Apartment Investment & Management Co.
as the real estate investment trust (REIT) is popularly known,
reported third quarter 2012 funds from operations (FFO) of 38
cents per share compared to 41 cents in the year-ago period.
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Recurring FFO stood at 46 cents per share, compared to 41 cents
in the year-ago period. The 12.2% year-over-year increase in
recurring FFO was due to improved property operating results,
incremental income from investments in partnership tenders and
mergers, and lower preferred stock dividends. Recurring FFO for
third quarter 2012 beat the Zacks Consensus Estimate by 3 cents.
During the quarter, total revenues stood at $267.4 million
compared to $254.5 million in the year-ago period. Total revenues
in the reported quarter missed the Zacks consensus estimate of
In the conventional same-store real estate portfolio, which
includes a diversified range of market-rate apartment
communities, Aimco had an average daily occupancy of 95.3%.
Average rents in the same-store conventional real estate
portfolio increased 4.4% during the quarter to $1,184 per unit
from $1,134 during third quarter 2011.
Rental rates on new leases and renewals in the conventional
same-store real estate portfolio were 3.8% and 6.0% higher
respectively than the expiring lease rates. Same-store revenues
in the conventional portfolio increased 4.9% year over year to
$190.9 million, while net operating income (NOI) increased 7.4%
to $122.8 million. Conventional portfolio average revenue per
unit increased 4.8% year over year to $1,312 in third quarter
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 daily average occupancy
of 98.9% at quarter-end. Average revenue per unit increased 3.2%
from $960 to $991. Same-store revenues in the affordable real
estate portfolio increased 4.4% year over year to $28.3 million,
while NOI increased 3.4% to $17.1 million.
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. Furthermore, the
company intends to completely sell its affordable portfolio over
the next four-to-five year period.
During the reported quarter, Aimco acquired an 84-unit apartment
community in downtown San Diego (with about 8,000 square feet of
commercial space) for $19.7 million. Average residential revenue
per unit was approximately $1,880 for this property, which was
about 15% greater than the local market average. The acquisition
was funded partly by using $9.7 million of non-recourse property
debt and in part by proceeds from the sale of lower-rated
Aimco sold eight conventional properties (2,349 units) and 14
affordable properties (1,562 units) during the quarter for $235.4
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
During the reported quarter, Aimco started redevelopment work on
The Preserve at Marin in Corte Madera, California. For full year
2012, Aimco expects to invest $100 million in redevelopment
projects of 10 properties.
Aimco issued 1.35 million shares during the quarter for net
proceeds of $36.1 million. At quarter-end, Aimco had a total debt
of $4.8 billion, including an outstanding debt of $66.2 million
on its revolving credit facility. Cash and cash equivalents were
$102.5 million, with debt service and fixed charge coverage
ratios of 1.63x and 1.44x respectively. By quarter-end, however,
Aimco had an available capacity of $406.8 million on its
revolving credit facility, net of $27.0 million of letters of
credit backed by the facility.
For full year 2012, Aimco expects recurring FFO in the range of
$1.79-$1.85 while FFO for fourth quarter is expected to be in the
range of 47 cents to 53 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,
) 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.