Apartment Investment and Management Company (“Aimco”) (NYSE:
AIV) announced today fourth quarter results for 2018.
Chairman and Chief Executive Officer Terry Considine comments:
“2018 was a solid year for Aimco. We increased estimated Net Asset
Value per share by about 6% which, with our cash dividend, provided
shareholders Economic Income of 8.5%. In our Same Store portfolio,
we set company records for occupancy and NOI margins. In
Redevelopment, we completed two major projects and continued
investment in this accretive line of business. Our capital
allocation activity led to an improved portfolio through investment
in community acquisitions, capital enhancements, and
redevelopments. We also repurchased 6% of our shares at a 20%
discount to Aimco published Net Asset Value per share. We funded
these accretive investments with proceeds from the sales of our
Asset Management business and properties with lower expected Free
Cash Flow growth. In aggregate, we redeployed $1.1 billion of
capital, increasing its expected Free Cash Flow returns by 420
basis points.
“Following a strong 2018, we expect 2019 to be another good
year. We benefit from starting the year more highly occupied at our
Same Store communities: 80 basis points higher than last year.
Additionally, our 2018 book of business is expected to contribute
150 basis points to our 2019 Same Store revenue growth, 30 basis
points greater than the 2017 contribution to 2018. Finally, Aimco’s
diversified portfolio provides important protection from continued
building in certain markets.”
Chief Financial Officer Paul Beldin adds: “Full year 2018 AFFO
of $2.16 per share and Pro forma FFO of $2.47 per share both were
$0.03 ahead of the midpoint of our original guidance when adjusted
for transactional activity. In the fourth quarter, we refinanced
$867 million of our property loans maturing in the next three
years, providing annual interest savings of $13 million and
increasing the size of our pool of unencumbered properties to $2.7
billion.
“In 2019, we expect Same Store revenue growth to be between
2.80% to 3.80%, and Same Store expense growth to be between 2.00%
and 3.00%, resulting in Same Store NOI growth between 2.70% and
4.50%. Same Store operations are expected to add $0.11 per share,
and lower interest expense to add $0.04 per share, to AFFO; this
growth will be offset by lower nonrecurring income tax benefit of
$0.08 per share and revenue lost from the sale of the Asset
Management business and from apartment communities sold to fund
investment in redevelopment and development, capital enhancements,
and property acquisitions. We anticipate AFFO per share in the
range of $2.12 to $2.22, up $0.01 at the midpoint from 2018. In
2019, we expect 98% of our AFFO to be derived from Real Estate
Operations, providing an improved quality of earnings.”
Financial Results: Full Year Pro forma
FFO Up 1%; AFFO Up 2%
FOURTH QUARTER FULL YEAR
(all items per common share - diluted)
2018
2017 Variance
2018 2017
Variance Net income $
0.03 $ 1.67
(98 %) $ 4.21
$ 1.96
115 % Funds From Operations (FFO)
$ 0.62 $
0.63 (2 %)
$ 2.55 $ 2.45
4 % Pro forma adjustments, net*
$ 0.01 $ 0.00
— % $ (0.08 ) $ 0.00
— %
Pro forma Funds From Operations (Pro forma
FFO) $ 0.63
$ 0.63 — %
$ 2.47 $
2.45 1 % Deduct Capital
Replacements $ (0.11 ) $ (0.07 )
57 % $ (0.31 ) $ (0.33 )
(6 %)
Adjusted Funds From Operations (AFFO)
$ 0.52 $
0.56 (7 %)
$ 2.16 $ 2.12
2 %
*See Supplemental Schedule 1 for a detailed list of Pro forma
adjustments to FFO.
Net Income (per diluted common share) - Year-over-year,
fourth quarter net income decreased primarily due to lower gains on
the sale of apartment communities.
Pro forma FFO (per diluted common share) - Aimco’s fourth
quarter Pro forma FFO per share was flat year-over-year due to the
following items:
- $0.02 from Same Store Property Net
Operating Income growth of 3.6%, driven by a 3.4% increase in
revenue, offset by a 3.0% increase in expenses;
- $0.04 Net Operating Income contribution
from redevelopment communities and lease-up communities; and
- $0.04 Net Operating Income
contributions from 2018 property acquisitions; offset by
- ($0.07) lower contribution from the
sale of the Asset Management business and from apartment
communities sold in 2018 to fund Aimco’s investment activities;
and
- ($0.03) lower tax benefits and other
items, net.
Adjusted Funds from Operations (per diluted common share)
- AFFO per share decreased $0.04 due to higher capital replacement
spending in 2018, due to a greater percentage of annual spend
occurring in the fourth quarter.
Operating Results: Fourth Quarter Same
Store NOI Up 3.6%; Full Year Up 3.1%
FOURTH QUARTER FULL YEAR
Year-over-Year Sequential
Year-over-Year 2018
2017 Variance
3rd Qtr. Variance
2018 2017 Variance
Average Rent per Apartment Home $1,853
$1,803 2.8 % $1,843 0.5 %
$1,831 $1,783 2.7 % Other
Income per Apartment Home* 111 110
0.9 % 125 (11.2 %)
116 114 1.8 % Average Revenue
per Apartment Home* $1,964 $1,913
2.7 % $1,968 (0.2 %)
$1,947 $1,897 2.6 %
Average Daily Occupancy 96.9 % 96.3 %
0.6 % 96.3
%
0.6 % 96.5 % 96.0 %
0.5 %
$ in Millions
Revenue, before utility reimbursements $147.1
$142.3 3.4 % $146.4
0.5 % $580.5 $563.0
3.1 % Expenses, net of utility reimbursements
35.9 34.9 3.0 %
38.3 (6.1 %) 150.0 145.3
3.3 % NOI $111.2 $107.4
3.6 % $108.1 2.8 %
$430.5 $417.7 3.1 %
* In 2018, Aimco changed its presentation of revenues and
expenses to reflect utility costs net of amounts reimbursed by
residents, which were previously included in revenue. 2017 amounts
have been revised to conform to this presentation. The change in
presentation reduced revenue growth rates in fourth quarter 2018 by
20 basis points and reduced full year 2018 by 10 basis points.
Same Store Rental Rates - Aimco measures changes in
rental rates by comparing, on a lease-by-lease basis, the rate on a
newly executed lease to the rate on the expiring lease for that
same apartment. Newly executed leases are classified either as a
new lease, where a vacant apartment is leased to a new customer, or
as a renewal. The table below details changes in new and renewal
lease rates.
2018 1st Qtr.
2nd Qtr.
3rd Qtr. Oct
Nov Dec
4th Qtr. Full Year
Renewal rent increases 4.9 % 4.8 %
4.2 % 4.2 % 4.3 %
5.0 % 4.3 % 4.5 % New lease rent
increases 0.4 % 1.9 % 2.2
% 0.8 % (0.2 %) (0.1 %)
0.2 % 1.5 % Weighted average rent
increases 2.7 % 3.4 % 3.2
% 2.5 % 1.6 % 1.4 %
2.0 % 3.0 % Average Daily Occupancy
96.3 % 96.3 % 96.3 %
96.8 % 96.9 % 97.1 %
96.9 % 96.5 %
Redevelopment
Redevelopment is Aimco’s second line of business where Aimco
creates value by repositioning communities within the Aimco
portfolio. Aimco also undertakes limited ground-up development when
warranted by risk-adjusted investment returns, either directly or
in connection with the redevelopment of an existing apartment
community. Aimco invests to earn risk-adjusted returns in excess of
those expected from the apartment communities sold in paired trades
to fund the redevelopment and development. Of these two activities,
Aimco favors redevelopment because it permits adjustment of the
scope and timing of spending to align with changing market
conditions and customer preferences.
During the fourth quarter, Aimco invested $51 million in
redevelopment and development. Aimco continued redevelopment
activities in Miami at its Flamingo South Beach and Bay Parc
communities, and in Los Angeles at its Palazzo communities.
Aimco also continued its ground-up construction of Parc Mosaic,
in Boulder, Colorado; and The Fremont, on the Anschutz Medical
Campus in Aurora, Colorado. As previously announced, construction
to build 58 townhomes on land adjacent to Aimco’s Elm Creek
Apartments in Elmhurst, Illinois, began in October.
In Center City, Philadelphia, Aimco completed the redevelopment
of Park Towne Place, and at December 31, 2018, had leased 96%
of the apartment homes at the community. This multi-year
redevelopment of 940 apartment homes, amenities, and common area
spaces, was executed on plan and leased-up in line with
expectations, with expected Free Cash Flow returns greater than
9%.
In San Jose, Aimco completed the redevelopment of Saybrook
Pointe, a 324-apartment home, garden-style community. Construction
was completed on-time and in-line with underwritten costs, and
lease-up of the community finished ahead of schedule and at rates
above underwriting, increasing the expected Free Cash Flow return
to greater than 14%, a 100-basis point outperformance to
underwriting.
During the fourth quarter, Aimco leased 66 apartment homes at
Redevelopment communities. At December 31, 2018, Aimco’s
exposure to lease-up at active redevelopment and development
communities was approximately 366 apartment homes, of which 208
were being constructed at Parc Mosaic and 158 were located in four
other communities. Additionally, Aimco expects to acquire One
Ardmore in 2019 upon its completion, as part of the Philadelphia
portfolio acquisition announced in April 2018. This acquisition
will increase Aimco’s exposure to lease-up risk by approximately
100 apartment homes.
Portfolio Management: Revenue Per
Apartment Home Up 4% to $2,126
Aimco’s portfolio of apartment communities is diversified across
“A,” “B,” and “C+” price points, averaging “B/B+” in quality and is
also diversified across several of the largest markets in the
United States.
As part of its portfolio strategy, Aimco seeks to sell up to 10%
of its portfolio annually and to reinvest the proceeds from such
sales in accretive uses such as capital enhancements,
redevelopments, occasional developments, and selective acquisitions
with projected Free Cash Flow internal rates of return higher than
expected from the communities being sold. Through this disciplined
approach to capital recycling, Aimco significantly increases the
quality and expected growth rate of its portfolio.
FOURTH QUARTER
2018 2017 Variance
Apartment Communities 134 136
(2 ) Apartment Homes 36,549
36,904 (355 ) Average
Revenue per Apartment Home* $ 2,126
$ 2,049 4 % Portfolio Average Rents as
a Percentage of Local Market Average Rents 113 %
113 % — % Percentage A (4Q 2018 Average
Revenue per Apartment Home $2,786) 51 %
53 % (2 %) Percentage B (4Q 2018 Average Revenue per
Apartment Home $1,850) 33 % 32 %
1 % Percentage C+ (4Q 2018 Average Revenue per Apartment
Home $1,706) 16 % 15 % 1
% NOI Margin 73 % 72 % 1
% Free Cash Flow Margin 69 % 67 %
2 %
* In 2018, Aimco changed its presentation of revenues and
expenses to reflect utilities costs net of amounts reimbursed by
residents, which were previously included in revenue. 2017 amounts
have been revised to conform to this presentation. Including these
reimbursements in revenue would have resulted in total Average
Revenue per Aimco Apartment Home of $2,205 and $2,123 for the
quarters ended December 31, 2018 and 2017, respectively.
Fourth Quarter Real Estate Portfolio - For its entire
portfolio, Aimco’s average monthly revenue per apartment home was
$2,126 for fourth quarter 2018, a 4% increase compared to fourth
quarter 2017. This increase is due to year-over-year growth in Same
Store revenue as well as Aimco’s acquisition activities, lease-up
of redevelopment and acquisition communities, and sales of
communities with average monthly revenues per apartment home lower
than those of the retained portfolio.
Acquisitions - Aimco evaluates potential acquisitions
with an eye for unique and opportunistic investments and funds
acquisitions pursuant to its strict “paired trade” discipline.
In December, Aimco acquired for $30 million Avery Row, a
67-apartment home community in Arlington, Virginia. Avery Row is
well-located in the Washington D.C. area, approximately two miles
north of the Pentagon and three miles north of Crystal City. Aimco
expects its operation of this community will generate a Free Cash
Flow internal rate of return of almost 9%.
Dispositions - Aimco did not sell any apartment
communities in the fourth quarter.
In January 2019, Aimco sold two apartment communities with 782
apartment homes for gross proceeds of $141 million. One community
was located in Schaumburg, Illinois and the other located in
Virginia Beach, Virginia.
Balance Sheet
Aimco Leverage
Aimco’s leverage strategy seeks to increase financial returns
while using leverage with appropriate caution. Aimco limits risk
through balance sheet structure, employing low leverage, primarily
non-recourse and long-dated property debt; builds financial
flexibility by maintaining ample unused and available credit as
well as holding properties with substantial value unencumbered by
property debt; and uses partners’ capital when it enhances
financial returns or reduces investment risk.
Aimco total leverage includes Aimco share of long-term,
non-recourse, property debt encumbering apartment communities,
outstanding borrowings under its revolving credit facility, and
outstanding preferred equity.
AS OF DECEMBER 31, 2018 $ in Millions
Amount % of Total
Weighted Avg.Maturity
(Yrs.)
Aimco share of long-term, non-recourse property debt
$ 3,927 91 % 8.0 Outstanding
borrowings on revolving credit facility 160
4 % 3.1 Preferred Equity*
226 5 % 40.0
Total
Leverage $ 4,313 100 %
9.5 Cash, restricted cash and investments in
securitization trust assets (160 )
Property debt secured by assets held
for sale 23
Net Leverage, as adjusted $ 4,176
* Aimco’s Preferred Equity is perpetual in nature; however, for
illustrative purposes, Aimco has computed the weighted average
maturity of its total leverage assuming a 40-year maturity for its
Preferred Equity.
Leverage Ratios
Aimco target leverage ratios are Proportionate Debt and
Preferred Equity to Adjusted EBITDA below 7.0x and Adjusted EBITDA
to Interest Expense and Preferred Dividends greater than 2.5x.
Aimco calculates Adjusted EBITDA, and Adjusted Interest Expense
used in its leverage ratios based on current quarter amounts,
annualized.
Proportionate Debt to Adjusted EBITDA 6.8x
Proportionate Debt and Preferred Equity to Adjusted
EBITDA 7.2x Adjusted EBITDA to Adjusted
Interest Expense 3.8x Adjusted EBITDA to
Adjusted Interest Expense and Preferred Dividends
3.4x
Aimco’s Adjusted EBITDA has been calculated on a pro forma basis
to adjust for significant items impacting the quarter for which
annualization would distort the results. Leverage ratios are
elevated by 0.5x due to the use of debt to fund temporarily share
repurchases completed during fourth quarter 2018. Aimco intends to
reduce its Proportionate Debt and Preferred Equity to Adjusted
EBITDA to 6.9x by the end of 2019 from earnings growth, primarily
due to increasing contribution from same store apartment
communities and reduction of debt balances due to
regularly-scheduled debt amortization and apartment community
sales, partially offset by the loss of earnings from communities
sold.
Refinancing Activity
During the fourth quarter, Aimco addressed more than half of its
property debt maturing in 2019, 2020 and 2021. Aimco placed $867
million of new loans: $740 million of fixed-rate loans at a
weighted average interest rate of 4.2% and a weighted average term
of 9.3 years; and $127 million of variable-rate loans with rates
floating at 115 basis points over 30-day LIBOR and a weighted
average term of 5.1 years. Aimco also repaid property-level debt
increasing the fair value of unencumbered properties to $2.7
billion, a 50% increase during 2018. This refinancing activity
results in annual interest savings of $13 million.
In connection with fourth quarter financing activity, Aimco
incurred approximately $14 million of debt extinguishment costs,
net of tax, which are excluded from Pro forma FFO.
Liquidity
During the fourth quarter, Aimco exercised its $200 million
expansion option on its revolving credit facility, increasing the
total capacity of the credit facility to $800 million.
At December 31, 2018, Aimco held cash and restricted cash
of $73 million and had the capacity to borrow $633 million under
its revolving credit facility, after consideration of $7 million of
letters of credit backed by the facility. Aimco uses its credit
facility primarily for working capital and other short-term
purposes and to secure letters of credit.
Equity Capital Activities; Special Dividend
During the fourth quarter, Aimco repurchased 8.7 million shares
of its common stock for $394 million, at a weighted average price
of $45.33 per share, approximately a 20% discount to Aimco’s
published Net Asset Value per share. Approximately half of the
repurchases were funded with proceeds from 2018 and January 2019
property sales at a premium to the values ascribed to these
communities in Aimco’s published Net Asset Value. The remaining
half of repurchases are temporarily funded with borrowings on our
credit facility. We expect to repay these borrowings with proceeds
from the sale of communities now under contract, again at prices
greater than those used in Aimco’s Net Asset Value. With the
completion of these transactions, Aimco will have increased Net
Asset Value per share by an estimated $0.67, or $106 million.
The 2019 property sales necessary to fund Aimco’s share
repurchases are expected to generate taxable gains of $285 million,
which is in excess of the company’s regular quarterly dividend.
Accordingly, on February 3, 2019, Aimco's Board of Directors
declared a special dividend on the common stock that consists of
$67.1 million in cash and 4.5 million shares of common stock. The
special dividend will be payable on March 22, 2019, to stockholders
of record as of February 22, 2019.
The special dividend amount includes the regular quarterly cash
dividend, which for 2019 will be $0.39 per share (an increase of 3%
compared to cash dividends paid during 2018). Additionally,
stockholders will receive $1.54 per share predominantly in stock
(based on Aimco’s closing price of $49.07 on February 1, 2019).
Stockholders will have the opportunity to elect to receive the
special dividend in the form of all cash or all stock, subject to
proration if either option is oversubscribed. Based on Aimco's
closing share price on February 1, 2019, we estimate the aggregate
value of the special dividend to be approximately $287.9 million,
or $1.93 per share. However, the actual value will vary, depending
on the price of Aimco common stock on the dividend valuation dates
(March 11 and 12, 2019).
In order to neutralize the dilutive impact of the stock issued
in the special dividend, Aimco's Board also authorized a reverse
stock split, effective on February 20, 2019. As a result, total
shares outstanding following completion of both the special
dividend and the reverse stock split are expected to be unchanged
from the total shares outstanding immediately prior to the
dividend. Some stockholders may have more Aimco shares and some may
have fewer based on their individual elections. The reverse split
will ensure comparability of Aimco per share results before and
after these transactions.
In summary, these transactions:
- Increase Net Asset Value per share by
1%;
- Do not affect Aimco’s regular quarterly
cash dividend;
- Reduce the number of Aimco shares
outstanding by 6% (as a result of the share repurchases);
- Minimize the aggregate tax paid by
Aimco and its stockholders;
- Are leverage neutral; and
- Result in no change in the number of
shares outstanding immediately prior to the dividend (as a result
of the special dividend and the reverse stock split), thereby
improving comparability of per share results.
Aimco is currently authorized to repurchase an additional 10.6
million shares under its existing share repurchase program.
2019 Outlook
The Aimco strategy remains unchanged: focusing on excellence in
property operations; value creation through redevelopment and
occasional development; portfolio management based on a disciplined
approach to capital recycling; a safe, flexible balance sheet with
abundant liquidity; and a simple business model executed by a
performance-oriented and collaborative team. Aimco executes this
consistent strategy with an eye on sustainable long-term
growth.
2018 to 2019 Components of AFFO Growth
($ Per share, at the midpoint of Aimco's
Outlook)
2018 AFFO per Share
$ 2.16 Same Store Growth
0.11 Lower Interest Expense, net 0.04 2018 Asset Mgmt Paired Trade,
net (0.04 ) Tax Benefits (0.08 ) Other, net
(0.02 )
2019 AFFO per Share
$ 2.17
Aimco expects 2019 Pro forma FFO per share in the range of $2.41
to $2.51 with AFFO per share of $2.12 to $2.22. At the guidance
range midpoint, Aimco’s projected 2019 AFFO growth of $0.01
reflects:
- $0.11 per share growth from its Same
Store portfolio;
- $0.04 from interest expense
savings;
- ($0.04) per share net dilution from the
Asset Management business paired trade, which includes dilution
from the sale of the Asset Management business, partially offset by
the reinvestment of proceeds in 2018 acquisitions and repayment of
debt; and
- ($0.08) per share lower tax
benefit;
- ($0.02) per share net reduction from
other activities including positive contribution from redevelopment
and development, offset by sales of apartment communities to fund
redevelopment. Share repurchases are expected to be AFFO
neutral.
Effective January 1, 2019, Aimco will adopt new accounting
guidance that changes how Aimco recognizes costs incurred to obtain
resident leases. In prior years, Aimco deferred certain costs based
on the percentage of successful leases. Under the new standard,
only costs that are contingent upon a signed lease may be deferred.
Aimco’s calculation of AFFO has historically included these costs
as a component of Capital Replacements, therefore, it will be
unchanged as a result of the change in accounting standard. The
amortization of these costs was excluded from Pro forma FFO as a
component of real estate related depreciation. Had the accounting
change been effective in 2018, Pro forma FFO would have been
approximately $0.02 per share lower than reported.
($ Amounts represent Aimco Share)
FULL YEAR 2019
FULL YEAR 2018
Net Income per
share $3.13 to $3.63
$4.21
Pro forma FFO per share $2.41 to
$2.51 $ 2.47 / $ 2.45 [1]
AFFO per
share $2.12 to $2.22
$2.16
Select Components of FFO
Same Store Operating Measures
Revenue
change compared to prior year 2.80% to 3.80%
3.10% Expense change compared to prior year
2.00% to 3.00% 3.30% NOI
change compared to prior year 2.70% to 4.50%
3.10%
Other Earnings
Asset Management
Contribution — $22M Tax
Benefits [2] $7M to $9M
$21M
Offsite Costs
Property management expenses
$20M $21M General and administrative expenses
$47M $46M
Total
Offsite Costs $67M
$67M
Capital Investments
Redevelopment/Development
$225M to $275M $176M Capital
Enhancements $80M to $100M
$103M
Transactions
Property dispositions
$750M to $850M $825M Property
acquisitions [3] $65M
$498M
Portfolio Quality
Average revenue per apartment home
~$2,220 $2,126
Balance
Sheet
Proportionate Debt to Adjusted EBITDA ~6.7x
6.8x Proportionate Debt and Preferred Equity
to Adjusted EBITDA ~6.9x
7.2x [1]
Adjusted Pro forma FFO per share of $2.45
reflects the $0.02 per share impact of the change in lease
accounting discussed above.
[2] Tax benefits are forecasted to decline in 2019 as the last of
the historic tax benefits related to redevelopments in Philadelphia
were earned in 2018 and due to lower run rate tax benefits from
routine activities in Aimco’s Taxable REIT Subsidiary. [3] Aimco
does not predict or guide to acquisitions. This amount represents
the purchase price for One Ardmore, which was contracted to be
acquired upon its completion as part of the Philadelphia portfolio
acquisition announced in April 2018. Aimco monitors potential
transactions with an eye for unique and opportunistic investments
and funds acquisitions pursuant to its strict paired trade
discipline. ($ Amounts represent Aimco
Share)
FIRST QUARTER 2019
Net income per share
$1.59 to $1.64
Pro forma FFO per share
$0.58 to $0.62
AFFO per share
$0.51 to $0.55
Earnings Conference Call
Information
Live Conference Call: Conference
Call Replay: Tuesday, February 5, 2019 at 1:00
p.m. ET Replay available until May 6, 2019 Domestic Dial-In Number:
1-888-317-6003 Domestic Dial-In Number: 1-877-344-7529
International Dial-In Number: 1-412-317-6061 International Dial-In
Number: 1-412-317-0088 Passcode: 3725757 Passcode: 10127088
Live webcast and replay:
investors.aimco.com
Supplemental Information
The full text of this Earnings Release and the Supplemental
Information referenced in this release are available on Aimco’s
website at investors.aimco.com.
Glossary & Reconciliations of
Non-GAAP Financial and Operating Measures
Financial and operating measures found in this Earnings Release
and the Supplemental Information include certain financial measures
used by Aimco management that are measures not defined under
accounting principles generally accepted in the United States
(“GAAP”). Certain Aimco terms and Non-GAAP measures are defined in
the Glossary in the Supplemental Information and Non-GAAP measures
reconciled to the most comparable GAAP measures.
About Aimco
Aimco is a real estate investment trust focused on the ownership
and management of quality apartment communities located in select
markets in the United States. Aimco is one of the country’s largest
owners and operators of apartments, with ownership interests in 132
communities in 17 states and the District of Columbia. Aimco common
shares are traded on the New York Stock Exchange under the ticker
symbol AIV, and are included in the S&P 500. For more
information about Aimco, please visit our website at www.aimco.com.
Forward-looking
Statements
This Earnings Release and Supplemental Information contain
forward-looking statements within the meaning of the federal
securities laws, including, without limitation, statements
regarding projected results and specifically forecasts of first
quarter and full year 2019 results, including but not limited to:
FFO, Pro forma FFO and selected components thereof; AFFO; Aimco
redevelopment and development investments and projected yield on
such investments, timelines and Net Operating Income contribution;
expectations regarding sales of Aimco apartment communities and the
use of proceeds thereof; and Aimco liquidity and leverage
metrics.
These forward-looking statements are based on management’s
judgment as of this date, which is subject to risks and
uncertainties. Risks and uncertainties include, but are not limited
to: Aimco’s ability to maintain current or meet projected
occupancy, rental rate and property operating results; the effect
of acquisitions, dispositions, redevelopments and developments;
Aimco’s ability to meet budgeted costs and timelines, and achieve
budgeted rental rates related to Aimco redevelopment and
development investments; expectations regarding Aimco sales of
apartment communities and the use of proceeds thereof; and Aimco’s
ability to comply with debt covenants, including financial coverage
ratios.
Actual results may differ materially from those described in
these forward-looking statements and, in addition, will be affected
by a variety of risks and factors, some of which are beyond Aimco’s
control, including, without limitation:
- Real estate and operating risks,
including fluctuations in real estate values and the general
economic climate in the markets in which Aimco operates and
competition for residents in such markets; national and local
economic conditions, including the pace of job growth and the level
of unemployment; the amount, location and quality of competitive
new housing supply; the timing of acquisitions, dispositions,
redevelopments and developments; and changes in operating costs,
including energy costs;
- Financing risks, including the
availability and cost of capital markets’ financing; the risk that
cash flows from operations may be insufficient to meet required
payments of principal and interest; and the risk that earnings may
not be sufficient to maintain compliance with debt covenants;
- Insurance risks, including the cost of
insurance, and natural disasters and severe weather such as
hurricanes; and
- Legal and regulatory risks, including
costs associated with prosecuting or defending claims and any
adverse outcomes; the terms of governmental regulations that affect
Aimco and interpretations of those regulations; and possible
environmental liabilities, including costs, fines or penalties that
may be incurred due to necessary remediation of contamination of
apartment communities presently or previously owned by Aimco.
In addition, Aimco’s current and continuing qualification as a
real estate investment trust involves the application of highly
technical and complex provisions of the Internal Revenue Code and
depends on Aimco’s ability to meet the various requirements imposed
by the Internal Revenue Code, through actual operating results,
distribution levels and diversity of stock ownership.
Readers should carefully review Aimco’s financial statements and
the notes thereto, as well as the section entitled “Risk Factors”
in Item 1A of Aimco’s Annual Report on Form 10-K for the year ended
December 31, 2017, and the other documents Aimco files from time to
time with the Securities and Exchange Commission.
These forward-looking statements reflect management’s judgment
as of this date, and Aimco assumes no obligation to revise or
update them to reflect future events or circumstances. This press
release does not constitute an offer of securities for sale.
Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)
Three
Months Ended Year Ended December 31, December
31, 2018 2017 2018 2017
REVENUES Rental and other property revenues attributable to
Real Estate $ 232,022 $ 231,509 $ 922,593 $ 918,148 Rental and
other property revenues of partnerships served by Asset Management
business — 18,719 42,830 74,046 Tax credit and transaction revenues
— 5,001 6,987 13,243 Total revenues
232,022 255,229 972,410 1,005,437
OPERATING EXPENSES Property operating expenses
attributable to Real Estate 75,329 79,172 307,901 319,126 Property
operating expenses of partnerships served by Asset Management
business 56 9,000 20,921 35,458 Depreciation and amortization
91,347 97,348 377,786 366,184 General and administrative expenses
9,074 12,058 46,268 43,657 Other (income) expenses, net (9,848 )
4,487 3,778 11,148 Provision for real estate impairment loss —
35,881 — 35,881 Total operating
expenses 165,958 237,946 756,654 811,454
Operating income 66,064 17,283 215,756 193,983
Interest income 3,146 2,081 10,914 8,332 Interest expense (57,441 )
(49,193 ) (200,634 ) (194,615 ) (Loss) gain on dispositions of real
estate and the Asset Management business (2,274 ) 297,793 677,463
300,849 Other, net (64 ) 92 77
7,694
Income before income tax benefit 9,431 268,056
703,576 316,243 Income tax benefit 409 18,133
13,027 30,836
Net income 9,840
286,189 716,603 347,079 Noncontrolling interests: Net income
attributable to noncontrolling interests in consolidated real
estate partnerships (175 ) (7,569 ) (8,220 ) (9,084 ) Net income
attributable to preferred noncontrolling interests in Aimco OP
(1,934 ) (1,938 ) (7,739 ) (7,764 ) Net income attributable to
common noncontrolling interests in Aimco OP (324 ) (12,293 )
(34,417 ) (14,457 ) Net income attributable to noncontrolling
interests (2,433 ) (21,800 ) (50,376 ) (31,305 )
Net income
attributable to Aimco 7,407 264,389 666,227 315,774 Net income
attributable to Aimco preferred stockholders (2,148 ) (2,149 )
(8,593 ) (8,594 ) Net income attributable to participating
securities (33 ) (143 ) (1,037 ) (319 )
Net income attributable
to Aimco common stockholders $ 5,226 $ 262,097 $
656,597 $ 306,861 Net income attributable to
Aimco per common share – basic $ 0.03 $ 1.68 $ 4.21
$ 1.96 Net income attributable to Aimco per
common share – diluted $ 0.03 $ 1.67 $ 4.21 $
1.96 Weighted average common shares outstanding –
basic 153,441 156,423 155,866 156,323
Weighted average common shares outstanding – diluted 153,705
156,878 156,053 156,796
Consolidated Balance Sheets (in thousands)
(unaudited) December 31,
2018 2017 Assets Real estate $
8,308,590 $ 7,927,753 Accumulated depreciation (2,585,115 )
(2,522,358 ) Net real estate 5,723,475 5,405,395 Cash and cash
equivalents 36,858 60,498 Restricted cash 35,737 34,827 Goodwill
37,808 37,808 Other assets 313,733 234,931 Assets held for sale
42,393 17,959 Assets of partnerships served by Asset Management
business: Real estate, net — 224,873 Cash and cash equivalents —
16,288 Restricted cash — 30,928 Other assets — 15,533
Total Assets $ 6,190,004 $ 6,079,040
Liabilities and Equity Non-recourse property debt secured by
Aimco Real Estate communities $ 3,937,000 $ 3,563,041 Debt issue
costs (21,695 ) (17,932 ) Non-recourse property debt, net 3,915,305
3,545,109 Term loan, net — 249,501 Revolving credit facility
borrowings 160,360 67,160 Accrued liabilities and other 226,230
213,027 Liabilities related to assets held for sale 23,177 —
Liabilities of partnerships served by Asset Management business:
Non-recourse property debt, net — 227,141 Accrued liabilities and
other — 19,812 Total Liabilities 4,325,072
4,321,750 Preferred noncontrolling interests in Aimco
OP 101,291 101,537 Equity: Perpetual preferred stock 125,000
125,000 Class A Common Stock 1,491 1,572 Additional paid-in capital
3,515,641 3,900,042 Accumulated other comprehensive income 4,794
3,603 Distributions in excess of earnings (1,947,507 ) (2,367,073 )
Total Aimco equity 1,699,419 1,663,144 Noncontrolling
interests in consolidated real estate partnerships (2,967 ) (1,716
) Common noncontrolling interests in Aimco OP 67,189 (5,675
) Total equity 1,763,641 1,655,753 Total liabilities
and equity $ 6,190,004 $ 6,079,040
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190204005774/en/
AimcoMatt Foster, Director, Investor RelationsInvestor
Relations 303-793-4661, investor@aimco.com
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