(NYSE: AIV) - Apartment Investment and Management Company
(“Aimco”) has executed definitive agreements with AIR Communities
(“AIR”) that will result in more than $100 million of realized
value creation for Aimco shareholders, eliminate the $469 million
obligation related to the four leased properties from AIR, and lead
directly to the refinance or repayment of nearly $1 billion of
debt.
Following the successful development and lease-up of 707 Leahy
in Redwood City, CA, Prism in Cambridge, MA, Flamingo Point North
Tower in Miami Beach, FL and The Fremont on the Anschutz Medical
Campus in Aurora, CO, Aimco and AIR have agreed to cancel Aimco’s
leasehold interest in each property on or before September 1, 2022.
AIR will pay Aimco $200 million in return for cancellation of the
leases of the four properties which were valued at $469 million in
2020. For Aimco, this outcome results in a profit, net of costs, of
approximately $100 million, which will be realized about 18 months
sooner than originally anticipated. Proceeds will be used to reduce
leverage and increase cash on hand.
As previously announced, Aimco and AIR have agreed on the early
repayment of the $534 million of notes due AIR, originally
scheduled to mature in January 2024 and carrying an annual rate of
5.2%. Aimco will pay to AIR a spread maintenance fee of
approximately $18 million, the sizing of which is subject to the
yield on one- and two-year treasuries at the time of repayment.
Aimco expects to repay, prior to the end of June, approximately
$400 million with funds on hand generated from the sale of its
Pathfinder Village asset and proceeds from the refinancing of 14
stabilized properties with fixed-rate debt at a blended rate of
4.37% (net of interest rate hedge proceeds) and an average term to
maturity of 9.4 years. Pursuant to its agreement with AIR, Aimco
plans to complete the repayment of the balance on or before August
1, 2022, with funds sourced from financing efforts currently in
progress.
Following repayment of the AIR note and collapse of the four
property leases, nearly all of Aimco’s property debt financing will
be in the form of long-dated, non-recourse, fixed-rate loans,
floating-rate construction loans with interest rate caps, and fixed
rate long-term land and property leases.
In addition, Aimco will acquire from AIR for $7.2 million its
minority limited partner position in the 16 properties that
presently secure the AIR note.
Aimco and AIR have also agreed to continue their strategic
relationship with AIR providing property management services to
Aimco and the companies working together to identify future
development opportunities where Aimco provides particular
expertise. As such, Aimco and AIR have agreed to an amended Master
Leasing Agreement (“MLA”).
Notably, under agreed amendments to the MLA, AIR’s purchase
option to acquire completed development and redevelopment
properties has been replaced with an AIR right of first offer
(“ROFO”) on development and redevelopment assets that Aimco chooses
to bring to market within one year following stabilization. These
changes reflect the companies’ shared commitment to work together
in a spirit of collaboration while allowing each the freedom to
execute on their respective business plans.
In accordance with Aimco policy, each of these agreements and
transactions was reviewed in detail and approved by a committee
comprised entirely of independent directors.
Wes Powell, Aimco President and CEO noted: “I am thankful to the
Aimco team for executing successfully on this initial class of
development properties leased from AIR Communities. Construction
efforts were actively managed, resulting in on-time and on-budget
delivery despite challenging conditions, while the strong lease-up
results highlight the value of customer-focused design and tailored
offerings. The expertise of the Aimco development team, combined
with the early monetization of these investments, will benefit
shareholders with returns well ahead of our initial
expectations.”
Mr. Powell continued, “Aimco’s early payoff of the AIR note
reduces the vast majority of our near-term refunding risk and
eliminates the single largest entanglement stemming from Aimco and
AIR’s separation, furthering each company’s independence from the
other. I greatly value our strong working relationship with AIR and
look forward to collaborating on future opportunities where our
complementary skills and investment objectives can lead to
additional mutually beneficial outcomes.”
Additional details can be found in the SEC Form 8-K filed by
Aimco on June 21, 2022.
Forward-Looking Statements
This document contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
include all statements that are not historical statements of fact
and those regarding our intent, belief, or expectations, including,
but not limited to, the statements in this document regarding our
2022 plans and goals, including our 2022 pipeline investments and
projects, and our plans to eliminate certain near-term debt
maturities. We caution investors not to place undue reliance on any
such forward-looking statements.
Words such as “anticipate(s),” “expect(s),” “intend(s),”
“plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,”
“seek(s)” and similar expressions, or the negative of these terms,
are intended to identify such forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside the control of Aimco that could
cause actual results or outcomes to differ materially from those
discussed in the forward-looking statement. Important factors,
among others, that may affect actual results or outcomes include,
but are not limited to: (i) the risk that the 2022 plans and goals
may not be completed, as expected, in a timely manner or at all,
(ii) the inability to recognize the anticipated benefits of the
pipeline investments and projects, and (iii) changes in general
economic conditions, including, increases in interest rates and as
a result of the COVID-19 pandemic. Although we believe that the
assumptions underlying the forward-looking statements are
reasonable, we can give no assurance that our expectations will be
attained.
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, 2021, and subsequent Quarterly Reports on Form 10-Q
and other documents Aimco files from time to time with the SEC.
These filings identify and address important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking
statements.
These forward-looking statements reflect management’s judgment
and expectations as of this date, and Aimco assumes no (and
disclaims any) obligation to revise or update them to reflect
future events or circumstances.
About Aimco
Aimco is a diversified real estate company primarily focused on
value add, opportunistic, and alternative investments, targeting
the U.S. multifamily sector. Aimco’s mission is to make real estate
investments where outcomes are enhanced through our human capital
so that substantial value is created for investors, teammates, and
the communities in which we operate. Aimco is traded on the New
York Stock Exchange as AIV. For more information about Aimco,
please visit our website www.aimco.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220621006095/en/
Matt Foster Sr. Director of Capital Markets and Investor
Relations investor@aimco.com 303-793-4661
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