Apartment Investment and Management Company (“Aimco”) (NYSE:
AIV) announced today second quarter results for 2021.
Wes Powell, Aimco President and Chief Executive Officer,
comments: “The fundamentals of the apartment market have largely
recovered from the impacts of 2020 and investor demand for
multifamily properties is strong. Aimco’s experienced team,
diversified portfolio and pipeline of future opportunities have us
well positioned for growth. Results within our stabilized operating
portfolio are accelerating, our active development projects are on
track to create significant value for shareholders, and our
pipeline is steadily expanding... having recently secured new
investment opportunities with the potential for approximately four
million square feet of new development in high-growth markets. The
first half of 2021 has been productive, I am thankful for the
dedication of the Aimco team and energized by what lies ahead.”
Lynn Stanfield, Aimco Executive Vice President and Chief
Financial Officer, comments: “In the second quarter, we invested
$49 million into our active development and redevelopment projects,
started construction on a luxury single-family rental development
in Corte Madera, California, and began the major redevelopment of
Hamilton on the Bay in Miami, Florida. When complete and fully
stabilized, our currently active development and redevelopment
projects are expected to produce approximately $60 million of net
operating income. Aimco’s balance sheet and today’s liquid capital
markets provide a strong foundation for our growing investment
platform. In the second quarter, Aimco closed two construction
loans with commitments of $251 million and currently has access to
$445 million of cash and capacity on its revolving credit
facility.”
Financial Results and Recent
Highlights
- Net loss attributable to common stockholders per share, on a
dilutive basis, was $0.13 for the quarter ended June 30, 2021,
compared to net income per share of $0.02 for the same period in
2020, due primarily to unrealized losses on interest rate options
which provide a hedge against the re-pricing of future debt
maturities.
- Aimco Total Shareholder Return was 32%, year-to-date through
July 2021.
- Aimco invested $49 million in development and redevelopment
activities during the second quarter and leased more than 200 homes
at properties currently in lease-up.
- Aimco closed $251 million of construction financing and ended
the second quarter with $445 million of liquidity, including cash
and capacity on its revolving credit facility.
- Aimco entered into agreements totaling $53 million to acquire
property for development in Colorado Springs, Colorado, and Fort
Lauderdale, Florida.
- Aimco acquired, for $19 million, property adjacent to its
Hamilton on the Bay asset located in Miami, Florida, providing
additional development opportunity.
- Revenue from Aimco’s Operating Properties was up 2.3%
year-over-year, with occupancy up 140 basis points and average
revenue per apartment home up 0.8%.
- Net Operating Income from Aimco’s Operating Properties was up
4.0% from the first quarter of 2021 and up 0.7%
year-over-year.
Development and
Redevelopment
Aimco’s dedicated team sources and executes development and
redevelopment projects across Aimco’s 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.
In the second quarter, Aimco had eight active development and
redevelopment projects located in five different markets across the
United States. These projects remain on track, as evidenced by
project-level budget and schedule, lease-up metrics, and current
market valuations.
Construction Activity
During the three months ended June 30, 2021, Aimco invested
approximately $49 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 $27
million remaining to invest. Apartment homes are planned for
initial delivery in the third quarter with construction completion
scheduled for 2022 and stabilization targeted for 2024. Pre-leasing
has been strong, as of July 31, 2021, approximately one-third of
the units have been leased prior to delivery at rates ahead of
initial targets.
- Upton Place in Upper-Northwest Washington, D.C., is progressing
on schedule and on-budget, with approximately $213 million
remaining to complete construction. The project is scheduled for
completion in 2024 and stabilization is targeted for 2026.
- The Benson Hotel and Faculty Club on the Anschutz Medical and
Life Sciences Campus in Aurora, Colorado, is on budget and on
schedule with a remaining investment of approximately $53 million.
The project is scheduled for completion in early 2023 and
stabilization in late 2026.
- In Corte Madera, California, Aimco began development activity
on 16 luxury single family rental homes, each averaging
approximately 3,200 sf, plus eight accessory dwelling units. The
land for this development is being leased from AIR Communities and
is located adjacent to AIR Communities’ Preserve at Marin apartment
community. Aimco expects the total development cost to be $47
million with deliveries beginning in 2023 and stabilization
occurring in 2025.
- In the Edgewater neighborhood of Miami, Florida, Aimco began
the major redevelopment of the existing apartment building at
Hamilton on the Bay. The scope of Aimco’s investment will
completely renew the waterfront high-rise which benefits from
spacious apartment homes (averaging 1,411 sf) and an abundance of
outdoor and amenity space that was previously underutilized. Aimco
expects the redevelopment investment at Hamilton on the Bay will be
$92 million with apartment homes coming back online in 2022 and
stabilization targeted for 2024.
Lease-up Progress
During the three months ended June 30, 2021, Aimco held three
properties where newly constructed, or fully renovated, homes had
been delivered but stabilization had not yet been reached.
- At 707 Leahy in Redwood City, California, all apartment homes
had been delivered and construction was complete as of 4Q 2020. As
of July 31, 2021, the 110-unit property was 98% leased.
- At The Fremont on the Anschutz Medical Campus in Aurora,
Colorado, all apartment homes had been delivered and construction
was complete as of 4Q 2020. As of July 31, 2021, the 253-unit
property was 74% leased.
- At Prism, located in Cambridge, Massachusetts, all apartment
homes had been delivered and construction was complete as of 1Q
2021. As of July 31, 2021, the 136-unit property was 82%
leased.
Asset Management
Operating Properties
Aimco owns a geographically diversified portfolio of operating
properties that produces stable cash flow and serves to balance the
risk and highly variable cashflows associated with its portfolio of
development and redevelopments and value-add investments.
Aimco’s Operating Portfolio produced solid results for the
quarter ended June 30, 2021, showing continued improvement as our
business recovers from the pandemic related impacts of 2020.
Second Quarter
Year-to-Date
Year-over-Year
Sequential
Year-over-Year
($ in millions)
2021
2020
Variance
1Q 2021
Variance
2021
2020
Variance
Average Daily Occupancy [1]
97.3%
95.9%
1.4
%
97.6%
(0.3
%)
97.4%
96.7%
0.9
%
Revenue, before utility reimbursements
$33.3
$32.6
2.3
%
$32.7
2.0
%
$66.0
$65.9
0.1
%
Expenses, net of utility reimbursements
[2]
11.0
10.4
5.5
%
11.2
(1.9
%)
22.1
20.9
5.9
%
Net operating income (NOI)
22.4
22.2
0.7
%
21.5
4.0
%
43.9
45.1
(2.6
%)
*Excluded from the table above is one,
40-unit apartment community that Aimco’s ownership includes a
partnership share.
[1] The intentional increase in lease
expirations during the late spring and summer months resulted in a
30-basis point decline in Average Daily Occupancy from the quarter
ended March 31, 2021.
[2] The year over year increase in
expenses, net of utility reimbursements is due primarily to higher
real estate taxes and insurance.
Aimco measures residential rent collection as the total amount
of payments received as a percentage of all residential amounts
owed. In the second quarter, Aimco collected 98.3% of all amounts
owed by residents and recognized 98.8% of contractual revenue,
reserving 120 basis points as bad debt.
1001 Brickell Bay Drive, a waterfront office building in Miami,
Florida owned as part of a larger assemblage, is currently 73.3%
occupied with the pace of tours and inquiries showing favorable
indications of future leasing. Through July 31, 2021, 99.8% of
second quarter rents due have been collected.
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 intends to undertake such
opportunistic value-add transactions when warranted by the prospect
of outsized risk-adjusted returns.
- During the second quarter Aimco acquired six properties
adjacent to its Hamilton on the Bay apartment community in Miami’s
Edgewater neighborhood, for $12 million. Subsequent to quarter end
Aimco acquired an additional two properties for $7 million. In
total this land assemblage allows for, as-of-right, the
construction of more than 700K square feet. As part of its initial
acquisition of Hamilton on the Bay, Aimco acquired waterfront land
that allows for the future development of more than 400K square
feet. Combined, Aimco can now construct more than 1.1M square feet
of new development in this rapidly growing submarket.
- Subsequent to quarter end, Aimco entered into a joint venture
with Kushner Companies to purchase three undeveloped land parcels
located in downtown Fort Lauderdale, Florida. The total contract
price for the land is $49 million ($25 million at Aimco’s 51%
share) and entitlements are in place for the development of
approximately three million square feet of multifamily homes and
commercial space. The land purchase is expected to close in January
2022.
- Subsequent to quarter end Aimco’s investment committee approved
a seven-acre land purchase in Colorado Springs, Colorado with a
contract price of $4 million that allows for the development of 119
apartment and townhomes that is targeted to close during the third
quarter.
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 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 maintaining ample liquidity. As of
June 30, 2021, Aimco had access to $445 million, including $286
million of cash on hand, $9 million of restricted cash, and the
capacity to borrow up to $150 million on our revolving credit
facility.
Aimco’s net leverage as of June 30, 2021 was as follows:
as of June 30, 2021
Proportionate, $ in thousands
Amount
Weighted Avg.
Maturity (Yrs.)*
Total non-recourse property debt
$
436,436
5.3
Total non-recourse construction loan
debt
119,747
2.9
Notes payable to AIR
534,127
2.6
Cash and restricted cash
(295,233
)
Net Leverage
$
795,077
In the second quarter, Aimco closed two construction loans.
- As previously announced, a $150 million 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.
- A $101 million construction loan for the redevelopment of
Hamilton on the Bay. 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 320 basis points. The floating interest rate
has a 3.45% floor.
Subsequent to quarter end, in July, Aimco closed a $13 million
supplemental, non-recourse property loan on a stabilized operating
property. Additionally, Aimco rate-locked a $40 million
non-recourse property loan. The terms of these loans are 10 years
at a 3.1% weighted average interest rate. Loan proceeds will be
used to fund Aimco investment activity.
Dividend
Aimco plans to reinvest earnings to facilitate growth and,
therefore, does not presently intend to pay a regular cash
dividend.
Strategic Overview
Aimco’s mission is to make
real estate investments, primarily focused on the multifamily
sector within the continental United States, 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’s value proposition
includes the benefits of an established multifamily investment
platform coupled with significant growth potential resulting from
the redeployment of Aimco equity to a deep and growing pipeline of
highly accretive investment opportunities.
- Platform: Aimco has successfully developed or
redeveloped multifamily assets worth in excess of $4.5 billion and
overseen real estate transactions totaling more than $7 billion
over the past decade.
- Growth: Aimco offers investors a high performing, high
return, vehicle with expected annualized returns on equity between
12-16% once target capital allocation is achieved.
- Pipeline: Aimco benefits from a deep and growing
investment pipeline with $1.0 billion of development and
redevelopment projects currently underway, over nine million square
feet of future opportunities under Aimco-control and more being
actively explored.
Aimco’s financial objectives
are to produce superior, project-level, risk-adjusted returns on
equity as measured by the investment period Internal Rate of Return
(IRR) and the Multiple on Invested Capital (MOIC).
Aimco is focused on providing superior total-return performance
to shareholders, primarily through capital appreciation driven by
accretive investment and active portfolio management over
multi-year periods. Aimco does not plan to pay a regular cash
dividend.
Aimco’s capital allocation
strategy has been designed to leverage the Aimco
investment platform and optimize risk adjusted returns for Aimco
shareholders.
Overall, Aimco targets a growth-oriented capital allocation,
primarily weighted toward direct investment in ‘Value Add’ and
‘Opportunistic’ multifamily real estate.
Aimco has policies in place that support its strategy and guide
its investment allocations, including to hold at all times a
sizeable portion of its net equity in a diversified portfolio of
‘Core’ and ‘Core-Plus’ assets.
From time to time, Aimco will allocate a defined portion of its
capital into Alternative Investments including passive debt and
equity investments (both direct and indirect). Aimco also plans to
utilize its established platform and existing relationships to
generate fees through service offerings.
Aimco seeks returns on invested equity commensurate with the
specific characteristics, risk profile and financing of each
individual investment. The table below presents the basis for Aimco
expected annualized returns on equity once Aimco’s capital
allocation targets are achieved over an expected transition
period.
Approximate Current
Allocation
Target Allocation*
Target Leverage
Avg. Annualized Project-Level
Return on Equity**
Value Add & Opportunistic Real
Estate
10
%
40% - 60%
65
%
~18%
Core & Core Plus Real Estate
55
%
30% - 35%
50
%
~ 9%
Alternative Investments
20
%
5% - 15%
0
%
~15%
Cash, Hedges, & Other Net Assets
15
%
5% - 10%
0
%
0%
Total Expected Annualized Returns on
Equity
12% - 16%
*Aimco expects to achieve targeted
reallocation of equity over the next three to five years. The
timing and ultimate level of such reallocation is subject to
general market conditions and investment specific factors.
**Individual project-level return on
equity is subject to specific investment risk profiles and market
dynamics, a range of outcomes is likely.
Value Add and Opportunistic Real
Estate
Current Investments: The Aimco Development and
Redevelopment portfolio currently includes $1.0 billion of projects
in construction and lease-up, located across five major US markets.
In addition, Aimco controls property with the potential for an
additional nine million square feet of development over time.
Targeted Opportunities: Aimco is actively advancing
planning efforts on pipeline projects under our control with the
potential for an additional five million square feet of development
and redevelopment. The Aimco portfolio contains additional assets
that have the capacity for approximately four million square feet
of development over time. In addition, Aimco has the opportunity to
add to its investment pipeline based on strategic relationships and
through sourcing by regional investment teams. Generally, Aimco
seeks Development and Redevelopment opportunities in locations
where barriers to entry are high, target customers can be clearly
defined and where 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.
Core and Core Plus Real
Estate
Current Investments: Aimco’s current portfolio includes
28 apartment communities located in ten major US markets and with
average rents in line with local market averages (generally defined
as B class). Aimco also owns one commercial office building that is
part of an assemblage with an adjacent apartment building.
Targeted Opportunities: The target composition of our
stabilized portfolio will continue to include primarily B
multifamily assets, spread across a nationally diversified
portfolio and with a bias toward long established residential
neighborhoods which are supply constrained and rank highly in
regard to schools, employment fundamentals and state and regional
governance. Core Plus opportunities offer the opportunity for
incremental capital investment while maintaining stabilized cash
flow to accelerate income growth and improve asset values.
Alternative Investments
Current Investments: Aimco’s current allocation to
Alternative Investments includes: its mezzanine loan to the
Parkmerced partnership which owns 3,165 apartment homes and
significant future development rights in San Francisco, California;
its passive equity investments in IQHQ, a privately-held life
sciences developer; and RET Ventures, an early-stage real estate
technology fund.
Targeted Opportunities: Aimco expects to allocate a
portion of its capital to passive debt and equity investments, both
directly and at the entity level. These prove attractive when
warranted by risk adjusted returns, when Aimco has special
knowledge or expertise relevant to the particular investment or
when the opportunity exists for positive asymmetric outcomes
through strategic partnerships or otherwise. In addition, from time
to time, Aimco will use its established platform and existing
relationships to generate fees through service offerings to third
party real estate investors, owners, and capital allocators.
Cash, Hedges, and Other Net
Assets
At all times Aimco will guard its liquidity by maintaining cash
and equivalents at no less than 5% of total equity.
From time to time Aimco will allocate capital to financial
assets designed to mitigate risks elsewhere in the Aimco
enterprise. Existing examples include Aimco’s option to acquire an
interest rate swap designed to protect against repricing risk on
maturing Aimco liabilities.
Upcoming Event
The Aimco team plans to welcome members of the investment
community to Miami, FL during the fall of 2021 where they will have
the opportunity to meet and hear from members of management and to
tour Aimco assets in order to experience the quality of the real
estate owned and being constructed.
More details to follow. For additional information please reach
out to:
Matt Foster 303-793-4661 investor@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, 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 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 high
performance, collaboration, and respect for all.
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 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
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
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
REVENUES:
Rental and other property revenues
$
40,418
$
37,165
$
80,222
$
75,474
OPERATING EXPENSES:
Property operating expenses
16,403
15,322
33,345
30,671
Depreciation and amortization
20,639
19,030
41,356
38,377
General and administrative expenses
[1]
7,383
1,625
13,694
3,387
Total operating expenses
44,425
35,977
88,395
72,435
Interest expense
(12,638
)
(5,809
)
(25,315
)
(11,460
)
Mezzanine investment income, net
7,551
6,936
15,018
13,683
Unrealized gains (losses) on interest rate
options [2]
(16,970
)
(1,080
)
8,377
(1,080
)
Other expenses, net
2,918
(154
)
3,281
(569
)
(Loss) income before income
taxes
(23,146
)
1,081
(6,812
)
3,613
Income tax benefit (expense)
2,760
2,032
7,860
4,055
Net (loss) income
(20,386
)
3,113
1,048
7,668
Net income attributable to redeemable
noncontrolling interests in consolidated real estate
partnership
(66
)
125
86
228
Net loss (income) attributable to
noncontrolling interests in consolidated real estate
partnership
(275
)
(10
)
(566
)
(5
)
Net loss (income) attributable to common
noncontrolling interests in Aimco Operating Partnership
1,037
(165
)
(44
)
(400
)
Net (loss) income attributable to Aimco
common stockholders
$
(19,690
)
$
3,063
$
524
$
7,491
Net (loss) income attributable to common
stockholders per share – basic
$
(0.13
)
$
0.02
$
—
$
0.05
Net (loss) income attributable to common
stockholders per share – diluted
$
(0.13
)
$
0.02
$
—
$
0.05
Weighted-average common shares outstanding
– basic
149,166
148,549
149,082
148,549
Weighted-average common shares outstanding
– diluted
149,166
148,569
149,442
148,569
[1] General and administrative expense in
the three and six months ended June 30, 2020 are represented as a
carve-out of Aimco predecessor expenses and are not representative
of Aimco’s anticipated expenses.
[2] Unrealized gains (losses) on interest
rate options are primarily the quarterly market-to-market
adjustment required to mark to fair value Aimco’s interest rate
options.
Consolidated
Balance Sheets
(in thousands) (unaudited)
June 30,
December 31,
2021
2020
Assets
Buildings and improvements
$
1,107,929
$
995,116
Land
518,954
505,153
Total real estate
1,626,883
1,500,269
Accumulated depreciation
(527,976
)
(495,010
)
Net real estate
1,098,907
1,005,259
Cash and cash equivalents
286,066
289,582
Restricted cash
9,167
9,153
Mezzanine investments
322,380
307,362
Right-of-use lease assets
443,460
98,280
Other assets, net
152,159
130,856
Total assets
$
2,312,139
$
1,840,492
Liabilities and Equity
Non-recourse property debt, net
$
427,881
$
447,967
Construction loans, net
114,309
—
Notes payable to AIR
534,127
534,127
Total indebtedness
1,076,317
982,094
Deferred tax liabilities
128,279
131,560
Lease liabilities
450,648
100,496
Accrued liabilities and other
91,496
62,988
Total liabilities
1,746,740
1,277,138
Redeemable noncontrolling interests in
consolidated real estate partnership
4,177
4,263
Equity:
Common Stock
1,496
1,490
Additional paid-in capital
517,540
515,127
Retained earnings (accumulated
deficit)
(16,315
)
(16,839
)
Total Aimco equity
502,721
499,778
Noncontrolling interests in consolidated
real estate partnerships
31,847
31,877
Common noncontrolling interests in Aimco
Operating Partnership
26,654
27,436
Total equity
561,222
559,091
Total liabilities and equity
$
2,312,139
$
1,840,492
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210813005430/en/
Matt Foster, Director, Capital Markets and Investor Relations
Investor Relations 303-793-4661, investor@aimco.com
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