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Aimco (AIV) Boosts Financial Flexibility with New Facility

Apartment Investment and Management CompanyAIV , commonly known as Aimco, declared the closure of a $600-million revolving credit facility. This move is aimed at improving its financial flexibility on favorable terms and an extended maturity date.

Specifically, the $600-million revolving credit facility is slated to mature in Jan 2022. For the borrowings under the new credit facility, interest rate to be borne is at LIBOR plus 1.20%. This denotes a 68-basis point contraction from the spread on the existing credit facility.

Moreover, the new facility offers uncommitted incremental facility, enabling the company to enhance the new facility's capacity by up to $200 million in total, conditioned upon customary norms.

Notably, Aimco has a solid portfolio, diversified both in terms of geography and price point. This raises hope for relatively lesser impact on the top line, despite new supply in various markets. In addition, its consistent property sales and reinvestment of proceeds in select apartment homes, with higher rents and superior margins, continue to fortify its position in high-growth potential markets. Further, enhanced financial flexibility also augurs well for its growth.

However, even if the divestitures pay off in the long run, near-term adverse effects on earnings cannot be ignored. In fact, loss of income from apartment sales, in 2015 and early 2016, has adversely affected the bottom line in recent times.

Currently Aimco has a Zacks Rank #3 (Hold).

Shares of Aimco have outperformed the Zacks categorized REIT and Equity Trust - Residential industry, year to date. In fact, Aimco's shares have a logged in a return of 11.3%, against a 6.2% decline of the industry, over this time frame.

Investors interested in the Residential REIT industry can consider stocks like Colony Starwood Homes SFR , Preferred Apartment Communities, Inc. APTS and Sun Communities, Inc. SUI . Each of these stocks has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Colony Starwood Homes has a long-term growth rate of 10%, ahead of the industry average of 7.3%.

Preferred Apartment Communities delivered an average positive surprise of 4.6% over the trailing four quarters.

Sun Communities' estimates for 2016 inched up 1.1%, over the past 60 days, to $3.79 per share.

Note: All EPS numbers presented in this write up represent funds from operations ("FFO") per share. FFO, 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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