Apartment Investment and Management Company
, as the real estate investment trust (REIT) is popularly known,
has recently announced a secondary offering of over 11 million
shares to increase its liquidity. The company has also decided to
grant the underwriters an option to purchase an additional 1.35
million shares to cover any over-allotments.
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The share offering includes 9 million shares to be sold by the
company and more than 2 million shares to be sold by its Chairman
and Chief Executive Officer as part of the full exercise of the
near-term expiring options.
) are acting 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 in the range of $550 million to $650 million (before
repayment of related property debt and transaction costs). Year to
date, Aimco has already completed approximately $162 million worth
of asset sale transactions.
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
Aimco has historically maintained a conservative balance sheet and
pursued a strategy of financial flexibility that enables the
payment of steady dividends 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, with debt service and fixed
charge coverage ratios of 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