Apartment Investment & Management Co.
), commonly known as Aimco, disclosed the improvement of its
Boston area portfolio. The move comes as the company shifts focus
from its predominantly suburban portfolio to properties with a
comparatively higher price point.
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In particular, Aimco acquired a 44-apartment home community,
Charlesbank Residences in Watertown, MA, the deal terms of which
were not disclosed. Being close to Watertown Square, an average
revenue per apartment home of $2,200 per month and rents
exceeding the Boston market average by 19%, this "B+" quality
stabilized asset, built recently (2012) is a good buy for Aimco.
Initially funded with its credit facility, Aimco plans to repay
the amount later this month with proceeds reaped through a
Florida property disposition. With Aimco projecting free cash
flow Internal Rate of Return (FCF IRR) generated by Charlesbank
to supersede that of the Florida property by around 150 basis
points, the deal can be regarded as an opportune investment.
In addition to this, Aimco penned a deal with Trinity Financial
to develop a 12-story building at One Canal Street in the
Bulfinch Triangle neighborhood of Boston's West End. As per the
deal, the building will be constructed by Trinity and its
development team. Following the completion Aimco will own and
Built on a 99-year ground leased to Aimco, this project will
comprise 310 luxury apartment homes, around 22,000 square feet of
commercial space and 147 parking spaces. Aimco envisages making
investments of around $190 million in the next two and one-half
years for developing this project that will enjoy easy
accessibility to public transit, the Government Center, Financial
District, and Massachusetts General Hospital employment centers
and shopping spots.
Aimco plans to sell lower-rated properties in Colorado, Indiana,
Massachusetts and Texas to finance the equity part of the deal.
The company anticipates One Canal Street project to reap a FCF
IRR that is well ahead (by 400 to 450 bps) of the properties
marked for sale and (200 to 225 bps above) that is available on
the buyout of a comparable, stabilized property in this
Aimco has been focusing on expanding its footprint through
acquisitions and redevelopments across target markets in the U.S.
With both the properties positioned advantageously, we believe
Aimco can reap solid rentals from these properties. The projected
rate of returns remains favorable and therefore we are
Aimco currently carries a Zacks Rank #3 (Hold). Better-performing
REITs that are worth a look include
Campus Crest Communities, Inc.
Education Realty Trust, Inc.
Cousins Properties Inc.
). All of these stocks carry a Zacks Rank #2 (Buy).