Apartment Investment & Management Co. (
or Aimco as the real estate investment trust (REIT) is popularly
known, reported second quarter 2012 funds from operations (FFO) of
38 cents per share compared to 29 cents in the year-ago period. The
strong quarterly earnings were primarily due to higher rents
Recurring FFO stood at 46 cents per share, compared to 27 cents
in the year-ago period. Recurring FFO for second quarter 2012 was
ahead of the Zacks Consensus Estimate by 6 cents.
During the quarter, total revenues stood at $270.9 million
compared to $259.4 million in the year-ago period. Total revenues
in the reported quarter beat the Zacks consensus estimate of $259
In the conventional same-store real estate portfolio, which
includes a diversified range of market rate apartment communities,
Aimco had an average daily ownership of 95.5% . Average rents
in the same-store conventional real estate portfolio increased 4.5%
during the quarter to $1,140 per unit from $1,091 during second
Rental rates on new leases and renewals in the conventional
same-store real estate portfolio were 4.3% and 5.7% higher
respectively than the expiring lease rates. Same-store revenues in
the conventional portfolio increased 4.6% year over year to $192.2
million, while net operating income (NOI) increased 5.9%.
Conventional portfolio average revenue per unit increased 8.1%
on a year- over year to $1,290 in second quarter 2012. Also,
Aimco expects fourth quarter 2012 Conventional portfolio revenue
per unit to be approximately $1,370, an increase of 9% on a
year-over year basis.
In the affordable real estate portfolio, which includes
properties with rents that are generally paid (in whole or in part)
by a government agency, Aimco had a weighted average ownership of
77% during the quarter. Average occupancy was 98.6% at quarter-end,
while average revenue per unit increased 3.4% from $935 to $967.
Same-store revenues in the affordable real estate portfolio
increased 4.3% year over year, while NOI increased 7.0%.
Aimco is continuing with a strategic focus on the largest
markets in the U.S. that are concentrated mostly in the coastal
areas and includes the Sun Belt cities, Chicago and Illinois. Going
forward, the company expects to sell each year the lowest rated
5.0% -10.0% of its portfolio, and increase its investment in target
markets through redevelopment and acquisitions. With the portfolio
restructuring initiatives, the company expects its year-end overall
average revenue per rental unit to grow at 4% to 5% higher than the
annual market rent growth
During the reported quarter, Aimco acquired a 42-unit Manhattan
property for $38.9 million. Average revenue per unit was
approximately $4,000 for this property. The acquisition was funded
partly by using $20.0 million of non-recourse property debt with a
3.95% interest rate and in part by proceeds from the sale of
Aimco sold five conventional properties (1,151 units) and 11
affordable properties (1,082 units) during the quarter for $122.4
million worth of total gross proceeds. During the entire course of
the current year, Aimco expects to sell over 25 conventional
properties and at least 60 affordable properties towards portfolio
During the reported quarter, Aimco started with the
redevelopment work of Elm Creek, a Chicago property. The company
constructed 28 new homes on this vacant land parcel in
Chicago.During 2012, Aimco expects to invest $125 to $150 million
in redevelopment projects of upto 10 properties.
During the reported quarter and subsequent related equity
offerings, Aimco issued 24.2 million shares for net proceeds of
At quarter-end, Aimco had a total debt of $5.2 billion and cash
and cash equivalents of $312.9 million with debt service and fixed
charge coverage ratios of 1.61x and 1.38x respectively. By
quarter-end, however, Aimco had no outstanding borrowings on its
revolving credit facility while available capacity was $473.0
million, net of $27.0 million of letters of credit backed by the
For full year 2012, Aimco expects recurring FFO in the range of
$1.78-$1.86 while FFO for third quarter is expected to be in the
range of 43 cents to 47 cents.
Aimco currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We also maintain our long-term Neutral
recommendation on the stock. One of its competitors
, Equity Residential (
currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
Note: Fund from operations, a widely used metric to gauge the
performance of REITs, is obtained after adding depreciation and
amortization and other non-cash expenses to net income.
APARTMENT INVT (AIV): Free Stock Analysis
EQUITY RESIDENT (EQR): Free Stock Analysis
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