Apartment Investment and Management Company
(
AIV
), or
Aimco
, as the real estate investment trust (REIT) is popularly known,
has recently announced that the underwriters have fully exercised
the over-allotment options to purchase an additional 1.35 million
shares in the just-concluded secondary offering. Consequently,
Aimco sold an aggregate of 10.35 million shares at $26.74 each.
Citigroup Inc.
(
C
) and
Morgan Stanley
(
MS
) acted as the joint book-running managers for the offering. Aimco
intends to utilize the proceeds from the equity offering along with
its available cash resources to redeem all the outstanding shares
of its 'Class U Cumulative Preferred Stock.'
In order to further increase its liquidity, the company is also
continuing with the sale of non-core assets and expects total asset
sale in 2012 to be in the range of $550 million to $650 million
(before repayment of related property debt and transaction costs).
Aimco expects to sell almost all of its affordable properties over
the next four- to five-year period to concentrate entirely on the
conventional real estate portfolio. The company also expects to
reduce its investment in non-target markets and consequently
increase its investment in target markets through redevelopment and
acquisitions.
Aimco has historically maintained a conservative balance sheet and
pursued a strategy of financial flexibility that ensures a steady
dividend to its shareholders. By the end of first quarter 2012,
Aimco had total debt of $5.6 billion and cash and cash equivalents
of $83.2 million. Debt service and fixed charge coverage ratios
stood at 1.62x and 1.38x, respectively.
One of the largest owners and operators of multifamily apartments
in the U.S., Aimco has a diversified portfolio of conventional,
affordable and student housing communities. The company has a
strong portfolio of Class 'B' and Class 'C' properties, primarily
catering to the middle-income market.
Despite attempts to reposition its portfolio in higher growth
markets, much of the company's portfolio still resides in areas
where housing is relatively cheap. As the company continues to sell
non-core assets and buy in high-growth infill areas, we expect
continued earnings dilution.
We maintain our long-term Neutral rating on Aimco, which currently
has a Zacks #3 Rank that translates into a short-term Hold
rating.
APARTMENT INVT (AIV): Free Stock Analysis
Report
CITIGROUP INC (C): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
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