Apartment Investment and Management Company (“Aimco”) (NYSE:
AIV) announced today third quarter results for 2022 and provided
highlights on recent activities.
Wes Powell, Aimco President and Chief Executive Officer,
comments: “Aimco had a productive third quarter, building on the
accomplishments of the first half of 2022 and effectively
positioning the company in the face of rapidly shifting market
conditions. Aimco benefits from a strong balance sheet with limited
near-term maturities, abundant liquidity and fully funded
development commitments. We proactively monetized more than $900
million of assets during 2022, while also substantially adding to
our high-quality development pipeline and opportunistically
acquiring over one million shares of Aimco common stock.
"Our active developments and redevelopment projects remain on
track. At The Hamilton, Aimco's major redevelopment in Miami, we
welcomed residents to their new homes in October and are
experiencing healthy demand for this unique waterfront property.
The building is 35% leased at rental rates ahead of our original
expectations.
"Our diversified portfolio of stabilized income producing
properties continues to yield strong results, with revenues up
11.0% and net operating income up 15.8% year to date. New customer
rent-to-income ratios remain comfortable at 21.6% while Aimco
retained 56.1% of our residents whose leases were expiring during
the quarter at rents 15.1% higher, on average, than the previous
lease."
Mr. Powell continued, "Our work over the past few years has
better positioned us to weather what are likely to be stormy
business and capital markets conditions to come. We fully intend to
execute on the development projects we have underway, we will lean
on the steady cashflows produced by our portfolio of stabilized
apartment communities, we will continue our efforts to source third
party capital and make disciplined decisions in regard to the
allocation of AIV’s capital; always focusing on its cost and the
expected returns of its use on a risk adjusted basis.
"Finally, I am thankful to the Aimco team for their execution
and good work, and to the Aimco Board of Directors for their
engagement and guidance, as we continue to build, and unlock, value
for Aimco shareholders.”
Financial Results and Recent
Highlights
- Net income attributable to common stockholders per share, on a
fully dilutive basis, was $0.19 for the quarter ended September 30,
2022, compared to net income per share of $(0.03) for the same
period in 2021, due primarily to net gains from real estate
transactions in the third quarter, increased tax benefit, and
higher net income from property operations.
- As of October 31, 2022, total shareholder return ("TSR") since
the December 15, 2020 separation from AIR was 57.9% and
year-to-date was 3.1%.
- Year-to-date through October 31, 2022, Aimco has repurchased
more than 1.3 million shares of its common stock at a weighted
average price of approximately $6.41 per share.
- Third Quarter 2022 Revenue and NOI from Aimco’s Stabilized
Operating Properties were up 11.5% and 17.5%, respectively, year
over year, with average revenue per apartment home of $2,173, up
$261 year over year.
- Aimco closed the previously announced $669 million lease
termination transaction with AIR that returned the four leased
properties to AIR in exchange for a payment to Aimco of $200
million thereby eliminating the $469 million obligation related to
these leased assets. Aimco's execution in the development and
lease-up of these assets resulted in Value Creation, net of costs
of approximately $100 million for shareholders.
- Aimco completed the early repayment of the $534 million of
notes due to AIR, originally scheduled to mature in January
2024.
- Aimco exited the Seattle market, closing on the sales of two
apartment communities for a total of $122 million.
Value Add, Opportunistic &
Alternative Investments:
Development and Redevelopment
Aimco generally seeks development and redevelopment
opportunities where barriers to entry are high, target customers
can be clearly defined, and Aimco has a comparative advantage over
others in the market. Aimco’s Value Add and Opportunistic
investments may also target portfolio acquisitions, operational
turnarounds, and re-entitlements.
As of September 30, 2022, Aimco had four active development and
redevelopment projects located in four U.S. markets, in varying
phases of construction and lease-up. These projects remain on
track, as measured by budget and lease-up metrics. During the third
quarter, Aimco invested $60.6 million in development and
redevelopment activities. Updates include:
- At The Hamilton in Miami, Florida, Aimco welcomed the first
residents into redesigned and fully renovated units in early
October 2022. As of October 31, 2022, 97 units were leased or
pre-leased at rental rates more than 20% ahead of
underwriting.
- Construction continues on schedule and on budget at Upton Place
in Northwest Washington, D.C., the Benson Hotel and Faculty Club on
the Anschutz Medical Campus in Aurora, Colorado, and at our
single-family home development project, Oak Shore, in Corte Madera,
California.
Alternative Investments
Aimco makes alternative investments where it has special
knowledge or expertise relevant to the venture and where
opportunity exists for positive asymmetric outcomes. Aimco’s
current alternative investments include a mezzanine loan secured by
a stabilized multifamily property with an option to participate in
future multifamily development as well as three passive equity
investments. Updates include:
- The borrower on Aimco’s $362.8 million mezzanine loan, which is
secured by the Parkmerced stabilized multifamily property plus
phases two through nine of the site's future development
opportunity, remains current on its first mortgage obligations. Due
to the relative size of Aimco’s investment and alternative
accretive uses of capital, Aimco initiated a marketing effort in
July to explore opportunities to monetize all or a portion of its
investment. Increased uncertainty within financial and capital
markets led us to extend the timeline related to this process and
its execution.
Investment Activity
Aimco is focused on development and redevelopment, funded
primarily through joint ventures. Aimco will also consider
opportunistic investments in related activities. Updates
include:
- As previously announced, in July and August, Aimco closed on
the purchase of two development parcels, completing the assemblage
it contracted to acquire, for $100 million, in February 2022. The
nine-acre assemblage is located in the rapidly growing Flagler
Village neighborhood of Fort Lauderdale, Florida, and allows for
approximately three million square feet of phased, mixed-use
development, which could contain up to 1,500 residential units,
more than 300 hotel keys, and more than 100,000 square feet of
retail space at full build-out.
Operating Property
Results
Aimco owns a diversified portfolio of operating apartment
communities located in eight major U.S. markets with average rents
in line with local market averages. Aimco also owns one commercial
office building that is part of an assemblage with an adjacent
apartment building.
Aimco’s operating properties produced solid results for the
quarter ended September 30, 2022.
Third Quarter
Year-to-Date
Stabilized Operating Properties
Year-over-Year
Sequential
Year-over-Year
($ in millions)
2022
2021
Variance
2Q 2022
Variance
2022
2021
Variance
Average Daily Occupancy
96.0%
97.9%
(1.9)%
97.7%
(1.7%)
97.4%
97.7%
(0.3%)
Revenue, before utility reimbursements
$34.7
$31.1
11.5%
$33.1
4.7%
$100.0
$90.1
11.0%
Expenses, net of utility
reimbursements
10.2
10.3
(0.7%)
10.4
(2.0%)
30.9
30.4
1.5%
Net operating income (NOI)
24.5
20.8
17.5%
22.7
7.8%
69.1
59.7
15.8%
*Excluded from the table above is one, 40-unit apartment
community that Aimco’s ownership includes a partnership share.
- Revenue in the third quarter 2022 was $34.7 million, up 11.5%
year-over-year, resulting from a $261 increase in average monthly
revenue per apartment home to $2,173, offset with a 190-basis point
decrease in Average Daily Occupancy to 96.0%. In October, Average
Daily Occupancy increased to 96.9%.
- New lease rents increased 15.8% and Aimco retained 56.1% of
residents whose leases were expiring during the quarter at rents
15.1% higher, on average, than the previous lease.
- The median annual household income of new residents was more
than $136,300 in the third quarter 2022, representing a rent to
income ratio of 21.6%.
- Expenses in the third quarter 2022 were down 0.7% due to a
favorable nonrecurring 2022 real estate tax adjustments made within
the quarter. Before real estate taxes, expenses, net of utility
reimbursements were up 5.3%.
- Net operating income in the third quarter 2022 was $24.5
million, up 17.5% year-over-year.
In addition, strong leasing momentum continued at 1001 Brickell
Bay Drive, a waterfront office building in Miami, Florida, owned as
part of a larger assemblage with substantial development potential.
Year to date, September 2022, Aimco executed leases on over 76,000
square feet of office space, at rates per square foot 15% higher
than leases executed in the same period of 2021. At the end of the
third quarter 2022, the building was 84% occupied, up from 73% at
the same time last year. Leases within the building have been
executed on terms of less than four years or contain redevelopment
provisions as needed to maximize the value of the underlying
development rights.
Property Dispositions
Year to date, Aimco has sold three stabilized properties at
values exceeding those used in Aimco's internal NAV estimate. Net
proceeds from the sales were primarily used to reduce leverage. In
the third quarter, Aimco completed the sale of two of the three
properties sold:
- In July, Aimco sold Cedar Rim, a 104-unit apartment community
located in Renton, Washington, for $53.0 million.
- In August, Aimco sold 2900 on First, a 135-unit apartment
community with 14,000 square feet of retail located in Seattle,
Washington for $69.0 million.
- As previously announced, in September Aimco closed the $669
million lease termination transaction with AIR that returned the
four leased properties to AIR in exchange for a payment to Aimco of
$200 million thereby eliminating the $469 million obligation
related to these leased assets. Aimco's execution in the
development and lease-up of these assets resulted in Value
Creation, net of costs, of approximately $100 million for
shareholders.
Balance Sheet and Financing
Activity
Aimco is highly focused on maintaining a strong balance sheet,
including having at all times ample liquidity. As of September 30,
2022, Aimco had access to $375.4 million, including $206.3 million
of cash on hand, $19.1 million of restricted cash, and the capacity
to borrow up to $150.0 million on its revolving credit
facility.
Aimco’s net leverage as of September 30, 2022, was as
follows:
as of September 30,
2022
Proportionate, $ in thousands
Amount
Weighted Avg. Maturity
(Yrs.)
Total non-recourse fixed rate debt
$
781,296
8.4
Total non-recourse floating rate debt
79,712
1.7
Total non-recourse construction loan
debt
85,470
1.9
Cash and restricted cash
(225,441
)
Net Leverage
$
721,037
As of September 30, 2022, Aimco had interest rate cap protection
in place for 100% of its floating rate exposure. Aimco's interest
hedging instruments, purchased to provide protection against
increases in interest rates, were valued at $61.3 million versus a
cost basis of $15.7 million.
Debt Repayments
- Aimco completed the accelerated repayment of $534 million in
notes, which carried a rate of 5.2%, prior to their maturity in
January 2024. The early payoff, including $17.4 million of spread
maintenance costs, was completed in July.
- In September, Aimco retired the $138.4 million construction
loan concurrent with the cancellation of the leasehold at Flamingo
Point.
Property Financing
- In August, Aimco closed a $60 million land loan secured by the
three Flagler Village parcels. The loan has an initial term of 24
months with an option to extend for one additional 12-month period
and has a floating interest rate equal to one-month Term SOFR plus
a spread of 675 basis points with a floor of 8.00%.
- In October, Aimco placed a non-recourse, $81.3 million property
loan on its commercial office building, 1001 Brickell Bay Drive.
The loan has an initial term of 36 months with options to extend
for two additional 12-month periods and has a floating interest
rate equal to one-month Term SOFR plus a spread of 450 basis points
with a floor of 6.00%.
Equity Financing
- In July, Aimco closed a $102 million, 8% preferred equity
financing on a portfolio of stabilized assets with an equity
partner. The financing has a seven-year term but is fully
pre-payable after 48 months.
- In August, Aimco entered into an agreement with the Alaska
Permanent Fund Corporation (APFC) to fund up to $1 billion of
future Aimco-led multifamily developments. Pursuant to the
agreement, APFC will fund up to $360 million of limited partner
equity into projects meeting specific criteria, including, among
other items, return thresholds and minimum project size. Aimco will
act as the general partner and developer, committing to at least
$40 million through funding or the contribution of assets, while
earning customary fees and the opportunity for performance-based
incentive fees.
Public Market Equity
Common Stock Repurchases
- In the third quarter, Aimco repurchased 73,444 shares of its
common stock at a weighted average price of $7.14 per share. Aimco
repurchased an additional 492,445 shares in October at a weighted
average price of $7.01 per share. Year to date, as of October 31,
2022, Aimco repurchased 1,308,053 shares of its common stock at a
weighted average price of $6.41 per share.
- As of October 31, 2022, Aimco had the authorization remaining
to purchase approximately 14.4 million additional shares of its
common stock.
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, or
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 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.
Team and Culture
Aimco has a national presence with corporate headquarters in
Denver, Colorado and Bethesda, Maryland. Our investment platform is
managed by experienced real estate professionals based in four
regions of the United States: West Coast, Central and Mountain
West, Mid-Atlantic and Northeast, and Southeast. The experience and
in-depth local market knowledge of the Aimco team is essential to
the execution of our mission and realization of our vision.
Above all else, Aimco is committed to a culture of integrity,
respect, and collaboration.
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
future plans and goals, including our pipeline investments and
projects, our plans to eliminate certain near term debt maturities,
our estimated value creation and potential, our timing, scheduling
and budgeting, and our plans to form joint ventures. 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.
Consolidated
Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
REVENUES:
Rental and other property revenues
$
47,683
$
42,893
$
148,375
$
123,115
OPERATING EXPENSES:
Property operating expenses
17,455
18,155
56,384
51,500
Depreciation and amortization [1]
85,438
21,709
143,420
63,065
General and administrative expenses
[2]
10,809
8,868
29,243
22,562
Total operating expenses
113,702
48,732
229,047
137,127
Interest expense
(9,719
)
(12,680
)
(65,865
)
(37,995
)
Mezzanine investment income, net
8,423
7,636
24,990
22,654
Realized and unrealized gains (losses) on
interest rate options
9,209
2,231
48,005
10,608
Realized and unrealized gains (losses) on
equity investments
(2,145
)
1,233
20,152
2,107
Gains on dispositions of real estate
75,539
-
170,004
-
Lease modification income [1]
1,577
-
206,963
-
Other income (expense), net
(255
)
552
(1,743
)
2,959
Income (loss) before income tax
benefit
16,610
(6,867
)
321,834
(13,679
)
Income tax benefit (expense)
17,563
2,021
(24,338
)
9,881
Net income (loss)
34,173
(4,846
)
297,496
(3,798
)
Net (income) loss attributable to
redeemable noncontrolling interests in consolidated real estate
partnerships
(2,907
)
(127
)
(5,446
)
(41
)
Net (income) loss attributable to
noncontrolling interests in consolidated real estate
partnerships
(240
)
(296
)
(585
)
(862
)
Net (income) loss attributable to common
noncontrolling interests in Aimco Operating Partnership
(1,554
)
253
(14,648
)
209
Net income (loss) attributable to
Aimco
$
29,472
$
(5,016
)
$
276,817
$
(4,492
)
Net income (loss) attributable to common
stockholders per share – basic [3]
$
0.19
$
(0.03
)
$
1.82
$
(0.03
)
Net income (loss) attributable to common
stockholders per share – diluted [3]
$
0.19
$
(0.03
)
$
1.81
$
(0.03
)
Weighted-average common shares outstanding
– basic
149,611
149,762
149,706
149,517
Weighted-average common shares outstanding
– diluted
151,197
149,762
151,076
149,517
[1] In the three months ended September 30, 2022, as a result of
the lease termination agreement with AIR Communities (AIR) and in
accordance with GAAP, Aimco accelerated $69.7 million of
depreciation on the associated leasehold improvements. Also, Aimco
reduced the right-of-use lease assets associated with these
properties to zero and recognized lease modification income of $1.6
million. Per the terms of the lease termination agreement, Aimco
received $200 million of cash payments from AIR in exchange for the
return of the properties from Aimco to AIR. Aimco received $10
million of cash payments from AIR in the form of a nonrefundable
deposit in the second quarter and the remaining $190 million in the
third quarter. [2] General and administrative expense includes $1.7
million and $4.6 million of expenses to be reimbursed to AIR, per
agreement upon separation, for consulting services, with respect to
strategic growth, direction, and advice, in the three and nine
months ended September 30, 2022, respectively. This agreement is
expected to conclude at year end. [3] See Note 6 of Aimco's Third
Quarter 2022 SEC Form 10-Q, filed November 7, 2022, for additional
details.
Consolidated
Balance Sheets
(in thousands) (unaudited)
September 30,
December 31,
2022
2021
Assets
Buildings and improvements
$
1,248,005
$
1,257,214
Land
639,272
534,285
Total real estate
1,887,277
1,791,499
Accumulated depreciation
(516,857
)
(561,115
)
Net real estate
1,370,420
1,230,384
Cash and cash equivalents
206,366
233,374
Restricted cash
19,075
11,208
Mezzanine investments
362,788
337,797
Interest rate options
61,448
25,657
Right-of-use lease assets
95,506
429,768
Other assets, net
180,641
165,913
Total assets
$
2,296,244
$
2,434,101
Liabilities and Equity
Non-recourse property debt, net
$
859,593
$
483,137
Construction loans, net
80,816
163,570
Notes payable to AIR
—
534,127
Total indebtedness
940,409
1,180,834
Deferred tax liabilities
121,344
124,747
Lease liabilities
98,467
435,093
Accrued liabilities and other
125,132
97,400
Total liabilities
1,285,352
1,838,074
Redeemable noncontrolling interests in
consolidated real estate partnerships
158,135
33,794
Equity:
Common Stock
1,492
1,498
Additional paid-in capital
514,341
521,842
Retained earnings (accumulated
deficit)
250,996
(22,775
)
Total Aimco equity
766,829
500,565
Noncontrolling interests in consolidated
real estate partnerships
45,517
35,213
Common noncontrolling interests in Aimco
Operating Partnership
40,411
26,455
Total equity
852,757
562,233
Total liabilities and equity
$
2,296,244
$
2,434,101
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107006037/en/
Matt Foster, Sr. Director, Capital Markets and Investor
Relations Investor Relations 303-793-4661, investor@aimco.com
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