Apartment Investment and Management Company (“Aimco”) (NYSE:
AIV) announced today first quarter results for 2021.
Wes Powell, Aimco President and Chief Executive Officer,
comments: “The first three months of 2021 have proven highly
productive with Aimco now well positioned for growth as a premier
real estate developer and investor. Aimco’s strategy, focused on
long-term value creation, is being put to work and we are on track
to produce superior results. Broadly, demand for housing remains
robust, supply in many U.S. markets is relatively constrained, and
the economy is improving rapidly. Aimco teams across the country
are utilizing their deep relationships and creativity to source and
devise new investment opportunities that will expand our already
robust pipeline. I am thankful for the good work produced by the
Aimco team during the first quarter and encouraged by what lies
ahead.”
Lynn Stanfield, Aimco Executive Vice President and Chief
Financial Officer, comments: “Apartment operations continue to
improve with occupancy at our portfolio of stabilized properties
having increased by 70 basis points quarter-over-quarter and
pricing power recovering in many of our markets. Aimco’s active
development and redevelopment projects are tracking on time and on
budget, lease-up results have been promising, and we’ve added about
$330 million to our investment pipeline with the start of
construction at Upton Place in Washington, D.C. and The Benson
Hotel on the Anschutz Medical Campus in Colorado. Additionally,
Aimco’s strong balance sheet, with limited use of corporate credit,
abundant liquidity, and a diversified portfolio of stabilized
properties provides a strong foundation for Aimco’s growing
investment platform.”
Financial Results
Net income attributable to common stockholders per common share,
on a dilutive basis, was $0.14 per share, an increase of $0.11
during the quarter ended March 31, 2021, compared to the same
period in 2020, due primarily to unrealized gains on interest rate
options.
Development and
Redevelopment
Aimco’s dedicated team sources and executes development and
redevelopment projects across its national platform. Aimco seeks
outsized returns on incremental capital invested, for itself and
its partners, through its team’s local insights regarding
sub-market fundamentals, the specific property location, a deep
understanding of how best to meet the end users’ needs and wants, a
disciplined commitment to mitigating risk during the construction
process, and a passion for quality. Aimco believes that each of
these components are critical to the creation of an investment
platform that is both sustainable and viable independent of broader
market conditions.
Construction Activity
During the three months ended March 31, 2021, Aimco invested
approximately $45.8 million at its development and redevelopment
projects.
- At the North Tower of Flamingo Point in Miami Beach, Florida,
the major redevelopment continues on plan with approximately $43.0
million remaining to invest and a target to complete construction
in 2022 and reach stabilization in 2023.
- At Upton Place in Washington, D.C., construction activities
began in January 2021 and are progressing on budget with
approximately $221.1 million remaining to complete construction and
on schedule for completion in 2024.
- As previously announced, Aimco began construction on The Benson
Hotel and Faculty Club on the Anschutz Medical Campus in Aurora,
Colorado. Aimco expects a remaining investment of approximately
$52.0 million with completion planned for the first quarter of
2023.
Lease-up Progress
During the three months ended March 31, 2021, Aimco held three
properties where newly constructed or renovated homes had been
delivered but stabilization had not yet been reached.
- At 707 Leahy in Redwood City, California, all apartment homes
had been delivered and construction was complete as of 4Q 2020. As
of March 31, 2021, the 110-unit property was 71% leased.
- At The Fremont on the Anschutz Medical Campus in Aurora,
Colorado, all apartment homes had been delivered and construction
was complete as of 4Q 2020. As of March 31, 2021, the 253-unit
property was 54% leased.
- At Prism, located in Cambridge, Massachusetts, all apartment
homes had been delivered and construction was complete as of 1Q
2021. As of March 31, 2021 the 136-unit property was 22%
leased.
The pace of absorption at these properties accelerated during
April and early May as local economies reopen and we enter the
prime leasing season. In April, leasing volume increased by more
than a third when compared to March, and leasing in May is
projected to outpace April.
Asset Management
Operating Properties
Aimco owns a geographically diversified portfolio of operating
properties that produces stable cash flow and serves to balance the
risk and highly variable cashflows associated with its portfolio of
development and redevelopments and value-add investments. Aimco
expects to maintain, at any given time, an allocation of capital to
stabilized operating properties of no less than 30% of Aimco
equity. At March 31, 2021, Aimco had approximately 54% of equity in
stabilized operating properties.
Aimco’s Operating Portfolio produced solid results for the
quarter ended March 31, 2021, showing sequential improvement in
revenue as our business recovers from the pandemic related impacts
of 2020.
First Quarter
Year-over-Year
Sequential
($ in thousands)
2021
2020
Variance
4Q 2020
Variance
Average Daily Occupancy
97.6%
97.6%
—
96.9%
0.7
%
Revenue, before utility reimbursements
$
32,674
$
33,345
(2.0
%)
$
32,477
0.6
%
Expenses, net of utility
reimbursements
11,161
10,497
6.3
%
10,613
5.2
%
Net operating income (NOI)
21,513
22,848
(5.8
%)
21,864
(1.6
%)
Highlights for the Operating Portfolio include the
following:
- Average Daily Occupancy was 97.6% for the quarter ended March
31, 2021, equal to the same period last year, and a 70-basis point
improvement from the quarter ended December 31, 2020.
- Average revenue per occupied unit was $1,852 for the quarter
ended March 31, 2021, down 2.0% year over year and essentially flat
to the quarter ended December 31, 2020.
- Revenue, before utility reimbursements, was $32.7 million for
the quarter ended March 31, 2021, down 2.0% year over year but up
0.6% from the quarter ended December 31, 2020.
- Expenses, net of utility reimbursements were $11.2 million for
the quarter ended March 31, 2021, up 6.3% year over year and up
5.2% from the quarter ended December 31, 2020. The year over year
increase is due primarily to higher real estate taxes and insurance
with the sequential increase due primarily to seasonal net utility
costs and snow removal. Sequentially, expenses outside of these
seasonal items were favorable 50 basis points.
- Net Operating Income was $21.5 million for the quarter ended
March 31, 2021, down 5.8% year over year and down 1.6% from the
quarter ended December 31, 2020.
Aimco measures residential rent collection as the amount of
payments received as a percentage of all residential amounts owed.
In the first quarter, Aimco collected 97.5% of all amounts owed by
Aimco residents and recognized 98.4% of revenue, reserving 160
basis points as bad debt.
1001 Brickell Bay Drive, a waterfront office building in Miami,
FL owned as part of a larger assemblage, is currently 72.4%
occupied with 100% of rents due collected, in the first
quarter.
Investment Activity
Aimco expects to have a broad set of investment opportunities
due to its national platform, management’s deep connections in the
local markets in which we invest, and various strategic
relationships. These opportunities may include, but are not limited
to, development, redevelopment, portfolio acquisitions,
programmatic joint ventures, debt placements, operational
turnarounds, and re-entitlements. Aimco will undertake such
opportunistic value-add transactions when warranted by the prospect
of outsized risk-adjusted returns.
- On January 1, 2021, terms commenced on leasehold agreements
with Apartment Income REIT Corp. (“AIR Communities”) for 707 Leahy,
The Fremont, Prism, and Flamingo Point North Tower.
- The combined initial value of leasehold interest, as indicative
of the initial fair market values of the leased assets at the time
of lease inception, was $469.0 million.
- The combined annual leasehold payment for these four assets is
$25.3 million.
- Aimco expects its total development and redevelopment
expenditures related to these assets to be approximately $70.8
million with $24.1 million having been invested as of March 31,
2021.
- The lease agreements provide Aimco the right to terminate each
lease once the leased property is stabilized, with AIR Communities
then having the option to retain ownership of the land and purchase
the improvements from Aimco. Should AIR Communities exercise its
option, Aimco would be due the difference between the property’s
fair-market value at stabilization and the initial value of
leasehold interest, less a 5% discount. Should AIR Communities not
exercise its option, Aimco has the right, but not the obligation,
to force a sale of the asset to monetize its investment.
- In the first quarter, Aimco purchased for $6.2 million,
1.5-acres of fully entitled land on the Anschutz Medical Campus in
Aurora, CO plus options allowing for the purchase of an additional
5.2 acres that will accommodate more than 750,000 square feet of
new development. The 1.5-acre site is now being developed as The
Benson Hotel and Faculty Club and represents a critical step in
advancement of the campus masterplan.
Balance Sheet and Financing
Activity
Aimco capitalizes its activities through a combination of
non-recourse property debt, construction loans, third-party equity,
and the recycling of Aimco equity, including through retained
earnings. Aimco plans to limit the use of recourse leverage, with a
strong preference towards property-level debt in order to limit
risk to the Aimco enterprise. When warranted, Aimco plans to seek
equity capital from joint venture partners to improve its cost of
capital, further leverage Aimco equity, reduce exposure to a single
investment and, in certain cases, for strategic benefits.
Aimco is highly focused on the importance of maintaining ample
liquidity. As of March 31, 2021, Aimco had access to $385.3
million, including $226.1 million of cash on hand, $9.2 million of
restricted cash, and the capacity to borrow up to $150 million on
our revolving credit facility.
Aimco’s net leverage as of March 31, 2021 was as follows:
as of March 31, 2021
Proportionate, $ in thousands
Amount
Weighted Avg. Maturity
(Yrs.)*
Total non-recourse property debt
$
438,729
5.6
Notes payable to AIR
$
534,127
2.8
Cash and restricted cash
(235,305
)
Net Leverage
$
737,551
Financing Activity
Subsequent to quarter end, Aimco closed a $150 million
construction loan secured by our leasehold interest in the North
Tower at Flamingo Point. The initial term of the loan is three
years with two one-year extension options at an interest rate
floating at One Month LIBOR plus 360 basis points. The floating
interest rate has a 3.85% floor. Loan proceeds will be used to fund
the completion of construction of the North Tower at Flamingo Point
and other investment activity.
Dividend
Aimco does not presently intend to pay a regular cash
dividend.
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 high
performance, collaboration, and respect for all.
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 Real Estate Investment Trust focused on property
development, redevelopment, and various other value-creating
investment strategies, targeting the U.S. multifamily market.
Aimco’s mission is to make real estate investments where outcomes
are enhanced through human capital and 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.
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. 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
statements are based on management’s current expectations and
beliefs and are subject to a number of risks and uncertainties that
could lead to actual results differing materially from those
projected, forecasted or expected. 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, 2020, and in Item 1A of Aimco’s Quarterly Reports on
Form 10-Q for the quarterly periods ended June 30, 2020, September
30, 2020, and March 31, 2021 and the 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
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 March
31,
2021
2020
REVENUES:
Rental and other property revenues
39,804
38,309
OPERATING EXPENSES:
Property operating expenses
16,942
15,349
Depreciation and amortization
20,717
19,347
General and administrative expense [1]
6,311
1,762
Total operating expenses
43,970
36,458
Interest expense
(12,677
)
(5,651
)
Mezzanine investment income, net
7,467
6,747
Unrealized gains on interest rate options
[2]
25,347
—
Other expenses, net
363
(415
)
(Loss) income before income
taxes
16,334
2,532
Income tax benefit (expense)
5,100
2,023
Net (loss) income
21,434
4,555
Net Income attributable to redeemable
noncontrolling Interests consolidated real estate partnership
152
103
Net Income attributable to noncontrolling
Interests consolidated real estate partnership
(291
)
5
Net Income attributable to common
noncontrolling Interests in Aimco Operating Partnership
(1,081
)
(236
)
Net Income attributable to common
stockholders
20,214
4,427
Net Income attributable to common
stockholders per share - basic
0.14
0.03
Net Income attributable to common
stockholders per share - diluted
0.14
0.03
Weighted average common shares outstanding
– basic
148,914
148,549
Weighted average common shares outstanding
– diluted
149,046
148,569
[1] General and administrative expense in
1Q 2020 is represented as a carve-out of Aimco predecessor expenses
and are not representative of Aimco’s current expenses.
[2] Unrealized gains on interest rate
options is primarily the quarterly market-to-market adjustment
recorded as required to fair value Aimco’s interest rate
options.
Consolidated
Balance Sheets
(in thousands) (unaudited)
March 31, 2021
December 31, 2020
Assets
Buildings and improvements
1,050,817
995,116
Land
506,968
505,153
Total real estate
1,557,785
1,500,269
Accumulated depreciation
(511,615
)
(495,010
)
Net real estate
1,046,170
1,005,259
Cash and cash equivalents
226,081
289,582
Restricted cash
9,224
9,153
Mezzanine Investments
314,829
307,362
Right-of-use lease assets
443,111
98,280
Other Assets, net
178,475
130,856
Total assets
2,217,890
1,840,492
Liabilities
Non-recourse property debt, net
429,873
447,967
Notes payable to AIR
534,127
534,127
Total indebtedness
964,000
982,094
Deferred tax liabilities
125,732
131,560
Lease liabilities
446,962
100,496
Accrued liabilities and other
95,733
62,988
Total liabilities
1,632,427
1,277,138
Redeemable noncontrolling interest in
consolidated real estate partnership
4,111
4,263
Equity
Common Stock
1,491
1,490
Additional paid-in capital
516,051
515,127
Retained earnings accumulated
(deficit)
3,375
(16,839
)
Total Aimco equity
520,917
499,778
Noncontrolling interests in consolidated
real estate partnerships
31,884
31,877
Common noncontrolling interests in Aimco
Operating Partnership
28,551
27,436
Total equity
581,352
559,091
Total liabilities and equity
2,217,890
1,840,492
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210517005918/en/
Matt Foster, Director, Capital Markets and Investor Relations
Investor Relations 303-793-4661, investor@aimco.com
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