain prospective investors will be allocated lower
amounts of depreciation deductions for tax purposes and increased taxable income
and gain on the sale by the AIMCO operating partnership or other Subsidiary
Partnerships of the contributed properties. This will tend to eliminate the
Book-Tax Difference over the life of these partnerships. However, the special
allocations do not always entirely rectify the Book-Tax Difference on an annual
basis or with respect to a specific taxable transaction such as a sale. Thus,
the carryover basis of the contributed properties in the hands of the AIMCO
operating partnership or other Subsidiary Partnerships may cause AIMCO to be
allocated lower depreciation and other deductions, and possibly greater amounts
of taxable income in the event of a sale of such contributed assets in excess of
the economic or book income allocated to it as a result of such
16
sale. This may cause AIMCO to recognize taxable income in excess of cash
proceeds, which might adversely affect AIMCO's ability to comply with the REIT
distribution requirements. See "Certain Federal Income Taxation Considerations
-- Annual Distribution Requirements."
With respect to any property purchased or to be purchased by any of the
Subsidiary Partnerships (other than through the issuance of OP Units) subsequent
to the formation of AIMCO, such property will initially have a tax basis equal
to its fair market value and the special allocation provisions described above
will not apply.
Sale of the Properties. AIMCO's share of any gain realized by the AIMCO
operating partnership or any other Subsidiary Partnership on the sale of any
property held as inventory or primarily for sale to customers in the ordinary
course of business will be treated as income from a prohibited transaction that
is subject to a 100% penalty tax. See "Certain Federal Income Taxation
Considerations -- General -- Income Tests." Under existing law, whether property
is held as inventory or primarily for sale to customers in the ordinary course
of a partnership's trade or business is a question of fact that depends on all
the facts and circumstances with respect to the particular transaction. The
AIMCO operating partnership and the other Subsidiary Partnerships intend to hold
their properties for investment with a view to long-term appreciation, to engage
in the business of acquiring, developing, owning and operating the properties
and to make such occasional sales of the properties, including peripheral land,
as are consistent with AIMCO's investment objectives. However, no assurance can
be given that any property sold by AIMCO will not be treated as property held
for sale to customers, or that AIMCO can comply with certain safe-harbor
provisions of the Code that would prevent such treatment.
TAXATION OF MANAGEMENT COMPANIES
A portion of the amounts to be used to fund distributions to
stockholders is expected to come from distributions made by the management
companies to the AIMCO operating partnership, and interest paid by the
management companies on certain notes held by the AIMCO operating partnership.
In general, the management companies pay Federal, state and local income taxes
on their taxable income at normal corporate rates. Any Federal, state or local
income taxes that the management companies are required to pay will reduce
AIMCO's cash flow from operating activities and its ability to make payments to
holders of its securities.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
Distributions. Provided that AIMCO qualifies as a REIT, distributions
made to AIMCO's taxable domestic stockholders out of current or accumulated
earnings and profits (and not designated as capital gain dividends) will be
taken into account by them as ordinary income and will not be eligible for the
dividends received deduction for corporations. Distributions (and retained
long-term capital gains) that are designated as capital gain dividends will be
taxed as long-term capital gains (to the extent that they do not exceed AIMCO's
actual net capital gain for the taxable year) without regard to the period for
which the stockholder has held its stock. However, corporate stockholders may be
required to treat up to 20% of certain capital gain dividends as ordinary
income. In addition, net capital gains attributable to the sale of depreciable
real property held for more than 12 months are subject to a 25% maximum Federal
income tax rate for taxpayers who are individuals to the extent of previously
claimed real property depreciation.
Distributions in excess of current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that they do not exceed the
adjusted basis of the stockholder's shares in respect of which the distributions
were made, but rather will reduce the adjusted basis of such shares. To the
extent that such distributions exceed the adjusted basis of a stockholder's
shares in respect of which the distributions were made, they will be included in
income as long-term capital gain (or short-term capital gain if the shares have
been held for one year or less). In addition, any dividend declared by AIMCO in
October, November or December of any year and payable to a stockholder of record
on a specified date in any such month will be treated as both paid by AIMCO and
received by the stockholder on December 31 of such year, provided that the
dividend is actually paid by AIMCO during January of the following calendar
year. Stockholders may not include in their individual income tax returns any
net operating losses or capital losses of AIMCO.
Dispositions of AIMCO Class A Common Stock. Capital gains recognized by
individuals and other non-corporate taxpayers upon the sale or disposition of
AIMCO Class A Common Stock held for more than one year at the time of
disposition will be long-term capital gains and will be short-term capital gains
if the AIMCO Class A Common Stock is held for one year or less. Capital losses
recognized by a stockholder upon the disposition of AIMCO Class A Common Stock
held for more than one year at the time of disposition will be a long-term
capital loss. In addition, any loss upon a sale or exchange of shares of AIMCO
Class A Common Stock by a stockholder who has held such shares for six months or
less (after applying certain holding period rules) will be treated as a
long-term capital loss to the extent of distributions from AIMCO required to be
treated by such stockholder as long-term capital gain.
17
TAXATION OF FOREIGN STOCKHOLDERS
The following is a summary of certain anticipated U.S. Federal income
and estate tax consequences of the ownership and disposition of AIMCO Class A
Common Stock applicable to Non-U.S. Holders of AIMCO Class A Common Stock. A
"Non-U.S. Holder" is generally any person other than (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
the United States or under the laws of the United States or of any state thereof
or the District of Columbia, (iii) an estate whose income is includable in gross
income for U.S. Federal income tax purposes regardless of its source or (iv) a
trust if a United States court is able to exercise primary supervision over the
administration of such trust and one or more United States fiduciaries have the
authority to control all substantial decisions of such trust. The discussion is
based on current law and is for general information only. The discussion
addresses only certain and not all aspects of U.S. Federal income and estate
taxation.
Ordinary Dividends. The portion of dividends received by Non-U.S.
Holders payable out of AIMCO's earnings and profits that are not attributable to
capital gains of AIMCO and that are not effectively connected with a U.S. trade
or business of the Non-U.S. Holder will be subject to U.S. withholding tax at
the rate of 30% (unless reduced by treaty and the Non-U.S. Holder provides
appropriate documentation regarding its eligibility for treaty benefits). In
general, Non-U.S. Holders will not be considered engaged in a U.S. trade or
business solely as a result of their ownership of AIMCO Class A Common Stock. In
cases where the dividend income from a Non-U.S. Holder's investment in AIMCO
Class A Common Stock is (or is treated as) effectively connected with the
Non-U.S. Holder's conduct of a U.S. trade or business, the Non-U.S. Holder
generally will be subject to U.S. tax at graduated rates, in the same manner as
U.S. Holders are taxed with respect to such dividends (and may also be subject
to the 30% branch profits tax in the case of a Non-U.S. Holder that is a
corporation).
Non-Dividend Distributions. Unless AIMCO Class A Common Stock
constitutes a United States Real Property Interest (a "USRPI") within the
meaning of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"),
distributions by AIMCO that are not dividends out of the earnings and profits of
AIMCO will not be subject to U.S. income or withholding tax. If it cannot be
determined at the time a distribution is made whether or not such distribution
will be in excess of current and accumulated earnings and profits, the
distribution will be subject to withholding at the rate applicable to dividends.
However, the Non-U.S. Holder may seek a refund of such amounts from the IRS if
it is subsequently determined that such distribution was, in fact, in excess of
current and accumulated earnings and profits of AIMCO. If AIMCO Class A Common
Stock constitutes a USRPI, such distributions will be subject to 10% withholding
and taxed pursuant to FIRPTA at a rate of 35% to the extent such distributions
exceed a stockholder's basis in his or her AIMCO Class A Common Stock.
Capital Gain Dividends. Under FIRPTA, a distribution made by AIMCO to a
Non-U.S. Holder, to the extent attributable to gains from dispositions of USRPIs
such as the properties beneficially owned by AIMCO ("USRPI Capital Gains"), will
be considered effectively connected with a U.S. trade or business of the
Non-U.S. Holder and subject to U.S. income tax at the rates applicable to U.S.
individuals or corporations, without regard to whether such distribution is
designated as a capital gain dividend. In addition, AIMCO will be required to
withhold tax equal to 35% of the amount of dividends to the extent such
dividends constitute USRPI Capital Gains. Distributions subject to FIRPTA may
also be subject to a 30% branch profits tax in the hands of a Non-U.S. Holder
that is a corporation.
Dispositions of AIMCO Class A Common Stock. Unless AIMCO Class A Common
Stock constitutes a USRPI, a sale of such stock by a Non-U.S. Holder generally
will not be subject to taxation under FIRPTA. The AIMCO Class A Common Stock
will not constitute a USRPI if AIMCO is a "domestically controlled REIT." A
domestically controlled REIT is a REIT in which, at all times during specified
testing periods, less than 50% in value of its shares is held directly or
indirectly by Non-U.S. Holders. AIMCO believes that it is, and it expects to
continue to be, a domestically controlled REIT. If AIMCO is, and continues to
be, a domestically controlled REIT, the sale of AIMCO Class A Common Stock
should not be subject to taxation under FIRPTA. Because most classes of stock of
AIMCO are publicly traded, however, no assurance can be given that AIMCO is or
will continue to be a domestically controlled REIT.
Even if AIMCO does not constitute a domestically controlled REIT, a
Non-U.S. Holder's sale of AIMCO Class A Common Stock generally will still not be
subject to tax under FIRPTA as a sale of a USRPI provided that:
o the stock is "regularly traded" (as defined by applicable Regulations)
on an established securities market (e.g., the NYSE, on which AIMCO
Class A Common Stock is listed) and
o the selling Non-U.S. Holder held 5% or less of such class of AIMCO
Class A Common Stock at all times during a specified testing period.
If gain on the sale of AIMCO Class A Common Stock were subject to
taxation under FIRPTA, the Non-U.S. Holder would be subject to the same
treatment as a U.S. stockholder with respect to such gain (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals) and the purchaser of the stock could be required
to withhold 10% of the purchase price and remit such amount to the IRS.
18
Gain from the sale of AIMCO Class A Common Stock that would not
otherwise be subject to taxation under FIRPTA will nonetheless be taxable in the
United States to a Non-U.S. Holder in two cases. First, if the Non-U.S. Holder's
investment in the AIMCO Class A Common Stock is effectively connected with a
U.S. trade or business conducted by such Non-U.S. Holder, the Non-U.S. Holder
will be subject to the same treatment as a U.S. stockholder with respect to such
gain. Second, if the Non-U.S. Holder is a nonresident alien individual who was
present in the United States for 183 days or more during the taxable year and
has a "tax home" in the United States, the nonresident alien individual will be
subject to a 30% tax on the individual's capital gain.
Estate Tax. AIMCO Class A Common Stock owned or treated as owned by an
individual who is not a citizen or resident (as specially defined for U.S.
Federal estate tax purposes) of the United States at the time of death will be
includible in the individual's gross estate for U.S. Federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise. Such
individual's estate may be subject to U.S. Federal estate tax on the property
includable in the estate for U.S. Federal estate tax purposes.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
AIMCO will report to its U.S. stockholders and to the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 31% with respect to distributions paid unless such
holder (i) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (ii) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with the applicable requirements of the backup withholding
rules. A stockholder who does not provide AIMCO with his correct taxpayer
identification number also may be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, AIMCO may be required to withhold a portion
of capital gain distributions to any Non-U.S. Holders. The IRS has issued final
Treasury Regulations regarding the withholding, backup withholding and
information reporting rules as applied to Non-U.S. Holders. Prospective
investors in securities should consult their tax advisors regarding the
application of these Treasury Regulations.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from Federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). The IRS has
privately ruled that dividend distributions from a REIT to an exempt employee
pension trust do not constitute UBTI, provided that the shares of the REIT are
not otherwise used in an unrelated trade or business of the exempt employee
pension trust. Based on that ruling, AIMCO believes that amounts distributed by
AIMCO to Exempt Organizations should generally not constitute UBTI. However, if
an Exempt Organization finances its acquisition of AIMCO Class A Common Stock
with debt, a portion of its income from AIMCO will constitute UBTI pursuant to
the "debt-financed property" rules. Furthermore, social clubs, voluntary
employee benefit associations, supplemental unemployment benefit trusts, and
qualified group legal services plans that are exempt from taxation under
paragraphs (7), (9), (17) and (20), respectively, of Section 501(c) of the Code
are subject to different UBTI rules, which generally will require them to
characterize distributions from AIMCO as UBTI. In addition, in certain
circumstances, a pension trust that owns more than 10% of AIMCO's stock is
required to treat a percentage of the dividends from AIMCO as UBTI (the "UBTI
Percentage"). The UBTI Percentage is the gross income derived by AIMCO from an
unrelated trade or business (determined as if AIMCO were a pension trust)
divided by the gross income of AIMCO for the year in which the dividends are
paid. The UBTI rule applies to a pension trust holding more than 10% of AIMCO's
stock only if:
o the UBTI Percentage is at least 5%,
o AIMCO qualifies as a REIT by reason of the modification of the 5/50
Rule that allows the beneficiaries of the pension trust to be treated
as holding shares of AIMCO in proportion to their actuarial interest in
the pension trust, and
o either (A) one pension trust owns more than 25% of the value of AIMCO's
stock or (B) a group of pension trusts each individually holding more
than 10% of the value of AIMCO's stock collectively owns more than 50%
of the value of AIMCO's stock.
The restrictions on ownership and transfer of AIMCO's stock should
prevent an Exempt Organization from owning more than 10% of the value of AIMCO's
stock.
LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS
The rules dealing with Federal income taxation are constantly under
review by persons involved in the legislative process and by the IRS and the
U.S. Treasury Department. Changes to the Federal laws and interpretations
thereof could adversely affect an investment in AIMCO or the AIMCO operating
partnership. Congress recently enacted legislation, generally effective in 2001,
that, among other things:
19
o modifies the current ownership limitations to permit a REIT to own up
to 100% of the voting securities and 100% of the value of the other
interests in a taxable REIT subsidiary. In addition, the 5% REIT asset
test would not apply to taxable REIT subsidiaries, but securities of
taxable REIT subsidiaries could not exceed 20% of the total value of a
REIT's assets;
o permits a taxable REIT subsidiary to perform services to a REIT's
tenants and imposes a 100% excise tax on certain non-arms length
transactions between a taxable REIT subsidiary and a REIT;
o disallows REIT status where healthcare or lodging facilities are
operated or managed by a taxable REIT subsidiary, beginning in 2001;
o generally restrict a REIT from owning more than 10% of the vote or
value of the securities of an issuer, including a partnership (taking
into account only the partnership's debt securities), an individual or
a non-REIT C corporation that is not a taxable REIT subsidiary;
o imposes certain limitations to the deductibility of interest paid by a
taxable REIT subsidiary to a related REIT;
o allow a REIT to rent up to 10% of a property to a taxable REIT
subsidiary and generally have the rent qualify as good income for
purposes of the REIT gross income tests; and
o change the measurement of rent attributable to personal property leased
in connection with a lease of real property from a comparison based on
adjusted tax bases of properties to a comparison of fair market values.
We cannot predict whether, when, in what form, or with what effective
dates, other legislative proposals applicable to AIMCO or its stockholders will
become law or if the tax laws applicable to AIMCO, or an investment in AIMCO,
will be changed.
STATE, LOCAL AND FOREIGN TAXES
The AIMCO operating partnership and its partners and AIMCO and its
stockholders may be subject to state, local or foreign taxation in various
jurisdictions, including those in which it or they transact business, own
property or reside. The state, local or foreign tax treatment of the AIMCO
operating partnership and its partners and AIMCO and its stockholders may not
conform to the Federal income tax consequences discussed above. Consequently,
prospective investors should consult their own tax advisors regarding the
application and effect of state, local and foreign tax laws on an investment in
the AIMCO operating partnership or AIMCO.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
20549 and in New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's web site at
http://www.sec.gov. Our Securities Exchange Act of 1934 filing number is
1-13232. Copies of our SEC filings are also available to the public from our
website at www.AIMCO.com. The information contained in our website is not
incorporated by reference into this prospectus.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below, any of such documents filed since the date this
registration statement was filed and any future filings with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
the offering is completed.
o Apartment Investment and Management Company's Annual Report on Form
10-K for the year ended December 31, 2001;
o Apartment Investment and Management Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 2002, June 30, 2002, and
September 30, 2002;
o Apartment Investment and Management Company's Current Reports on Form
8-K, dated February 22, 2002 (filed February 25, 2002); March 11, 2002
(filed March 13, 2002); March 19, 2002 (filed March 20, 2002); March
20, 2002 (filed March 20, 2002); March 25, 2002 (filed March 26, 2002);
April 11, 2002 (filed on April 16, 2002); May 2, 2002 (filed May 2,
2002); May 15, 2002 (filed May 16, 2002); June 5, 2002 (filed June 6,
2002); July 29, 2002 (filed July 30, 2002); August 5, 2002 (filed
August 7, 2002); August 12, 2002 (filed August 14, 2002); August 29,
2002 (filed September 4, 2002); October 4, 2002
20
(filed October 4, 2002); November 4, 2002 (filed November 6, 2002); and
Current Reports on Form 8-K/A, dated May 2, 2002 (filed May 3, 2002);
and May 15, 2002 (filed May 28, 2002); and
o the description of Apartment Investment and Management Company's
capital stock contained in its Registration Statement on Form 8-A (File
No. 1-13232) filed July 19, 1994, including any amendment or reports
filed for the purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
calling us at the following address and telephone number:
Corporate Secretary Apartment Investment and Management Company, 2000
South Colorado Boulevard, Tower Two, Suite 2-1000 Denver, Colorado 80222-7900
(303) 757-8101.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. The selling stockholders named herein are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front of the document.
LEGAL MATTERS
Certain legal matters will be passed upon for AIMCO by Skadden, Arps,
Slate, Meagher & Flom LLP, Los Angeles, California. The validity of the Class A
Common Stock offered hereby will be passed upon for AIMCO by Piper Rudnick LLP,
Baltimore, Maryland.
EXPERTS
Ernst & Young LLP, independent auditors, have audited AIMCO's
consolidated financial statements and schedule included in AIMCO's Annual Report
on Form 10-K for the year ended December 31, 2001, as set forth in their report,
which is incorporated by reference in this prospectus. These financial
statements and schedule are incorporated by reference in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
21
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
The estimated expenses, other than underwriting discounts and
commissions, in connection with the offering of the Class A Common Stock, are as
follows:
Registration Fee -- Securities and Exchange Commission $ 853
Printing Expenses 10,000
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 25,000
Miscellaneous 5,000
---------
Total $ 75,853
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AIMCO's charter limits the liability of AIMCO's directors and officers
to AIMCO and its stockholders to the fullest extent permitted from time to time
by Maryland law. Maryland law presently permits the liability of directors and
officers to a corporation or its stockholders for money damages to be limited,
except (i) to the extent that it is proved that the director or officer actually
received an improper benefit or profit in money, property or services for the
amount of the benefit or profit in money, property or services actually
received, or (ii) if a judgment or other final adjudication is entered in a
proceeding based on a finding that the director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. This provision
does not limit the ability of the Company or its stockholders to obtain other
relief, such as an injunction or rescission.
AIMCO's charter and bylaws require AIMCO to indemnify its directors,
officers and certain other parties to the fullest extent permitted from time to
time by Maryland law. The Maryland General Corporation Law permits a corporation
to indemnify its directors, officers and certain other parties against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service to or at the request of the corporation, unless
it is established that (i) the act or omission of the indemnified party was
material to the matter giving rise to the proceeding and (x) was committed in
bad faith or (y) was the result of active and deliberate dishonesty, (ii) the
indemnified party actually received an improper personal benefit in money,
property or services or (iii) in the case of any criminal proceeding, the
indemnified party had reasonable cause to believe that the act or omission was
unlawful. Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. In addition, a director or officer may not be
indemnified with respect to any proceeding charging improper personal benefit to
the director or officer in which the director or officer was adjudged to be
liable on the basis that personal benefit was improperly received. The
termination of any proceeding by conviction, or upon a plea of nolo contendere
or its equivalent, or an entry of any order of probation prior to judgment,
creates a rebuttable presumption that the director or officer did not meet the
requisite standard of conduct required for indemnification to be permitted. It
is the position of the Securities and Exchange Commission that indemnification
of directors and officers for liabilities arising under the Securities Act is
against public policy and is unenforceable pursuant to Section 14 of the
Securities Act.
The Company has entered into agreements with certain of its officers,
pursuant to which the Company has agreed to indemnify such officers to the
fullest extent permitted by applicable law.
The Agreement of Limited Partnership (the "Operating Partnership
Agreement") of the AIMCO operating partnership also provides for indemnification
of AIMCO, or any director or officer of AIMCO, in its capacity as the previous
general partner of the AIMCO operating partnership, from and against all losses,
claims, damages, liabilities, joint or several, expenses (including legal fees),
fines, settlements and other amounts incurred in connection with any actions
relating to the operations of the AIMCO operating partnership, as set forth in
the operating partnership Agreement.
Section 11.6 of the Apartment Investment and Management Company 1997
Stock Award and Incentive Plan (the "1997 Plan"), Section 2.8 of the Amended and
Restated Apartment Investment and Management Company Non-Qualified Employee
Stock Option Plan (the "Non-Qualified Plan"), Section 2.8 of the Apartment
Investment and Management Company 1996 Stock Award and Incentive Plan (the "1996
Plan"), and Section 6.7 of the 1994 Stock Option Plan of Apartment Investment
and Management Company (the "1994 Plan") specifically provide that, to the
fullest extent permitted by law, each of the members of the Board of Directors
of AIMCO (the "Board"), the Compensation Committee of the Board and each of the
directors, officers and employees of AIMCO, any AIMCO subsidiary, the AIMCO
operating partnership and any subsidiary of the AIMCO operating partnership
shall be held harmless and indemnified by AIMCO for any liability, loss
(including amounts paid in settlement), damages or expenses (including
reasonable
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attorneys' fees) suffered by virtue of any determinations, acts or failures to
act, or alleged acts or failures to act, in connection with the administration
of the 1997 Plan, the Non-Qualified Plan, the 1996 Plan or the 1994 Plan, as the
case may be, so long as such person is not determined by a final adjudication to
be guilty of willful misconduct with respect to such determination, action or
failure to act.
ITEM 16. EXHIBITS.
4.1 Specimen certificate for Class A Common Stock (incorporated by
reference from AIMCO's Registration Statement on Form 8A filed on
July 19, 1994).
5.1 Opinion of Piper Rudnick LLP.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
23.1 Consent of Piper Rudnick LLP (included in their opinion filed as
Exhibit 5.1).
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
their opinion filed as Exhibit 8.1).
23.3 Consent of Ernst & Young LLP, Denver, Colorado, dated December 4,
2002.*
24.1 Power of Attorney.*
24.2 Power of Attorney for James N. Bailey (included on page II-5).
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
shall not apply if the registration statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
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the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on the 18th day of December, 2002.
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
/s/ PETER K. KOMPANIEZ
-----------------------------------
By: Peter K. Kompaniez
President and Vice Chairman
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POWER OF ATTORNEY
The person whose signature appears below authorizes Peter K. Kompaniez
and Paul J. McAuliffe, and each of them, each of whom may act without joinder of
the other, as his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to execute in his name and to file any amendments
(including post effective amendments) to this Registration Statement and any
registration statement for the same offering filed pursuant to Rule 462 under
the Securities Act of 1933, and to file the same, with all exhibits thereto and
all other documents in connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing appropriate or necessary to be done, as fully and
for all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
/s/ JAMES N. BAILEY Director December 10, 2002
---------------------------
James N. Bailey
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Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed below
by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ TERRY CONSIDINE* Chairman of the Board and Chief Executive Officer December 18, 2002
--------------------------- (Principal Executive Officer)
Terry Considine
December 18, 2002
/s/ PETER K. KOMPANIEZ Vice Chairman of the Board and President
---------------------------
Peter K. Kompaniez
December 18, 2002
/s/ PAUL J. MCAULIFFE* Executive Vice President and Chief Financial Officer
---------------------------
Paul J. McAuliffe
December 18, 2002
/s/ THOMAS C. NOVOSEL* Senior Vice President and Chief Accounting Officer
--------------------------- (Principal Accounting Officer)
Thomas C. Novosel
December 18, 2002
/s/ JAMES N. BAILEY* Director
---------------------------
James N. Bailey
December 18, 2002
/s/ RICHARD S. ELLWOOD* Director
---------------------------
Richard S. Ellwood
December 18, 2002
/s/ J. LANDIS MARTIN* Director
---------------------------
J. Landis Martin
December 18, 2002
/s/ THOMAS L. RHODES* Director
---------------------------
Thomas L. Rhodes
* By /s/ PETER K. KOMPANIEZ
----------------------
Peter K. Kompaniez
Attorney-in-Fact for
each of the persons
indicated
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Specimen certificate for Class A Common Stock (incorporated by
reference from AIMCO's Registration Statement on Form 8A filed
on July 19, 1994).
5.1 Opinion of Piper Rudnick LLP.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
23.1 Consent of Piper Rudnick LLP (included in their opinion filed
as Exhibit 5.1).
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in their opinion filed as Exhibit 8.1).
23.3 Consent of Ernst & Young LLP, Denver, Colorado, dated December
4, 2002.*
24.1 Power of Attorney.*
24.2 Power of Attorney for James N. Bailey (included on page II-5).
* Previously filed
II-7