On Jul 4, 2013, we reaffirmed our long-term recommendation on
Apartment Investment & Management Co.
), commonly known as Aimco, at Neutral. This was based on the
company's improved core operating portfolio performance in
first-quarter 2013. However, stiff competition from other housing
alternatives and a huge redevelopment pipeline somewhat restricts
the company's growth tempo.
Aimco reported a better-than-expected first-quarter 2013
results, with pro forma Funds from Operations (FFO) of 48 cents
per share - which beat the Zacks Consensus Estimate by a penny
and the year-ago quarter figure by 8 cents. Also, this was higher
than Aimco's guidance range of $0.42-$0.46 per share.
Improved property operating results, a rise in the ownership
of consolidated properties and a decrease in preferred stock
dividend boosted the results. Aimco also raised its outlook
slightly for full-year 2013 pro forma FFO.
Moreover, the demand generated by 'echo boomers' - children of
the baby boomer generation - provides Aimco with ample growth
opportunities in the coming quarters. This age cohort prefers to
stay on their own but with the lack of stability in job market
and rising student debt, owning a home has become difficult,
steering them to rent apartments instead. Additionally, Aimco's
consistency in successfully disposing non-core assets to focus on
markets with higher growth potential is helping it achieve
efficiency amid a protracted economic recovery.
However, despite attempts to reposition its portfolio in
higher growth markets, much of the company's portfolio remains in
areas where housing is relatively cheap. Moreover, the company
has exposure to the Florida market, with over 15 conventional
properties situated in the region. Historically, the weakness in
the Florida real estate market has affected the company's top
line and we expect the headwinds to continue in the near
Following first-quarter 2013 results release, over the last 60
days, the Zacks Consensus Estimate for 2013 FFO per share rose 1%
$2.03. On the other hand, for 2014, the Zacks Consensus Estimate
for FFO per share remained stable at $2.20. Thus, this real
estate investment trust (REIT) now carries a Zacks Rank #3
Other Stocks to Consider
Better performing apartment REITs that are worth a look
AvalonBay Communities, Inc.
Sun Communities Inc.
Camden Property Trust
). All of them carry a Zacks Rank #2 (Buy).
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.
APARTMENT INVT (AIV): Free Stock Analysis
AVALONBAY CMMTY (AVB): Free Stock Analysis
CAMDEN PPTY TR (CPT): Free Stock Analysis
SUN CMNTYS INC (SUI): Free Stock Analysis
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