Apartment Investment & Management Co. AIV , better known as Aimco, has received support from a broad coalition in the company's appeal of the California court decision for its case against Airbnb. Particularly, the group backs Aimco's measures to hold Airbnb legally responsible for engaging in brokering and endorsing illegal short-term rentals.
Going by facts, per a December 2017 U.S. District Court ruling, Airbnb was provided "immunity" from liability for illegal short-term rentals brokering at Aimco's apartment communities. This was granted on the basis of the federal Communications Decency Act (CDA) which protects online-service providers from the responsibility for the content users post.
However, last month, Aimco filed its Ninth Circuit brief in the company's appeal of the December 2017 ruling. And now the coalition has filed amicus briefs in support of Aimco's appeal that the CDA does not offer such broad immunity to Airbnb.
Among the members in the coalition, are names like National Multifamily Housing Council and the National Apartment Association; the California Apartment Association and Avalon Bay Communities; the League of California Cities, International Municipal Lawyers Association and California State Association of Counties; the American Hotel and Lodging Association; and others. All these strengthen Aimco's appeal and raise hopes for the reconsideration of the ruling.
Moreover, an amicus brief, pointing out the troubles created by Airbnb to affordable housing and stable communities, has been filed with the court by a group of New York neighborhood associations.
According to Aimco's legal representative Mike Williams, "Airbnb is a full-fledged real estate broker of illegal short-term rentals and should be held to the same level of scrutiny and accountability as a 'brick-and-mortar' broker engaged in comparable unauthorized activities."
According to Aimco and the parties supporting its appeal, rather than focusing on Airbnb's act of publishing of property listings, the company should be held legally accountable for illegal short-term rental activities, as such doings pose a threat to the safety and quality of life of full-time residents.
In fact, per the company, though prospective Aimco residents go through criminal background checks, several Airbnb customers are not thoroughly examined and are unknown trespassers. These customers not only pose a risk to safety but have also triggered disruption and damaged property at Aimco's apartment premises.
Such a support from the broader fraternity is a positive for the company. Moreover, Aimco is making diligent efforts to reposition its portfolio by shedding non-strategic properties and investing the proceeds in opportunistic acquisitions. The company's portfolio is diversified in terms of geography and price point, and its revamping efforts have the capability to drive long-term growth.
However, the dilutive impact on earnings from such asset dispositions cannot be bypassed in the near term. Also, new supply in various markets, which is affecting other residential REITs like AvalonBay Communities, Inc. AVB
, Equity Residential EQR
and Essex Property Trust, Inc. ESS
, is also anticipated to dampen the company's rent growth and new-lease pricing ability. Hike in interest rate adds to its woes.
Aimco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here
In the past three months, shares of the company have underperformed the industry
. While the stock has inched up 1.8%, the industry has rallied 4.6% during this period. Looking for Stocks with Skyrocketing Upside?
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apartment Investment and Management Company (AIV): Free Stock Analysis Report AvalonBay Communities, Inc. (AVB): Free Stock Analysis Report Equity Residential (EQR): Free Stock Analysis Report Essex Property Trust, Inc. (ESS): Free Stock Analysis Report To read this article on Zacks.com click here.