We have reiterated our Neutral recommendation on
Apartment Investment & Management Co (
or Aimco, a Real Estate Investment Trust (REIT) as we expect
the stock to perform in line with the broader market.
The company 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
Aimco is one of the largest owners and operators of multifamily
apartments in the U.S., with 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. In
addition, Aimco rents and leases its apartment units to a diverse
base of residents. This provides a strong upside potential for the
Aimco continues to sell older assets to reposition its portfolio
and focus on fewer markets with higher growth potential.
Furthermore, the company is focused on redevelopments to mitigate
operating risk amidst a challenging macroeconomic
The company's properties are geographically diversified compared
to several of its competitors, which helps to limit the effect of a
single significant local downturn. The company is also ensured of a
relatively stable revenue stream, which augurs well for its
However, Aimco competes with other housing alternatives such as
rental apartments, condominiums and single-family homes that are
available for rent, and new and existing condominiums and
single-family homes available for sale. This puts considerable
pressure on profit maintenance.
Aimco currently retains a Zacks #2 Rank, which translates into a
short-term Buy rating.. One of its competitors
, Equity Residential (
also currently retains a Zacks #2 Rank.
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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