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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220301006097/en/
Matt Foster, Director, Capital Markets and Investor Relations
Investor Relations 303-793-4661, investor@aimco.com
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