Apartment Investment and Management Company
) - better known as Aimco - reported pro forma funds from
operations (FFO) of 49 cents per share in second-quarter 2013,
beating the Zacks Consensus Estimate by a penny and the year-ago
quarter's FFO per share by 3 cents. Notably, this was equal to
the high end of the company's outlook range of 45-49 cents.
The quarterly increase at this real estate investment trust
(REIT) was attributable to improved property operating results
and lower preferred share dividends. It was, however, partially
offset by lower income from discontinued operations. On the other
hand, Adjusted FFO (AFFO) was 37 cents per share, up 9% from 34
cents in the year-ago period.
Total revenue was $259.7 million, up 3% year over year, and
surpassed the Zacks Consensus Estimate of $243 million.
Behind the Headlines
Conventional real estate portfolio:
This includes a diversified range of market-rate apartment
communities. In the same-store portfolio, the average daily
occupancy was up 10 basis points (bps) year over year to 95.5%
and average rent per unit increased 4.1% year over year to
$1,212. Moreover, average revenue per unit in the same-store
portfolio upped 5.0% year over year to $1,363.
Same-store revenues increased 5.1% year over year to $192.0
million while expenses rose 4.8% year over year to $67.4 million.
Consequently, net operating income (NOI) climbed 5.3% to $124.6
million on a year-over-year basis.
Rental rates on new leases and renewals in the portfolio were
up 3.1% and 5.2%, respectively, from the expiring lease
Affordable real estate portfolio:
This includes properties for which rent is generally paid (in
whole or in part) by a government agency. In the same-store
portfolio, the average daily occupancy upped 30 bps year over
year to 99.0% in the quarter. In addition, average revenue per
unit increased 0.7% year over year to $976.
Portfolio Restructuring Activity
During the reported quarter, Aimco purchased a Class A 60-home
building for $29.0 million in California. Subsequent to
quarter-end, the company acquired another Class A 30-home
building for $9.5 million in Midtown Atlanta.
Moreover, as per its strategic initiative, Aimco sold 2
Affordable Properties (164-home) for $6.5 million. Aimco's share
of net sales proceeds was $1.8 million, following distributions
to limited partners, paying back of existing property debt and
During the reported quarter, Aimco finished the Baywalk
redevelopment project at Flamingo South Beach. Moreover, the
company carried on with the redevelopment of 5 properties, which
it had commenced in the prior year. Furthermore, it continued
redevelopment work on multi-phase capital projects, namely Park
Towne Place and The Sterling located in Center City Philadelphia
and 2900 on First in Seattle.
Property Loans Buyouts
In 2006, Aimco financed $100.1 million of second mortgage
loans collateralized by 84 buildings in the West Harlem
neighborhood of New York City. Simultaneously, Aimco inked a deal
with the borrower, according to which the former had the option
to buy the properties and the borrower had the right to put the
assets to Aimco upon realization of certain revenue
In the said quarter, Aimco acquired at par the first mortgage
loans related to those buildings for $119.1 million. Out of this
amount, $106.0 million matured on Jun 1. As part of the
first mortgage loans acquisition deal, Aimco will receive all
loans from the borrower by Nov 22, 2013 and $11 million for the
unexercised option to buy the properties. Notably, the borrower's
right was terminated.
On Jul 30, 2013, Aimco declared second-quarter 2013 cash
dividend of 24 cents per share of its Class A common stock. The
dividend is payable on Aug 30 to shareholders of record as of Aug
As of Jun 30, 2013, Aimco had cash and restricted cash on hand
of $157.8 million, down from $193.9 million in past quarter.
Moreover, there were 4 unencumbered properties, with an estimated
fair value of around $190 million.
Furthermore, as of that date, Aimco had outstanding borrowings
of $187.1 million on its revolving credit facility, while
available capacity was $268.4 million, net of $44.5 million of
letters of credit backed by the revolver.
During the quarter, Fitch Ratings assigned Aimco a credit
rating of "BB+" and a Positive Rating Outlook, after concluding
the initial review of Aimco's creditworthiness.
For third-quarter 2013, Aimco expects pro forma FFO per share
in the range of 48-52 cents. For full-year 2013, the company
narrowed its outlook and now expects pro forma FFO per share in
the range of $1.99-$2.07 (prior range being $1.94-$2.10).
We are encouraged by the impressive second-quarter results of
this Zacks Rank #3 (Hold) stock, which came on the back of strong
operating portfolio performance. Moreover, Aimco's successful
portfolio enhancement activity, through the continued disposal of
non-core assets, strengthens its position in high-growth
Other apartment REITs that are performing better and are worth
a look include
Camden Property Trust
Campus Crest Communities, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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
APARTMENT INVT (AIV): Free Stock Analysis
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