Apartment Investment and Management Company (
- a real estate investment trust (REIT), better known as Aimco -
reported its fourth quarter 2012 pro forma funds from operations
(FFO) of 52 cents per share, exceeding the Zacks Consensus
Estimate by a couple of cents and the year-ago quarter's figure
by 10 cents.
The quarterly increase was attributable to improved property
operating results, lower interest expenses, additional income
from increased consolidated properties ownership and lower
preferred stock dividends. It was, however, partially offset by
lower income from discontinued operations. For full year 2012,
pro forma FFO came in at $1.84 per share, surpassing the Zacks
Consensus Estimate of $1.70 and up from $1.49 per share reported
a year ago.
For fourth quarter 2012, adjusted FFO jumped 90% to 38 cents per
share from 20 cents in the year-ago period. For full year 2012,
adjusted FFO escalated 54% to $1.34 per share from 87 cents in
Inside the Headlines
During the quarter, total revenue was $266.0 million, higher than
$248.5 million in the year-ago period. Also, revenues in the
reported quarter surpassed the Zacks Consensus Estimate of $257
million. For full year 2012, total revenue stood at $1.0 billion,
up 5% year over year and in line with the Zacks Consensus
Conventional real estate portfolio:
This includes a diversified range of market-rate apartment
communities. In same-store portfolio, the average daily occupancy
was flat year over year at 95.3% in the reported quarter.
However, average rents in the same-store portfolio increased 4.0%
to $1,188 per unit from $1,142 prior-year quarter.
Rental rates on new leases and renewals in the portfolio were
0.4% and 5.1% higher, respectively, than the expiring lease
rates. Also, same-store revenues increased 5.1% year over year to
$184.9 million, while net operating income (NOI) increased 5.7%
to $122.1 million. Moreover, average revenue per unit increased
5.1% year over year to $1,330.
Affordable real estate portfolio:
This includes properties with rents that are generally paid (in
whole or in part) by a government agency. In same-store
portfolio, the average daily occupancy upped 120 bps to 98.9% in
the quarter. Average revenue per unit increased 1.1% year over
year to $981.
Portfolio Restructuring Activity
Aimco is currently focusing on the largest markets in the U.S.
that are concentrated mostly in the coastal areas including the
Sun Belt cities, Chicago and Ill. Going forward, the company
expects to sell each year the lowest rated 5%-10% of its
portfolio and increase its investment in target markets through
redevelopment and acquisitions. Furthermore, the company intends
to completely sell its affordable portfolio by 2017-2018.
During the fourth quarter, Aimco sold 8 Conventional (1,865
units) and 16 Affordable assets (1,417 units) for $271.1 million
of total gross proceeds.
Also, the company completed the sale of its legacy asset
management business - NAPICO portfolio. Aimco financed the
transaction and it will pay off the associated notes over the
next 6 years. Aimco projects to add $6-$8 million in FFO over the
expected term of the notes.
During the quarter, Aimco started redevelopment work on
multi-phase capital projects - Park Towne Place and The Sterling
- in Center-City Philadelphia.
On Jan 31, 2013, Aimco declared fourth quarter dividend of 24
cents per share - a hike of 20% from the prior dividend rate. The
dividend is payable on Feb 28 to shareholders of record as of Feb
As of Dec 31, 2012, Aimco had cash and cash equivalents worth
$84.4 million. The company had no outstanding balance under its
revolving credit facility. By the year-end, however, Aimco had an
available capacity of $454.6 million on its revolving credit
facility, net of $45.4 million of letters of credit backed by the
For the first quarter of 2013, Aimco expects pro forma FFO per
share in the range of 42-46 cents. For full year 2013, the
company expects pro forma FFO per share in the range of
We are encouraged by the solid fourth quarter results of Aimco.
This leading multi-family apartment REIT continues to sell older
assets to reposition its portfolio and focus on fewer markets
with higher growth potential. Furthermore, redevelopment activity
will help it to mitigate operating risk amid challenging
macroeconomic environment. This provides compelling growth
potential to the company. Moreover, the recent dividend hikes
boost investors' confidence in the stock.
In addition to Aimco, many other REITs have raised their
Simon Property Group Inc. (
raised its dividend by 4.5% sequentially,
AvalonBay Communities Inc. (
hiked its dividend by 10.3% and
BRE Properties Inc. (
declared a 2.6% sequential hike in its quarterly cash dividend.
Aimco currently holds a Zacks Rank #3 (Hold).
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
AVALONBAY CMMTY (AVB): Free Stock Analysis
BRE PROPERTIES (BRE): Free Stock Analysis
SIMON PROPERTY (SPG): Free Stock Analysis
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