Apartment Investment and Management Company (“Aimco”) (NYSE:
AIV) announced today fourth quarter and full year results for 2022
and provided highlights on recent activities and an outlook for
2023.
Dear fellow and prospective stockholders,
Apartment Investment and Management Company (“Aimco”) recently
completed its second year following the spin-off of Apartment
Income REIT, Corp ("AIR Communities"). Over that period we have
taken decisive action to improve, simplify and organize our
business as needed to maximize returns, minimize risk and position
Aimco for continued growth.
Aimco’s mission is to make real estate investments, primarily
focused on the multifamily sector within targeted US markets, where
outcomes are enhanced through our human capital and substantial
value is created for investors, teammates, and the communities in
which we operate. Our capital allocation is balanced between a
geographically diversified portfolio of stabilized, cash flowing,
apartment properties and the investment in (and management of)
dynamic real estate development projects located in South Florida,
the Washington D.C. Metro Area and Colorado’s Front Range. We
benefit from a senior management team with an average of more than
20 years of experience in the apartment investment, finance and
development industry; including regional leaders who are experts in
each of their local markets.
Today, I am excited to report on the team’s many accomplishments
during 2022 and to highlight our plans for the year ahead.
During 2022, Aimco made accretive investments in our development
projects and pipeline by completing construction on, and leasing
up, $669 million of apartment properties. We also secured
high-quality future development opportunities in our target
markets, adding the potential to construct more than 3,600
apartment homes and approximately 450K square feet of commercial
use.
In addition to investing in future growth opportunities we
acquired $25 million of Aimco shares, at an average cost of $7.21
per share.
We took advantage of strong valuations early in the year and
monetized a sizeable portion of our assets, exiting investments
valued at nearly $1 billion, including three stabilized apartment
communities and four recently completed development projects at a
weighted average NOI cap rate of 3.9%.
Our portfolio of stabilized apartment communities delivered
strong growth as evidenced by average monthly revenue up by more
than $200 per home, NOI margins expanding by 220 basis points, and
NOI increasing by 14.2% to over $94 million.
We proactively fortified our balance sheet by refinancing or
retiring more than $1 billion of near-term liabilities, eliminated
substantially all of our floating rate exposure, and nearly doubled
our average term to maturity. In addition, we entered into a
strategic partnership with Alaska Permanent Fund Corporation to
provide Limited Partner equity capital for up to $1 billion of
future Aimco-led multifamily development projects.
Finally, we committed to important changes to our corporate
governance provisions that will bring us to a best-in-class
standard within the REIT industry and we achieved an all-time Aimco
record employee engagement score of 4.5 out of 5 stars.
2022 proved to be a good year for Aimco but our focus is on the
road ahead.
Notwithstanding a higher interest rate environment and diverging
views regarding the likelihood, and relative severity, of an
economic downturn, the rental housing sector has proven quite
enduring over time and a lingering supply and demand imbalance
provides additional support to the Aimco strategy.
During 2023, Aimco will continue our in-progress development
projects, invest in the advancement of planning and entitlement
efforts related to certain of our pipeline assets, asset manage our
portfolio of stabilized apartment properties, look to reduce our
exposure to alternative assets and maintain our strong balance
sheet.
Our active development and redevelopment projects have a total
planned investment value of $815 million (requiring approximately
$45 million of additional Aimco capital to complete) and are
currently in various stages of construction and lease-up. When
stabilized they are forecasted to produce approximately $55 million
of NOI, ahead of our original expectations due to market level rent
growth, resulting in an expected NOI yield on cost of 6.8% for this
portfolio of investments.
Our future development pipeline totals approximately 14 million
square feet and has the potential to deliver approximately 6,500
new apartment homes and 1.7 million square feet of commercial space
over the next ten years or so. These opportunities are high quality
and well located with approximately 80% of our pipeline focused in
Southeast Florida, 17% in Colorado’s Front Range and 3% in the
Washington D.C. Metro Area. Although we do not anticipate any new
construction starts during 2023, we are advancing planning and
entitlement efforts prudently such that incremental investment adds
value independent of a decision to commence construction. During
the year we plan to invest between $20 and $25 million to advance
certain pipeline projects.
Beyond 2023, Aimco targets that between $1 billion and $2
billion of active development and redevelopment projects will be
underway at any point in time, with the range driven by market
conditions, the specific timing of project starts and completions
and the potential to fully monetize certain development
opportunities prior to vertical construction. Aimco equity invested
in these projects is expected to range between 10% and 15% of the
total development costs.
With regard to the timing and funding of Aimco’s future
development starts it is important to note that: 1) we will be
guided by the projected risk adjusted returns on Aimco’s equity as
compared to alternative uses of capital, 2) Aimco’s net cost to
carry our current development pipeline is approximately $2 million
annually due to the positive cashflow from the current improvements
on our Brickell assemblage and the use of low cost options, and 3)
we currently have embedded equity within our development pipeline
that exceeds what is required to fully build-out the pipeline given
our plan to finance projects through construction debt and joint
venture equity. To provide more clarity on the depth, timing, and
value potential within our development pipeline we have included a
new schedule in this earnings release.
Our portfolio of over 5,500 stabilized apartment homes is
diversified by geography and generates average monthly revenue per
home of $2,170 (generally in line with local market averages) and
our new customers in 2022 have median annual household incomes of
more than $110,000. Our stabilized portfolio is expected to produce
NOI in 2023 that is 5% to 7% higher than the prior year.
Turning to acquisitions and dispositions, given the
forementioned depth and quality of our development pipeline, we are
not planning any new acquisitions in 2023. Similarly, we do not
forecast any real estate dispositions during the year but continue
to advance plans to monetize our position in Parkmerced given
various accretive uses of that capital, including share
repurchases, reducing leverage, and investing in the pipeline.
Our balance sheet is solid. Aimco’s property debt is primarily
fixed rate loans on stabilized properties with an average term to
maturity of 8.2 years and refunding requirements of less than $5
million in 2023. As we look to the most accretive risk-adjusted use
of capital we may opportunistically pay down certain higher cost
debt when prudent.
The Aimco team remains our most important asset and I am
thankful for the team's good results, camaraderie, and commitment
to excellence. As we continue to simplify our business and optimize
results, we are narrowing our focus and plan to close our
California office during the year. We will retain a full-time
presence in our target investment markets of Southeast Florida, the
Washington D.C. Metro area, and Colorado's Front Range.
As always, the future is far from certain. However, Aimco’s
strategic focus on rental housing and the specific actions taken
over the past two years have positioned us to withstand market
turbulence and given us the ability to prudently allocate capital
to new opportunities should they be presented.
Above all else, the Aimco management team and Board remain
steadfast in our commitment to actively explore all paths that
would allow stockholders to realize the full value of their
investment.
I thank you for your interest in Aimco!
Wes Powell Chief Executive Officer
Financial Results and Recent
Highlights
- Net income attributable to common stockholders per share, on a
fully dilutive basis, was $(1.34) for the quarter ended December
31, 2022, compared to net income per share of $(0.01) for the same
period in 2021, due primarily to a non-cash impairment charge
related to the Parkmerced mezzanine investment.
- As of February 14, 2023, total shareholder return ("TSR") since
the December 15, 2020 separation from AIR Communities was 40.5% and
year-to-date was 7.7%.
- In the fourth quarter, Aimco and its joint venture partner
began construction on the 220-apartment home development at
Strathmore Square in Bethesda, Maryland.
- In 2022 and through February 14, 2023, Aimco has repurchased
more than 4.2 million shares of its common stock at a weighted
average price of approximately $7.24 per share.
- Fourth Quarter 2022 Revenue and NOI from Aimco’s Stabilized
Operating Properties were up 9.5% and 10.0%, respectively, year
over year, with average revenue per apartment home of $2,170, up
$215 year over year.
Value Add, Opportunistic &
Alternative Investments:
Development and Redevelopment
Aimco generally seeks development and redevelopment
opportunities where barriers to entry are high, target customers
can be clearly defined, and Aimco has a comparative advantage over
others in the market. Aimco’s Value Add and Opportunistic
investments may also target portfolio acquisitions, operational
turnarounds, and re-entitlements.
As of December 31, 2022, Aimco had five active development and
redevelopment projects located in four U.S. markets, in varying
phases of construction and lease-up. These projects remain on
track, as measured by construction budget and lease-up metrics.
During the fourth quarter, Aimco invested $72.1 million in
development and redevelopment activities. Updates include:
- In Miami, Florida, construction is nearing completion and fully
renovated apartment homes are being leased at The Hamilton. Demand
for rental housing in Southeast Florida remains robust, especially
for unique luxury properties such as The Hamilton. The building
welcomed its first residents in October 2022 and at year end the
building was 50% occupied at rental rates significantly ahead of
our underwritten projections. As of February 15, 2023, 75% of the
building’s 276 units were leased or pre-leased.
- In Bethesda, Maryland, construction began on the first phase of
Strathmore Square which will contain 220 highly tailored apartment
homes when complete in 2025. This infill project is located
adjacent to the Grosvenor-Strathmore Metro station and the
Strathmore Performing Arts Campus, and is 1.5 miles from The
National Institutes of Health main campus. Funding for the $164.0
million project is fully secured with Aimco’s equity commitment
projected to be $31.5 million.
- In upper northwest Washington D.C., construction at Upton Place
continues on schedule and on budget. The neighboring apartment
community, City Ridge, is leasing up well and at rents that provide
a positive indicator for Upton Place. Aimco plans to start
pre-leasing Upton’s 689 apartment homes during the summer of 2023
in anticipation of initial delivery in the fourth quarter of 2023.
To date, 80% of the project's 105K square feet of retail space has
been leased.
- In Corte Madera, California, construction is ongoing at Oak
Shore where 16 luxury single family rental homes and eight
accessory dwelling units are being developed. The Marin County
submarket is significantly supply constrained with for-sale starter
homes generally priced near $2 million. Aimco expects to deliver
the first homes in the third quarter with pre-leasing efforts
having begun in the first quarter of 2023.
- In Aurora, Colorado, The Benson Hotel and Faculty Club, a
106-key boutique hotel and event center, is slated for completion
at the end of March 2023. As the only ‘on campus’ accommodations,
The Benson will serve the surrounding Anschutz Medical Campus which
includes The University of Colorado Medical School, UC Health
Hospital, Children’s Hospital Colorado, The Rocky Mountain VA
Medical Center and the burgeoning Fitzsimons Innovation
Community.
Alternative Investments
Aimco’s current alternative investments are primarily those
investments originated prior to the separation from AIR Communities
and include a mezzanine loan secured by a stabilized multifamily
property with an option to participate in future multifamily
development, as well as three passive equity investments. Over
time, we plan to significantly reduce capital allocated to these
investments. Updates include:
- The borrower on Aimco’s mezzanine loan, which is secured by the
Parkmerced stabilized multifamily property plus phases two through
nine of the site's future development opportunity, remains current
on its first mortgage obligations. In the fourth quarter, given the
decline in the underlying collateral value, Aimco recorded a
non-cash impairment charge to reduce the value of the mezzanine
investment to $158.6 million.
- Aimco recently entered into an agreement to sell the mezzanine
loan for $167.5 million. Closing on the sale of the loan is subject
to a reasonable due diligence period and certain approvals and, as
such, is not guaranteed. If the sale is closed, Aimco expects to
monetize the $1.5 billion notional swaption purchased in
conjunction with the mezzanine loan investment to protect against
future interest rate increases. These transactions could produce
approximately $220 million of gross proceeds, representing a 75%
recovery of the initial investments, and achieves Aimco's target to
reduce capital allocated to alternative investments. Aimco expects
to use proceeds on other accretive uses of capital including share
repurchases, reducing leverage, and investing in its pipeline.
Investment Activity
Aimco is focused on growing the business, and delivering strong
investment returns, through development and redevelopment
activities, funded primarily through third-party capital. Updates
include:
- In December 2022, Aimco closed on the $1.8 million purchase of
land pursuant to one of its controlled options for multifamily
development on the Anschutz Medical Campus in Aurora, Colorado.
Aimco has begun planning for the next multifamily development on
the site which is slated to include approximately 285 apartment
homes.
- In February 2023, Aimco entered into an option agreement with
the Fitzsimons Redevelopment Authority. If exercised, the option
allows for the long-term lease of 4.8 acres of land located on the
Anschutz Medical Campus in Aurora, Colorado that can accommodate
approximately 850K square feet of commercial life science
development built out over multiple phases. The option's annual
cost is approximately $0.5 million.
- In December, Aimco's joint venture in Fort Lauderdale, Florida
monetized a portion of its investment by closing on the sale of one
of three land parcels it acquired in the first quarter of 2022 for
development along Broward Avenue. The 0.8-acre land parcel was sold
for $18.3 million, approximately double the original purchase price
per acre.
Operating Property
Results
Aimco owns a diversified portfolio of operating apartment
communities located in eight major U.S. markets with average rents
in line with local market averages.
Aimco’s operating properties produced solid results for the
quarter ended December 31, 2022.
Fourth Quarter
FULL YEAR
Stabilized Operating Properties
Year-over-Year
Sequential
Year-over-Year
($ in millions)
2022
2021
Variance
3Q 2022
Variance
2022
2021
Variance
Average Daily Occupancy
97.4%
98.8%
(1.4)%
96.0%
1.4%
97.4%
98.0%
(0.6%)
Revenue, before utility reimbursements
$35.2
$32.1
9.5%
$34.7
1.4%
$135.2
$122.2
10.6%
Expenses, net of utility
reimbursements
9.9
9.2
8.3%
10.2
(2.9%)
40.8
39.6
3.0%
Net operating income (NOI)
25.2
23.0
10.0%
24.5
3.2%
94.4
82.7
14.2%
*Excluded from the table above is one,
40-unit apartment community that Aimco’s ownership includes a
partnership share.
- Revenue in the fourth quarter 2022 was $35.2 million, up 9.5%
year-over-year, resulting from a $215 increase in average monthly
revenue per apartment home to $2,170, offset by a 140-basis point
decrease in Average Daily Occupancy to 97.4%.
- New lease rents increased 9.5% and Aimco retained 56.7% of
residents whose leases were expiring during the quarter at rents
22.5% higher, on average, than the previous lease.
- The median annual household income of new residents was more
than $120,000 in the fourth quarter 2022, representing a rent to
income ratio of 19.2%.
- Expenses in the fourth quarter 2022 were up 8.3% due to higher
real estate taxes, utilities, and insurance. Operating expenses,
before real estate taxes, utilities, and insurance were down
0.5%.
- Net operating income in the fourth quarter 2022 was $25.2
million, up 10.0% year-over-year.
Other Real Estate Operations
Aimco also owns one commercial office building that is part of
an assemblage with an adjacent apartment building.
Strong leasing momentum continued at 1001 Brickell Bay Drive, a
waterfront office building in Miami, Florida, owned as part of a
larger assemblage with substantial development potential. In 2022,
Aimco executed leases on over 96,000 square feet of office space,
at rates per square foot more than 10% higher than leases executed
in the same period of 2021. At the end of 2022, the building was
86% occupied, up from 80% at the same time last year. Leases within
the building have been executed on terms of less than four years or
contain redevelopment provisions as needed to maximize the value of
the underlying development rights.
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,
2022, Aimco had access to $379.8 million, including $206.5 million
of cash on hand, $23.3 million of restricted cash, and the capacity
to borrow up to $150.0 million on its revolving credit
facility.
Aimco’s net leverage as of December 31, 2022, was as
follows:
as of December 31,
2022
Proportionate, $ in thousands
Amount
Weighted Avg. Maturity
(Yrs.)
Total non-recourse fixed rate debt
$
780,355
8.2
Total non-recourse floating rate debt
156,479
2.1
Total non-recourse construction loan
debt
118,230
3.2
Cash and restricted cash
(229,766
)
Net Leverage
$
825,298
As of December 31, 2022, 98% of Aimco's total debt was either
fixed rate or hedged with interest rate cap protection. Aimco's
interest hedging instruments, purchased to provide protection
against increases in interest rates, were valued at $62.3 million
versus a cost basis of approximately $18.0 million.
Debt Repayments
- Aimco and its joint venture partner used the majority of the
proceeds generated from the sale of the development lot on Broward
Avenue in Fort Lauderdale to reduce the principal amount of the
floating rate land loan from $40.0 million to $22.9 million.
Construction Financing
- In December, Aimco's joint venture for the development of
Strathmore Square completed financing for the project which
includes a $94 million construction loan with interest accruing at
a rate of one-month Term SOFR, capped at 4.00%, plus 275 basis
points with a floor of 5.00%, a $32.5 million mezzanine position
accruing at 13%, and fixed-rate financing through the Amazon
Housing Equity Fund for $6.5 million. When fully drawn Aimco
expects the weighted average interest rate on leverage to be
7.8%.
Public Market Equity
Common Stock Repurchases
- In the fourth quarter, Aimco repurchased 2.6 million shares of
its common stock at a weighted average price of $7.56 per share.
For the full year 2022, Aimco repurchased 3.5 million shares of its
common stock for $24.9 million, with a weighted average price of
$7.21 per share. Aimco repurchased an additional 0.8 million shares
in 2023, through February 14, at a weighted average price of $7.41
per share.
2023 Outlook
2023 Outlook
$ in millions (except per share amounts),
Square Feet in millions
2023 Full Year
Forecast
Full Year 2022
Net income (loss) per share –
diluted
$(0.33) - $(0.23)
$0.49
Active Developments and
Redevelopments
Total Direct Costs of Projects Underway
[1]
$815
$870
Direct Project Costs
$165 - $185
$209
Other Capitalized Costs
$30 - $31
$36
Construction Loan Draws
$150 - $170
$91
JV Partner Equity Funding
$0
$31
AIV Equity Funding
~$45
$122
Pipeline Projects
Pipeline Size Gross Square Feet [1]
14.0
12.6
Pipeline Size Multifamily Units [1]
7,640
6,118
Pipeline Size Commercial Sq Ft [1]
1.7
0.8
Planning Costs (AIV Share)
$20 - $25
$18
Real Estate Transactions
Acquisitions
None
$153
Dispositions
None
$936
Operating Properties
Revenue Growth, before utility
reimbursements
5.0% - 7.0%
10.6%
Operating Expense Growth, net of utility
reimbursements
5.25% - 7.25%
3.0%
Net Operating Income Growth
5.0% - 7.0%
14.2%
Recurring Capital Expenditures
$11 - $13
$12
General and Administrative
$33 - $35
$40
Leverage
Interest Expense, net of
capitalization
$39 - $42
$74
[1] Includes land or leasehold value,
calculated as the quarterly average.
Active Developments and Redevelopments
Planned incremental direct capital investment in development and
redevelopment projects during 2023 is expected to be between $165 -
$185 million. Aimco's incremental equity investment is expected to
be approximately $45 million with the remainder funded through
previously committed third party debt and equity. Aimco expects to
have projects with $815 million of total direct costs, inclusive of
land or leasehold value, underway during 2023 and expects those
projects to produce annual NOI of approximately $55 million once
fully stabilized.
In 2023, Aimco plans to:
- Complete the construction and lease up of The Hamilton with NOI
stabilization projected to occur in 2024;
- Deliver initial single family rental homes and begin the
lease-up of Oak Shore with NOI stabilization projected to occur in
2025;
- Deliver initial apartment homes and begin the lease-up of Upton
Place with NOI stabilization projected to occur in 2026; and
- Complete construction and welcome its first guests to The
Benson Hotel and Faculty Club with NOI stabilization projected to
occur in 2026.
Pipeline Development and Redevelopment Projects
Aimco's future pipeline is located in Southeast Florida, the
Washington D.C. Metro Area and Colorado's Front Range. The pipeline
is comprised of land assemblages that provide the opportunity for
phased multifamily and mixed-use development, real estate where the
development opportunity is worth more than the capitalized value of
the current income producing assets, and Aimco-controlled options
that provide opportunity to access future development rights.
Aimco's current pipeline offers the opportunity to construct
approximately 14 million square feet over the next ten years or
so.
While Aimco maintains the optionality for future development,
advances entitlement, and secures third party financing, the costs
associated with carrying these assets is mitigated by the
diversified nature of the pipeline assets, in particular the income
generated by the operating assets at the Brickell assemblage and
the low-cost options on future development at Strathmore Square and
on the Anschutz Medical Campus.
Aimco expects to invest between $20 million and $25 million to
advance planning and entitlement of certain of its future
development pipeline projects during 2023. Aimco currently
forecasts no new development starts in 2023. If pre-development
schedules progress favorably, market and economic conditions
support underwriting with NOI yield spreads of 150-200 bps above
expected cap rates and we are able to secure favorable third-party
financing, Aimco may accelerate the start of certain pipeline
projects and begin construction activities late during the fourth
quarter of 2023.
Real Estate Transactions
In 2023, Aimco does not plan for any acquisitions that will
increase the size of its current development pipeline. Broadly,
Aimco does not predict or guide to future transactions but
continuously weighs the potential use of proceeds against the
source.
Operating Properties
Aimco's stabilized operating portfolio includes properties with
rents, on average, in line with local market rents, generally
considered class B apartment communities. These properties are
primarily located in suburban residential areas of Boston and
Chicago with other select assets in Manhattan and Southeast
Florida, and single assets in Denver, Nashville, Atlanta, and San
Francisco. In the fourth quarter of 2022, Aimco's portfolio
generated average monthly revenue per home of $2,170 and new
residents had rent-to-income ratios of 19.2%, on average.
In 2023, Aimco forecasts revenues to grow between 5.0% and 7.0%,
and operating expenses to increase between 5.25% and 7.25%,
resulting in NOI increasing between 5.0% and 7.0%.
Leasing activity from 2022 will contribute approximately 5% to
Aimco's stabilized operating portfolio revenue growth in 2023 with
approximately +150 bps impact from 2023 lease transactions, at the
midpoint of guidance, assuming flat occupancy year over year and
-50 bps impact from other revenue items. Additionally, Aimco will
add one property to its stabilized operating portfolio in 2023 that
will have minimal impact on growth.
General and Administrative
As Aimco announced in the fall of 2022, it is now targeting real
estate investment in just three markets, Southeast Florida, the
Washington D.C. Metro Area, and Colorado's Front Range. Aimco is
planning to exit the California market over time and has eliminated
its satellite offices and reduced its regional offices to only its
three target markets.
Aimco expects G&A costs in 2023 to be reduced by more than
10%, due to the narrowed geographic focus discussed above and the
expiration of the consulting services agreement with AIR
Communities that was put in place as part of the separation of the
two companies in December 2020.
Leverage
Aimco uses leverage to capitalize its real estate portfolio and
construction activities so that Aimco preserves liquidity and so
that Aimco equity is invested in diverse projects and markets,
mitigating concentration risk. Aimco prefers non-recourse
property-level financing with fixed, or rate-capped floating
interest rates. In addition, Aimco has a secured revolving credit
facility providing additional liquidity.
In 2023, Aimco expects fixed rate and floating rate property
loan balances to be in line with ending balances for 2022 and does
not anticipate needing to draw on its $150 million revolving credit
facility. Aimco does plan to draw between $150 and $170 million on
in-place construction and mezzanine loans for planned costs related
to active developments and redevelopments. Aimco has a single
property loan maturing in 2023 with refunding requirements of less
than $5 million. In December 2023, the initial term on Aimco's
secured revolving credit facility expires and it is expected that
Aimco will exercise its option to extend its maturity for one
year.
Public Market Equity & Dividends
Aimco's primary goal is outsized risk-adjusted returns and
accelerating growth for our shareholders. In addition to allocating
capital to accretive real estate investments and maintaining a
solid balance sheet, Aimco will continue to repurchase shares when
prices are significantly below our internal estimated net asset
value. As of December 31, 2022, Aimco had the authorization
remaining to purchase approximately 12 million additional shares of
its common stock.
Aimco does not presently intend to pay a regular quarterly cash
dividend but may occasionally distribute amounts, as necessary, to
comply with REIT requirements.
Commitment to Enhance Stockholder Value
As announced in the fall of 2022, the Aimco Board of Directors
is overseeing the review of a broad range of options to enhance
stockholder value. This effort is being led by Pat Gibson, the
Chairwoman of Aimco’s Investment Committee, who has considerable
experience in the areas of real estate finance, transactions, and
capital markets. There can be no assurance that the ongoing review
will result in any transaction or other change or outcome. Aimco
does not intend to comment further until it determines that further
disclosure is appropriate or necessary.
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 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 Washington, D.C. Our investment platform is
managed by experienced professionals based in three regions, where
it will focus its new investment activity: Southeast Florida, the
Washington D.C. Metro Area and Colorado's Front Range. By
regionalizing this platform, Aimco is able to leverage the in-depth
local market knowledge of each regional leader, creating a
comparative advantage when sourcing, evaluating, and executing
investment opportunities and is essential to the execution of our
mission and realization of our vision.
Above all else, Aimco is committed to a culture of integrity,
respect, and collaboration.
Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
include all statements that are not historical statements of fact
and those regarding our intent, belief, or expectations, including,
but not limited to, the statements in this document regarding our
future plans and goals, including our pipeline investments and
projects, our plans to eliminate certain near term debt maturities,
our estimated value creation and potential, our timing, scheduling
and budgeting, our plans to form joint ventures, our plans for new
acquisitions or dispositions, our strategic partnerships and value
added therefrom, and changes to our corporate governance. We
caution investors not to place undue reliance on any such
forward-looking statements.
Words such as “anticipate(s),” “expect(s),” “intend(s),”
“plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,”
“seek(s)” and similar expressions, or the negative of these terms,
are intended to identify such forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside the control of Aimco that could
cause actual results or outcomes to differ materially from those
discussed in the forward-looking statement. Important factors,
among others, that may affect actual results or outcomes include,
but are not limited to: (i) the risk that the 2023 plans and goals
may not be completed, as expected, in a timely manner or at all,
(ii) the inability to recognize the anticipated benefits of the
pipeline investments and projects, and (iii) changes in general
economic conditions, including, increases in interest rates and
other force-majeure events. Although we believe that the
assumptions underlying the forward-looking statements are
reasonable, we can give no assurance that our expectations will be
attained.
Readers should carefully review Aimco’s financial statements and
the notes thereto, as well as the section entitled “Risk Factors”
in Item 1A of Aimco’s Annual Report on Form 10-K for the year ended
December 31, 2021, and subsequent Quarterly Reports on Form 10-Q
and other documents Aimco files from time to time with the SEC.
These filings identify and address important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking
statements.
These forward-looking statements reflect management’s judgment
and expectations as of this date, and Aimco assumes no (and
disclaims any) obligation to revise or update them to reflect
future events or circumstances.
Consolidated
Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
REVENUES:
Rental and other property revenues
$
41,969
$
46,722
$
190,344
$
169,836
OPERATING EXPENSES:
Property operating expenses
15,408
16,113
71,792
67,613
Depreciation and amortization [1]
15,548
21,648
158,967
84,712
General and administrative expenses
[2]
10,430
10,588
39,673
33,151
Total operating expenses
41,386
48,349
270,432
185,476
Interest income
2,016
559
4,052
2,277
Interest expense
(7,977
)
(14,908
)
(73,842
)
(52,902
)
Mezzanine investment income, net [3]
(204,229
)
7,781
(179,239
)
30,436
Realized and unrealized gains (losses) on
interest rate options
200
(4,099
)
48,205
6,509
Realized and unrealized gains (losses) on
equity investments
150
4,478
20,302
6,585
Income from unconsolidated real estate
partnerships
120
230
579
973
Gains on dispositions of real estate
5,860
-
175,863
-
Lease modification income [1]
-
-
206,963
-
Other income (expense), net [4]
(9,134
)
2,715
(13,373
)
3,212
Income (loss) before income tax
benefit
(212,412
)
(4,871
)
109,422
(18,550
)
Income tax benefit (expense)
7,074
3,689
(17,264
)
13,570
Net income (loss)
(205,339
)
(1,182
)
92,158
(4,980
)
Net (income) loss attributable to
redeemable noncontrolling interests in consolidated real estate
partnerships
(3,383
)
(50
)
(8,829
)
(91
)
Net (income) loss attributable to
noncontrolling interests in consolidated real estate
partnerships
(3,087
)
(274
)
(3,672
)
(1,136
)
Net (income) loss attributable to common
noncontrolling interests in Aimco Operating Partnership
10,718
88
(3,931
)
297
Net income (loss) attributable to
Aimco
$
(201,091
)
$
(1,418
)
$
75,726
$
(5,910
)
Net income (loss) attributable to common
stockholders per share – basic
$
(1.34
)
$
(0.01
)
$
0.50
$
(0.04
)
Net income (loss) attributable to common
stockholders per share – diluted
$
(1.34
)
$
(0.01
)
$
0.49
$
(0.04
)
Weighted-average common shares outstanding
– basic
148,755
149,480
149,395
149,480
Weighted-average common shares outstanding
– diluted
148,755
149,480
150,834
149,480
[1] In the twelve months ended December
31, 2022, as a result of the lease termination agreement with AIR
Communities (AIR) and in accordance with GAAP, Aimco accelerated
$85.7 million of depreciation on the associated leasehold
improvements. Also, Aimco reduced the right-of-use lease assets
associated with these properties to zero and recognized lease
modification income of $207.0 million. Per the terms of the lease
termination agreement, Aimco received $200 million of cash payments
from AIR in exchange for the return of the properties from Aimco to
AIR.
[2] General and administrative expense
includes $2.0 million and $6.6 million of expenses to be reimbursed
to AIR, per agreement upon separation, for consulting services,
with respect to strategic growth, direction, and advice, in the
three and twelve months ended December 31, 2022, respectively. This
agreement concluded on December 31, 2022.
[3] In the fourth quarter, Mezzanine
investment income, net was a $204.2 million loss primarily due to
the impairment charge related to Aimco's Parkmerced mezzanine
investment.
[4] Other income (expense), net in the
three months ended December 31, 2022 includes $6.2 million of
advisory expenses related to the annual shareholder meeting.
Consolidated
Balance Sheets
(in thousands) (unaudited)
December 31,
December 31,
2022
2021
Assets
Buildings and improvements
$
1,322,381
$
1,257,214
Land
641,102
534,285
Total real estate
1,963,483
1,791,499
Accumulated depreciation
(530,722
)
(561,115
)
Net real estate
1,432,761
1,230,384
Cash and cash equivalents
206,460
233,374
Restricted cash
23,306
11,208
Mezzanine investments
158,558
337,797
Interest rate options
62,387
25,657
Unconsolidated real estate
partnerships
15,789
13,025
Notes receivable
39,014
38,029
Right-of-use lease assets
110,269
429,768
Other assets, net
132,679
114,859
Total assets
$
2,181,223
$
2,434,101
Liabilities and Equity
Non-recourse property debt, net
$
929,501
$
483,137
Construction loans, net
118,698
163,570
Notes payable to AIR
—
534,127
Total indebtedness
1,048,199
1,180,834
Deferred tax liabilities
119,615
124,747
Lease liabilities
114,625
435,093
Accrued liabilities and other
106,600
97,400
Total liabilities
1,389,039
1,838,074
Redeemable noncontrolling interests in
consolidated real estate partnerships
166,826
33,794
Equity:
Common Stock
1,466
1,498
Additional paid-in capital
496,482
521,842
Retained earnings (accumulated
deficit)
49,904
(22,775
)
Total Aimco equity
547,852
500,565
Noncontrolling interests in consolidated
real estate partnerships
48,294
35,213
Common noncontrolling interests in Aimco
Operating Partnership
29,212
26,455
Total equity
625,358
562,233
Total liabilities and equity
$
2,181,223
$
2,434,101
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230221005799/en/
Matt Foster, Sr. Director, Capital Markets and Investor
Relations Investor Relations 303-793-4661, investor@aimco.com
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