DENVER--(BUSINESS WIRE)--Apartment Investment and Management Company (“Aimco”) (NYSE: AIV) announced today its fourth quarter and full year 2011 results.
Chairman and Chief Executive Officer Terry Considine comments: “2011 was a good year, and we expect 2012 will be even better. Aimco starts the year with high occupancy, low turnover and steady renewal lease rate growth. Our portfolio is increasingly concentrated in better markets, with higher rents and superior growth rates. In the coming twenty-four months, through redevelopment of three currently vacant properties, we will deliver more than 1,200 A-quality units in Coastal California. Our balance sheet is strong and we continue to reduce leverage and our cost of capital. We are off to a good start in 2012.”
Chief Financial Officer Ernie Freedman adds: “Fourth quarter Pro forma FFO of $0.42 per share exceeded the midpoint of our guidance range by $0.01 per share, primarily as a result of better than expected operating results. We expect 2012 FFO to be in a range from $1.72 to $1.82 per share, or approximately 8% higher than 2011, and we expect AFFO to increase even more, up 21%. First quarter 2012 FFO is projected to be $0.33 to $0.37 per share.”
2011 Pro forma FFO, Excluding One-Time Items, Up 11%, AFFO Up 5%*
|FOURTH QUARTER||FULL YEAR|
|Net loss per share||($0.19||)||($0.33||)||($0.86||)||($1.08||)|
|Funds from Operations (FFO)||$||0.43||$||0.35||$||1.52||$||1.52|
Add back (deduct) Aimco’s share of preferred equity redemption
|Pro forma Funds from Operations (Pro forma FFO)||$||0.42||$||0.39||$||1.49||$||1.51|
|Deduct Aimco’s share of Capital Replacements||($0.22||)||($0.14||)||($0.62||)||($0.51||)|
Adjusted Funds from Operations (AFFO)
2011 Pro forma FFO and AFFO of $1.49 per share and $0.87 per share, respectively, include a one-time charge of $0.15 per share related to debt prepayment penalties and write-off of deferred loan costs incurred in connection with a refinancing and securitization transaction completed during the second quarter. 2010 Pro forma FFO and AFFO of $1.51 per share and $1.00, respectively, include a net benefit of $0.03 per share related to several, mostly offsetting, one-time items during second quarter 2010. Excluding these one-time items from each period, 2011 Pro forma FFO increased 11% and AFFO increased 5% when compared to 2010. Pro forma FFO growth exceeds AFFO growth due to higher capital replacements spending in 2011.
Net loss – Net loss attributable to Aimco common stockholders for the quarter was $23.4 million, compared to net loss of $38.4 million for fourth quarter 2010. Fourth quarter 2011 net loss decreased as compared to fourth quarter 2010 primarily due to: an increase in net operating income of our properties included in continuing operations, reflecting improved operations; an increase in income from discontinued operations, net of noncontrolling interest allocations, primarily due to an increase in gains on dispositions of consolidated real estate partially offset by losses on dispositions of unconsolidated real estate; and a decrease in interest expense.
Funds from Operations – FFO and AFFO are non-GAAP financial measures and are defined in the glossary in Aimco’s Supplemental Information (the Glossary). FFO is computed in accordance with the framework prescribed by the National Association of Real Estate Investment Trusts (NAREIT). In October 2011, NAREIT revised its definition of FFO to exclude operating real estate impairments effective fourth quarter 2011. All prior period FFO results included in this press release have been restated accordingly. Fourth quarter 2011 FFO was $52.2 million, or $0.43 per share, compared to $41.4 million, or $0.35 per share, in fourth quarter 2010. Pro forma FFO, which represents FFO as prescribed by NAREIT but excludes preferred equity redemption related amounts, was $50.4 million, or $0.42 per share, compared to $45.3 million, or $0.39 per share, in fourth quarter 2010, an increase of 8%. AFFO, which represents Pro forma FFO after the deduction of Capital Replacements, was $24.3 million, or $0.20 per share, compared to $29.6 million, or $0.25 per share, in fourth quarter 2010.
Property operating results discussed below, including property net operating income (NOI), relate to properties that Aimco owns and manages, and that are classified within continuing operations. To ensure comparability between periods, results are based on Aimco’s current period ownership. See the Glossary for property definitions and reconciliation of non-GAAP measures and Schedules 1 and 2 in the Supplemental Information for financial and statistical information for these portfolios.
Diversified Operating Portfolio – Aimco’s property operations consist primarily of Conventional, with some Affordable, real estate operations. Conventional real estate operations relate to Aimco’s diversified portfolio of market rate apartment communities and include Same Store Properties, Redevelopment Properties, Acquisition Properties and Other Properties.
Affordable real estate operations consist of Aimco’s portfolio of properties with rents that are generally paid, in whole or in part, by a government agency. Affordable properties tend to have more stable rents and higher occupancy than Conventional properties due to government rent payments and thus are less affected by market fluctuations.
2011 Total Same-Store NOI Up 5.9%
|FOURTH QUARTER||FULL YEAR|
|Year-over-year Variance||Year-over-year Variance|
|% NOI||Revenue||Expenses||NOI||% NOI||Revenue||Expenses||NOI|
|Conventional Same Store||83||%||3.3||%||-1.0||%||5.8||%||81||%||2.8||%||-1.5||%||5.3||%|
|Affordable Same Store||12||%||3.2||%||-0.7||%||6.2||%||11||%||4.0||%||-3.8||%||10.4||%|
|Total Same Store||95||%||3.3||%||-1.0||%||5.9||%||92||%||2.9||%||-1.8||%||5.9||%|
Negative results are due primarily to lost revenue related to properties undergoing repairs from casualty events and retail vacancy in Manhattan.
Conventional Same Store Results – In fourth quarter 2011, the Conventional Same Store portfolio included 161 communities with 56,731 units, in which Aimco had a weighted average ownership of 94%.
|Average Daily Occupancy||95.3||%||96.8||%||-1.5||%||95.2||%||0.1||%||95.8||%||96.2||%||-0.4||%|
|Average Rent Per Unit||$||1,124||$||1,076||4.5||%||$||1,108||1.4||%||$||1,111||$||1,084||2.5||%|
|$ in Millions|
Rental Rates Rising
Aimco measures changes in rental rates by comparing, on a lease-by-lease basis, the rate on a newly executed lease to the rate on the expiring lease for that same apartment. Newly executed leases are classified as either a new lease, where a vacant apartment is leased to a new customer, or a renewal of an existing lease. Full year 2011 results by quarter are as follows:
|FOURTH QUARTER||THIRD QUARTER||SECOND QUARTER||FIRST QUARTER||FULL YEAR|
Refer to Supplemental Schedules 6a through 6c for additional details on Conventional Same Store operating results.
Affordable Same Store Results – In fourth quarter 2011, the Affordable Same Store portfolio included 122 communities with 15,639 units, in which Aimco had a weighted average ownership of 73%. For fourth quarter 2011, average month-end occupancy for the Affordable portfolio was 97.7%, a decrease of 0.2% from fourth quarter 2010, while average rent per unit increased 3.0% from $862 to $888 per unit.
Aimco’s portfolio strategy focuses on B/B+ quality Conventional apartment communities located in the largest U.S. markets as measured by total apartment value. Aimco believes these markets to be deep, relatively liquid and possessing desirable long-term growth characteristics. These markets are primarily coastal markets, and also include several Sun Belt cities and Chicago, Illinois. In executing Aimco’s portfolio strategy, the company expects to reduce its investment in non-target markets and to increase its investment in target markets through redevelopment, acquisitions and increasing ownership in properties Aimco already owns through limited partnerships.
During fourth quarter 2011, net operating income generated by Conventional properties located in Aimco’s target markets accounted for 86% of total Conventional Property net operating income, an increase of 2% compared to fourth quarter 2010.
Conventional Property Rents Up 9% to $1,143
Aimco measures Conventional Property asset quality based on average rents compared to local market average rents as reported by REIS, a third-party provider of commercial real estate performance information and analysis. Aimco defines A-quality assets as those with rents greater than 125% of local market average, B-quality assets as those with rents 90% to 125% of local market average and C-quality assets as those with rents less than 90% of local market average. For third quarter 2011, the most recent period for which REIS information is available, Aimco’s Conventional Property rents averaged approximately 101% of local market average rents.
For fourth quarter 2011, average rents for the Conventional portfolio were $1,143 per unit, a 9.0% increase compared to fourth quarter 2010, as a result of year-over-year rent growth and the sale of Conventional properties during 2010 and 2011 with rents substantially lower than those of the retained portfolio.
Dispositions – In fourth quarter 2011, Aimco sold seven Conventional properties and 20 Affordable properties with 1,947 and 2,185 units, respectively, for $180.3 million in gross proceeds. Aimco’s share of net proceeds after distributions to limited partners, repayment of existing property debt and transaction costs was $71.9 million.
See Supplemental Schedules 7a and 7b for additional details regarding Aimco’s Conventional portfolio quality and capital allocation, and Supplemental Schedule 8 for information related to acquisition and disposition activity.
Agreement to Sell Asset-Managed Portfolio – As of December 31, 2011, Aimco asset-managed for a fee a portfolio of 147 properties with 10,184 units. During first quarter 2012, Aimco entered into an agreement to transfer asset management of this portfolio effective February 6, 2012, and to sell its minority interest in the portfolio to the new asset manager upon satisfaction of certain conditions and regulatory approvals. Aimco expects the sale of the asset-managed portfolio to close later this year, at which time Aimco will have liquidated all of its legacy asset management business.
Balance Sheet and Liquidity
Components of Aimco Leverage
|AS OF DECEMBER 31, 2011|
|Amount||% of Total||Weighted Avg Maturity (Yrs)||Weighted Avg Rate|
|Aimco leverage ($ in millions)|
|Aimco’s share of long-term, non-recourse property debt||$||4,730.1||86||%||8.0||5.50||%|
|Revolving credit facility||-||0||%||5.0||n/a|
See Supplemental Schedule 4 for additional details about Aimco’s non-recourse property debt and Supplemental Schedule 5 for information related to Aimco’s preferred securities.
Revolving Credit Facility – Aimco’s recourse debt at December 31, 2011, was limited to its revolving credit facility, which Aimco uses for working capital purposes and to secure letters of credit. As announced in fourth quarter 2011, Aimco closed on a new $500 million revolving credit facility to replace its then-existing $300 million facility. Borrowings under the revolving credit facility bear interest based on a pricing grid determined by leverage (currently either LIBOR plus 2.75% or, at Aimco’s option, a base rate equal to the Prime rate plus a spread of 1.50%). The facility matures in December 2016, inclusive of two one-year extension options and the Debt Service and Fixed Charge Coverage covenants are unchanged from those associated with the previous facility. At the end of fourth quarter, Aimco had no outstanding borrowings on its revolving credit facility and available capacity was $469.5 million, net of $30.5 million of letters of credit backed by the facility.
Coverage Ratios – Aimco’s fourth quarter EBITDA Coverage of Interest and EBITDA Coverage of Interest and Preferred Dividends ratios were 2.18:1 and 1.78:1, compared to fourth quarter 2010 ratios of 2.07:1 and 1.68:1, respectively. Separately, in connection with its revolving credit facility, Aimco is subject to Debt Service and Fixed Charge Coverage covenants, as defined in the Glossary. For fourth quarter 2011, Aimco’s Debt Service and Fixed Charge Coverage ratios were 1.61:1 and 1:37.1, compared to covenants in place during the quarter of 1.40:1 and 1:20.1, respectively, and fourth quarter 2010 ratios of 1.57:1 and 1.33:1. In first quarter 2012, the Debt Service Coverage and Fixed Charge Coverage covenants increase to 1.50:1 and 1.30:1, respectively. Aimco expects to remain in compliance with these covenants.
Based on annualized projected fourth quarter 2012 EBITDA, Aimco expects its EBITDA Coverage of Interest and EBITDA Coverage of Interest and Preferred Dividends ratios to be approximately 2.50:1 and 2.00:1, respectively. Year-end Debt to EBITDA and Debt & Preferred Equity to EBITDA ratios are projected to be approximately 7.5:1 and 9:1, respectively.
Equity Activity – During fourth quarter 2011, Aimco issued approximately 45,000 shares of Class Z Cumulative Preferred Stock through its Class Z Preferred Stock At-the-Market offering program (Class Z ATM) at $24.24 per share, equating to a yield of 7.22%, for gross proceeds to Aimco of approximately $1.1 million. We intend to accumulate the proceeds from further ATM issuances of our Class Z Preferred Stock and use them for further redemptions of outstanding preferred securities with higher rates.
Dividend – Aimco’s Board of Directors declared a cash dividend of $0.18 per share on its Class A Common Stock for the quarter ended December 31, 2011, which is a 50% increase compared to the $0.12 per share dividend paid for the prior four quarters. The dividend is payable February 29, 2012 to shareholders of record on February 21, 2012. Aimco expects to pay quarterly dividends at the increased rate during 2012.
|FIRST QUARTER||FULL YEAR|
|Net loss per share||-$0.35 to -$0.31||-$1.00 to -$0.90|
|FFO per share||$0.33 to $0.37||$1.72 to $1.82|
|AFFO per share||$1.17 to $1.29|
|Conventional Same Store Operating Measures|
|NOI change compared to fourth quarter 2011||-3.5% to -2.5%|
|NOI change compared to same period 2011||3.0% to 4.0%||5.25% to 7.25%|
|Average daily occupancy||95.5% to 96.0%|
|Revenue change compared to 2011||4.5% to 5.5%|
|Expense change compared to 2011||2.5% to 3.0%|
|Affordable Same Store NOI change compared to 2011||0.0% to 1.0%|
|Total Same Store NOI change compared to 2011||4.50% - 6.25%|
|Asset Management and Tax Credit Activities|
|Recurring Revenues||$30 million|
|Recurring Expenses||$5 million|
|Non-Recurring Revenues||$6 million|
|Non-Recurring Expenses, including pursuit costs of $1.5 million||$3 million|
|Property Management Expenses||$35 million|
|General and Administrative Expenses||$47 million|
|Conventional Redevelopment||$125 - $150 million|
|Property Upgrades||$30 - $40 million|
|Direct Real Estate Acquisitions (100% Aimco Share)||$60 million|
|Aimco Share of Real Estate Value of Partnership Tenders and Mergers||$160 million|
|Aimco Share of Gross Real Estate Dispositions||$550 to $650 million|
Pro forma FFO Reconciliation
$ per Share
(at the midpoint)
|2011 Pro forma FFO||$||1.49|
|Total Same Store NOI growth||0.24|
|Debt prepayment penalties and write-off of deferred loan costs incurred in connection with a refinancing and securitization transaction in 2011||0.15|
|Offsite costs, including G&A||0.09|
|Reduction in asset management and non-recurring revenues||(0.05||)|
|2011 and 2012 asset sales, net of reinvestment||(0.13||)|
|Impact of 2011 share issuances||(0.02||)|
|2012 Pro forma FFO||$||1.77|
Earnings Conference Call
Live Conference Call
Conference Call Replay
Wednesday, February 8, 2012 at 1:00 p.m. EST
|Available until 9:00 a.m. EST on February 23, 2012|
|Domestic Dial-In Number: 1-866-843-0890||Domestic Dial-In Number: 1-877-344-7529|
|International Dial-In Number: 1-412-317-9250||International Dial-In Number: 1-412-317-0088|
|Passcode: 9327149||Passcode: 10007657|
Live webcast and replay: www.aimco.com/investors/events-presentations/webcasts
The full text of this Earnings Release and the Supplemental Information referenced in this release are available on Aimco’s website http://www.aimco.com/investors/financial-reports/quarterly-earning-reports.
Glossary & Reconciliations of Non-GAAP Financial and Operating Measures
Financial and operating measures found in this Earnings Release and the Supplemental Information include certain financial measures used by Aimco management that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP. These measures are defined in the glossary in the Supplemental Information and, where appropriate, reconciled to the most comparable GAAP measures.
This Earnings Release and Supplemental Information contain forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected results and specifically forecasts of first quarter and full year 2012 results. These forward-looking statements are based on management’s judgment as of this date and include certain risks and uncertainties. Risks and uncertainties include, but are not limited to, Aimco’s ability to maintain current or meet projected occupancy, rental rates and property operating results. Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond the control of Aimco, including, without limitation: financing risks, including the availability and cost of capital markets financing and the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; earnings may not be sufficient to maintain compliance with debt covenants; real estate risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the terms of governmental regulations that affect Aimco and interpretations of those regulations; the competitive environment in which Aimco operates; the timing of acquisitions and dispositions; insurance risk, including the cost of insurance; natural disasters and severe weather such as hurricanes; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; energy costs; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by Aimco. In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on our ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. Readers should carefully review Aimco’s financial statements and the notes thereto, as well as the section entitled “Risk Factors” in Item 1A of Aimco’s Annual Report on Form 10-K for the year ended December 31, 2010, and the other documents Aimco files from time to time with the Securities and Exchange Commission. These forward-looking statements reflect management’s judgment as of this date, and Aimco assumes no obligation to revise or update them to reflect future events or circumstances. This press release does not constitute an offer of securities for sale.
Aimco is a real estate investment trust that is focused on the ownership and management of quality apartment communities located in the largest markets in the United States. Aimco is one of the country’s largest owners and operators of both conventional and affordable apartments, with 518 communities serving approximately 250,000 residents in 36 states, the District of Columbia and Puerto Rico. Aimco common shares are traded on the New York Stock Exchange under the ticker symbol AIV and are included in the S&P 500. For more information about Aimco, please visit our website at www.aimco.com.
|Consolidated Statements of Operations|
|(in thousands, except per share data) (unaudited)|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|Rental and other property revenues||$||263,035||$||259,651||$||1,040,923||$||1,020,231|
|Asset management and tax credit revenues||9,889||11,422||38,661||35,630|
|Property operating expenses||107,785||112,999||449,982||460,995|
|Investment management expenses||3,053||3,508||10,415||14,487|
|Depreciation and amortization||97,606||100,452||378,043||397,740|
|Provision for operating real estate impairment losses||4,182||65||4,331||65|
|General and administrative expenses||14,544||14,351||50,950||53,365|
|Other expense, net||6,082||7,760||19,576||9,697|
|Total operating expenses||233,252||239,135||913,297||936,349|
|Recovery of (provision for) losses on notes receivable||329||(665||)||509||(949||)|
|Equity in losses of unconsolidated real estate partnerships||(9,288||)||(11,313||)||(17,721||)||(23,112||)|
|(Loss) gain on dispositions of unconsolidated real estate and other, net||(2,717||)||5,265||2,398||10,631|
|Loss before income taxes and discontinued operations||(40,739||)||(47,049||)||(149,266||)||(180,631||)|
|Income tax benefit||1,509||6,255||7,166||17,101|
|Loss from continuing operations||(39,230||)||(40,794||)||(142,100||)||(163,530||)|
Income from discontinued operations, net
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships
Net income attributable to preferred noncontrolling interests in Aimco Operating Partnership
Net loss attributable to common noncontrolling interests in Aimco Operating Partnership
|Total noncontrolling interests||(4,361||)||12,749||1,077||17,896|
|Net loss attributable to Aimco||(12,935||)||(21,463||)||(57,087||)||(71,728||)|
|Net income attributable to Aimco preferred stockholders||(10,423||)||(16,964||)||(45,852||)||(53,590||)|
|Net income attributable to participating securities||(53||)||-||(222||)||-|
|Net loss attributable to Aimco common stockholders||$||(23,411||)||$||(38,427||)||$||(103,161||)||$||(125,318||)|
|Weighted average common shares outstanding - basic and diluted||120,433||116,683||119,312||116,369|
|Earnings (loss) per common share - basic and diluted:|
Loss from continuing operations attributable to Aimco common stockholders
Income from discontinued operations attributable to Aimco common stockholders
|Net loss attributable to Aimco common stockholders||$||(0.19||)||$||(0.33||)||$||(0.86||)||$||(1.08||)|
|Consolidated Statements of Operations (continued)|
|Notes to Consolidated Statements of Operations|
| Income from discontinued operations consists of the following (in thousands):|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|Rental and other property revenues||$||7,172||$||26,604||$||58,925||$||131,677|
|Property operating expenses||(5,768||)||(14,887||)||(33,987||)||(72,676||)|
|Depreciation and amortization||(2,293||)||(9,407||)||(17,290||)||(39,093||)|
|Provision for operating real estate impairment losses||(4,086||)||(3,411||)||(15,915||)||(12,961||)|
|Operating (loss) income||(4,975||)||(1,101||)||(8,267||)||6,947|
Loss before gain on dispositions of real estate and income taxes
|Gain on dispositions of real estate||43,308||20,537||108,209||94,945||`|
|Income tax expense||(6,572||)||(8,410||)||(6,615||)||(6,204||)|
|Income from discontinued operations, net||$||30,656||$||6,582||$||83,936||$||73,906|
|Income from discontinued operations attributable to:|
|Noncontrolling interests in consolidated real estate partnerships||$||(15,968||)||$||(4,608||)||$||(34,727||)||$||(26,061||)|
|Noncontrolling interests in Aimco Operating Partnership||(1,060||)||(133||)||(3,351||)||(3,207||)|
|Total noncontrolling interests||(17,028||)||(4,741||)||(38,078||)||(29,268||)|
|Income from discontinued operations attributable to Aimco||$||13,628||$||1,841||$||45,858||$||44,638|
|Consolidated Balance Sheets|
|(in thousands) (unaudited)|
|December 31, 2011||December 31, 2010|
|Buildings and improvements||$||6,839,678||$||6,772,272|
|Total real estate||8,893,653||8,812,991|
|Net real estate||6,028,780||6,153,671|
|Cash and cash equivalents||91,066||111,325|
|Accounts receivable, net||41,796||49,855|
|Deferred financing costs, net||49,486||45,387|
|Notes receivable, net||111,205||116,726|
|Investment in unconsolidated real estate partnerships||47,790||59,282|
|Deferred income tax assets, net||51,933||58,736|
|Assets held for sale||16,894||389,654|
|LIABILITIES AND EQUITY|
|Non-recourse property debt||$||5,172,320||$||5,181,538|
|Accrued liabilities and other||251,933||297,121|
|Liabilities related to assets held for sale||13,167||279,309|
|Preferred noncontrolling interests in Aimco Operating Partnership||83,384||83,428|
|Preferred stock subject to repurchase agreement||-||20,000|
|Perpetual Preferred Stock||657,114||657,601|
|Class A Common Stock||1,209||1,176|
|Additional paid-in capital||3,098,333||3,070,296|
|Accumulated other comprehensive loss||(6,860||)||(2,076||)|
|Distributions in excess of earnings||(2,841,467||)||(2,680,955||)|
|Total Aimco equity||908,329||1,046,042|
|Noncontrolling interests in consolidated real estate partnerships||270,666||291,458|
|Common noncontrolling interests in Aimco Operating Partnership||(34,321||)||(30,728||)|
|Total liabilities and equity||$||6,871,862||$||7,378,566|