Apartment Investment and Management Company (“Aimco”) (NYSE: AIV) announced today fourth quarter results for 2021.

Wes Powell, Aimco President and Chief Executive Officer, comments: “Aimco had a successful 2021 and 2022 is off to a good start. Consumer and investor demand for multifamily housing remains remarkably strong, and Aimco is well positioned given the performance of our current class of development projects, the composition of our stabilized apartment portfolio and our growing pipeline of high-quality investment opportunities. All the while, we remain focused on maintaining ample liquidity, pre-funding our construction activities and utilizing financial leverage prudently. I offer my thanks to our teammates across the country for their excellent work and dedication to our mission of adding value for Aimco shareholders.”

Lynn Stanfield, Aimco Chief Financial Officer, adds: “Aimco’s balance sheet remains strong and liquid as we add opportunities to our pipeline. In the fourth quarter, we closed on a $52 million preferred equity financing to aid in funding the development of Upton Place, improving Aimco’s expected return on invested capital and affording Aimco the opportunity to allocate capital to additional investments. Our portfolio of stabilized properties produced cash flow sufficient to cover core overhead costs and finished 2021 with fourth quarter revenue growth of 9.7% and Net Operating Income (“NOI”) growth of 16.8%. In addition, we recently repurchased shares at a substantial discount to Aimco Net Asset Value (“NAV”).”

Financial Results and Recent Highlights

  • Net loss attributable to common stockholders per share, on a dilutive basis, was $(0.01) for the quarter ended December 31, 2021, compared to net loss per share of $(0.10) for the same period in 2020, due primarily to the 2020 impairments related to certain corporate assets received in conjunction with the separation from Apartment Income REIT Corporation (“AIR Communities”).
  • Aimco Total Shareholder Return was 46.2% for the year of 2021.
  • Strong demand for Aimco’s Development and Redevelopment projects resulted in the execution of approximately 140 net new leases during the fourth quarter, with the majority secured for units that were still under construction. The new leases were signed at rental rates ahead of target, and contributed to the $4.5 million in revenue from these properties during the period, up more than 40% from the third quarter.
  • In the fourth quarter 2021, Aimco closed a $52 million preferred equity financing to fund the completion of construction activities at Upton Place and allow Aimco to allocate capital to additional value-add investments.
  • Aimco ended the fourth quarter with $395 million of liquidity, including cash and capacity on its revolving credit facility.
  • Fourth Quarter 2021 Revenue and NOI from Aimco’s Stabilized Operating Properties was up 9.7% and 16.8%, respectively, year-over-year, with occupancy of 98.7%, up 180 basis points year-over-year.
  • Full Year 2021 Revenue and NOI from Aimco’s Stabilized Operating Properties was up 4.1% and 4.1%, respectively, year-over-year, with occupancy of 97.9%, up 160 basis points year-over-year.
  • In early 2022, Aimco repurchased 202,400 shares of Aimco Class A Common Stock at a weighted average price of $6.49.

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 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.

In the fourth 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. By the end of the fourth quarter 2021, Aimco had achieved stabilized occupancy at two of the four initial leased properties from AIR Communities. Across its eight active projects, Aimco invested approximately $215 million during 2021, and expects to invest another $330 million to complete these projects.

  • At the North Tower of Flamingo Point in Miami Beach, Florida, at year end, Aimco had completed construction on more than half of the units with the remaining units on track to be delivered in early March, on schedule. Demand for these highly tailored apartment homes has been strong. The property was 95% pre-leased as of February 25, 2022, and we now forecast to reach stabilized occupancy six months ahead of plan and at rental rates approximately 25% ahead of underwriting.
  • Prism in Cambridge, Massachusetts, and 707 Leahy in Redwood City, California, reached stabilized occupancy by year end 2021, and The Fremont on the Anschutz Medical Campus in Aurora, Colorado is expected to reach stabilized occupancy in the third quarter of 2022. Aimco plans to monetize its investment in accordance with the terms of the lease agreements with AIR Communities.
  • Construction continues on schedule and on budget at The Benson Hotel and Faculty Club in Aurora, Colorado, The Hamilton in Miami, Florida and Oak Shore in Corte Madera, California.

Alternative Investments

Aimco uses alternative investment strategies when it has special knowledge or expertise relevant to the venture and when opportunity exists for positive asymmetric outcomes. Aimco’s current investments include a mezzanine loan with an option to participate in future development and three passive equity investments.

  • In 2021, operations at Parkmerced were stressed due to reduced in-person learning at the neighboring San Francisco State University and lower demand as the region navigated the pandemic and related restrictions. Through this, the borrower on Aimco’s $338 million mezzanine loan has performed, including by advancing capital to service its first mortgage debt, and has reported that it expects to do the same in 2022.
  • In the fourth quarter, Aimco funded a capital call of $11.2 million associated with the previously announced $50 million total passive equity commitment to the life sciences developer, IQHQ, bringing our total investment to $35.8 million. In early 2022, Aimco funded the remaining balance on the commitment to IQHQ.

Investment Activity

Aimco expects to have a broad set of investment opportunities, including, but not limited to, development, redevelopment, portfolio acquisitions, programmatic joint ventures, debt placements, operational turnarounds, and re-entitlements.

  • Subsequent to quarter end, in January, Aimco’s joint venture with The Kushner Companies closed on the previously announced acquisition of three undeveloped land parcels located in downtown Fort Lauderdale, Florida. The total purchase price for the land is $49 million ($25 million at Aimco’s 51% share) and current zoning allows for the development of approximately three million square feet of multifamily homes and commercial space.
  • Also in January 2022, Aimco purchased a strategic land parcel for $1.7 million adding to its land assemblage in Miami’s Edgewater neighborhood where it is redeveloping its Hamilton apartment community and has the ability to construct more than 1.1 million square feet of new development in this rapidly growing submarket.
  • In February 2022, Aimco entered into a contract to acquire, for $100 million, a 9-acre development site in Fort Lauderdale. The site is located in the rapidly growing Flagler Village neighborhood and allows for approximately three million square feet of phased, mixed-use, development.

Operating Property Results

Aimco’s operating properties produced solid results for the quarter ended December 31, 2021, showing continued improvement as our business recovers from the pandemic related impacts of 2020.

 

Fourth Quarter

 

 

FULL YEAR

 

Stabilized Operating Properties

Year-over-Year

 

 

Sequential

 

 

Year-over-Year

 

($ in millions)

2021

 

 

2020

 

 

Variance

 

 

3Q 2021

 

 

Variance

 

 

2021

 

 

2020

 

 

Variance

 

Average Daily Occupancy

 

98.7

%

 

 

96.9

%

 

 

1.8

%

 

 

97.8

%

 

 

0.9

%

 

 

97.9

%

 

 

96.3

%

 

 

1.6

%

Revenue, before utility reimbursements

$

35.6

 

 

$

32.5

 

 

 

9.7

%

 

$

34.6

 

 

 

3.0

%

 

$

136.2

 

 

$

130.8

 

 

 

4.1

%

Expenses, net of utility reimbursements

 

10.1

 

 

 

10.6

 

 

 

(5.0

%)

 

 

11.2

 

 

 

(10.4

%)

 

 

43.4

 

 

 

41.7

 

 

 

4.2

%

Net operating income (NOI)

 

25.5

 

 

 

21.9

 

 

 

16.8

%

 

 

23.3

 

 

 

9.5

%

 

 

92.8

 

 

 

89.1

 

 

 

4.1

%

*Excluded from the table above is one, 40-unit apartment community that Aimco’s ownership includes a partnership share.

  • Revenue in the fourth quarter was $35.6 million, up 9.7% year-over-year, due primarily to a $115 increase in average rent per unit and a 180-basis point increase in Average Daily Occupancy, ending the year at 98.7%.
  • Expense in the fourth quarter was $10.1 million, down 5.0% year-over-year, due primarily to non-recurring adjustments in real estate taxes and insurance.
  • 1001 Brickell Bay Drive, a waterfront office building in Miami, Florida, is owned as part of a larger assemblage containing substantial excess development rights. At the end of the fourth quarter, the building was 80% occupied, up 700 basis points from the end of the third quarter.

Balance Sheet and Financing Activity

Aimco is highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of December 31, 2021, Aimco had access to $395 million, including $233 million of cash on hand, $11 million of restricted cash, and the capacity to borrow up to $150 million on our revolving credit facility.

Aimco’s net leverage as of December 31, 2021 was as follows:

 

 

as of December 31, 2021

 

Proportionate, $ in thousands

 

Amount

 

 

Weighted Avg.

Maturity (Yrs.)

 

Total non-recourse property debt

 

$

491,699

 

 

 

5.4

 

Total non-recourse construction loan debt

 

 

167,678

 

 

 

2.4

 

Notes payable to AIR

 

 

534,127

 

 

 

2.1

 

Cash and restricted cash

 

 

(244,582

)

 

 

 

 

Net Leverage

 

$

948,922

 

 

 

 

 

  • In December, Aimco closed a preferred equity financing arrangement for $52 million, accruing at a 9.7% interest rate, related to the completion of construction activities at Upton Place.
  • Subsequent to quarter end, Aimco’s joint venture in Fort Lauderdale, Florida secured a $40 million loan ($20.4 million Aimco share) to facilitate the previously announced purchase of three land parcels for $49 million ($25 million Aimco share).

Equity Capital Activities

Subsequent to quarter end, in January, Aimco repurchased 202,400 shares of Aimco Class A Common Stock at a weighted average price of $6.49, at a significant discount to our internally estimated NAV and at an attractive expected risk-adjusted return compared to alternate uses of Aimco capital.

Dividend

Aimco plans to reinvest earnings to facilitate growth and, therefore, does not presently intend to pay a regular quarterly cash dividend.

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 its intent, belief, or expectations, including, but not limited to, the statements in this document regarding our expected investment opportunities and our 2022 pipeline investments and projects. 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),” “forecast(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 preliminary plans and goals may not be completed 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 as a result of the COVID-19 pandemic. Although we believe that the assumptions underlying the forward-looking statements, which are based on management’s expectations and estimates, 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 as of this date, and Aimco assumes no (and disclaims any) obligation to revise or update them to reflect future events or circumstances.

2022 Plans and Goals:

Aimco’s 2022 plan is an extension of its work in 2021 and supportive of its long-term growth strategy. Aimco intends to continue to focus on actively managing its development, redevelopment, and lease-up projects; growing its pipeline of accretive real estate investments; and maintaining a sizeable allocation to stabilized operating properties as needed to balance Aimco’s risk profile and provide stable cash flow.

Opportunistic and Value Add Investments

In 2022, Aimco plans to:

  • Complete the construction of Flamingo Point’s North Tower in Miami Beach, Florida and reach stabilized occupancy six months ahead of plan. The building is 95% leased as of February 25, 2022, with average monthly rental rates more than $900 ahead of target;
  • Reach stabilized occupancy at The Fremont on the Anschutz Medical Campus in Aurora, Colorado (85% leased as of February 25, 2022) and monetize its investments in 707 Leahy in Redwood City, California and Prism in Cambridge, Massachusetts under the terms of the Master Leasing Agreement with AIR Communities;
  • Begin the phased delivery of fully renovated waterfront apartment homes and commence the lease-up of Hamilton on the Bay in Miami, Florida. Average rental rates in the submarket have increased more than 20% since Aimco acquired the property in Q3 of 2020; and
  • Progress the development of Upton Place in Washington, DC, The Benson Hotel and Faculty Club on the Anschutz Medical Campus in Colorado, and Oak Shore in Corte Madera, California, which are currently on time and on budget.

Aimco will also focus on expanding the opportunities in its pipeline by advancing entitlement and planning for previously identified projects located in Fort Lauderdale, Florida, Miami, Florida, Colorado Springs, Colorado, and Aurora, Colorado that have the potential to include more than 1,700 apartment homes at full build-out.

Additionally, Aimco plans to grow its investment pipeline by sourcing value-add opportunities from within its existing portfolio, through strategic partnerships, and local contacts. Aimco teams are in active discussions and negotiations on prospective opportunities across the country, including:

  • A 9-acre development site (now under contract) located in a high-growth South Florida submarket that could accommodate nearly 1,500 units (or 3 million GSF) at full build out, for a price of approximately $100 million;
  • Joint venture development opportunities in South Florida, San Diego, and Washington, DC submarkets that together could accommodate as many as 2,700 units (or 3 million GSF) at full build out;
  • The lease of a property located in Manhattan’s Upper East Side neighborhood from AIR Communities to develop 41 luxury apartment homes; and
  • The acquisition of just over two acres of land contiguous to an existing Aimco property located in Chicago’s western suburbs.

Stabilized Operating Portfolio

Aimco forecasts to build upon solid 2021 operating results and maintain sufficient cash flow to cover all core overhead.

Financing Activity

In 2022, Aimco plans to remain pre-funded for all investment commitments by utilizing its broad range of available financing options and eliminating the need to issue additional public market equity. Aimco has no debt maturing in 2022 and will start preparations for 2023 and 2024 debt maturities.

Team and Community

Aimco will continue to foster a healthy environment of respect and innovation, empowering Aimco human capital to create value and maintain its commitment to the communities in which we work, live, and invest by building apartment communities with conservation and sustainability in mind and giving back by way of Aimco Cares, both in monetary support and through volunteerism.

Shareholder Value

At year end 2022, Aimco estimates its NAV will be approximately $12 per share (assuming stable cap rates and before ascribing any value creation from its current portfolio of opportunistic and value add investments). Aimco is on track to reach its previously announced NAV target of $15-$16 per share by year end 2025.

*2022 Plans and Goals as previously disclosed and updated with leasing data through February 25, 2022.

Consolidated Statements of Operations

(in thousands, except per share data) (unaudited)

 

 

 

Three Months Ended

December 31,

 

 

Twelve Months Ended

December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

 

$

46,722

 

 

$

38,649

 

 

$

169,836

 

 

$

151,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

16,113

 

 

 

15,692

 

 

 

67,613

 

 

 

61,514

 

Depreciation and amortization

 

 

21,648

 

 

 

20,292

 

 

 

84,712

 

 

 

77,965

 

Impairment

 

 

-

 

 

 

15,860

 

 

 

-

 

 

 

15,860

 

General and administrative expenses [1] [2]

 

 

10,588

 

 

 

5,530

 

 

 

33,151

 

 

 

10,469

 

Total operating expenses

 

 

48,349

 

 

 

57,374

 

 

 

185,476

 

 

 

165,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(14,908

)

 

 

(8,949

)

 

 

(52,902

)

 

 

(27,512

)

Mezzanine investment income, net

 

 

7,781

 

 

 

7,023

 

 

 

30,436

 

 

 

27,576

 

Unrealized gains (losses) on interest rate options [3]

 

 

(4,099

)

 

 

3,136

 

 

 

6,509

 

 

 

1,058

 

Other expenses, net [4]

 

 

7,982

 

 

 

(1,341

)

 

 

13,047

 

 

 

(2,685

)

(Loss) income before income taxes

 

 

(4,871

)

 

 

(18,856

)

 

 

(18,550

)

 

 

(15,920

)

Income tax benefit (expense)

 

 

3,689

 

 

 

3,421

 

 

 

13,570

 

 

 

10,149

 

Net (loss) income

 

 

(1,182

)

 

 

(15,435

)

 

 

(4,980

)

 

 

(5,771

)

Net income attributable to redeemable noncontrolling interests in consolidated real estate partnership

 

 

(50

)

 

 

108

 

 

 

(91

)

 

 

457

 

Net loss (income) attributable to noncontrolling interests in consolidated real estate partnership

 

 

(274

)

 

 

8

 

 

 

(1,136

)

 

 

4

 

Net loss (income) attributable to common noncontrolling interests in Aimco Operating Partnership

 

 

88

 

 

 

776

 

 

 

297

 

 

 

269

 

Net (loss) income attributable to Aimco common stockholders

 

$

(1,418

)

 

$

(14,543

)

 

$

(5,910

)

 

$

(5,041

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to common stockholders per share – basic

 

$

(0.01

)

 

$

(0.10

)

 

$

(0.04

)

 

$

(0.03

)

Net (loss) income attributable to common stockholders per share – diluted

 

$

(0.01

)

 

$

(0.10

)

 

$

(0.04

)

 

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding – basic

 

 

149,480

 

 

 

148,549

 

 

 

149,480

 

 

 

148,549

 

Weighted-average common shares outstanding – diluted

 

 

149,480

 

 

 

148,569

 

 

 

149,480

 

 

 

148,569

 

 

[1] General and administrative expense includes $1.6 million and $4.6 million of expenses reimbursed to AIR Communities, per agreement upon separation, for consulting services with respect to strategic growth, direction, and advice, in the three and twelve months ended December 31, 2021, respectively.

[2] General and administrative expense in the three and twelve months ended December 31, 2020 are represented as a carve-out of Aimco predecessor expenses and are not representative of Aimco’s anticipated expenses.

[3] 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.

[4] In the three months and twelve months ended December 31, 2021, Aimco earned $5.3 million and $8.0 million of fee income related to specific acquisition and redevelopment services, respectively. The remaining change from the respective prior periods is due primarily to valuation changes for our investments in privately held entities that develop technology related to the real estate industry.

Consolidated Balance Sheets

(in thousands) (unaudited)

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Buildings and improvements

 

$

1,257,214

 

 

$

995,116

 

Land

 

 

534,285

 

 

 

505,153

 

Total real estate

 

 

1,791,499

 

 

 

1,500,269

 

Accumulated depreciation

 

 

(561,115

)

 

 

(495,010

)

Net real estate

 

 

1,230,384

 

 

 

1,005,259

 

Cash and cash equivalents

 

 

233,374

 

 

 

289,582

 

Restricted cash

 

 

11,208

 

 

 

9,153

 

Mezzanine investments

 

 

337,797

 

 

 

307,362

 

Right-of-use lease assets

 

 

429,768

 

 

 

92,709

 

Other assets, net

 

 

191,570

 

 

 

136,427

 

Total assets

 

$

2,434,101

 

 

$

1,840,492

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Non-recourse property debt, net

 

$

483,137

 

 

$

447,967

 

Construction loans, net

 

 

163,570

 

 

 

 

Notes payable to AIR

 

 

534,127

 

 

 

534,127

 

Total indebtedness

 

 

1,180,834

 

 

 

982,094

 

Deferred tax liabilities

 

 

124,747

 

 

 

131,560

 

Lease liabilities

 

 

435,093

 

 

 

86,781

 

Accrued liabilities and other

 

 

97,400

 

 

 

76,703

 

Total liabilities

 

 

1,838,074

 

 

 

1,277,138

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests in consolidated real estate partnership

 

 

33,794

 

 

 

4,263

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Common Stock

 

 

1,498

 

 

 

1,490

 

Additional paid-in capital

 

 

521,842

 

 

 

515,127

 

Retained earnings (accumulated deficit)

 

 

(22,775

)

 

 

(16,839

)

Total Aimco equity

 

 

500,565

 

 

 

499,778

 

Noncontrolling interests in consolidated real estate partnerships

 

 

35,213

 

 

 

31,877

 

Common noncontrolling interests in Aimco Operating Partnership

 

 

26,455

 

 

 

27,436

 

Total equity

 

 

562,233

 

 

 

559,091

 

Total liabilities and equity

 

$

2,434,101

 

 

$

1,840,492

 

 

Matt Foster, Director, Capital Markets and Investor Relations Investor Relations 303-793-4661, investor@aimco.com

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