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  Title	Aimco Reports Third Quarter Results, Updates 2024 Guidance, and Provides Highlights on Recent Activities
  ID	3978238
  External ID	7283697972
  Author	Apartment Investment and Management Company (Aimco)
  Published Date	Nov. 7, 2024, 3:16 p.m.
  Summary	DENVER Nov. 7, 2024 /PRNewswire/ -- Apartment Investment and Management Company ("Aimco") (NYSE: AIV ) announced today third quarter results for 2024, updated 2024 guidance, and provided highlights on
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  URL	https://www.prnewswire.com/news-releases/aimco-reports-third-quarter-results-updates-2024-guidance-and-provides-highlights-on-recent-activities-302299273.html
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  Content ID	2255718
  Key	c8f56d7f-24a7-4d5a-aba9-15c1c4c637d2
  Content	DENVER Nov. 7, 2024 /PRNewswire/ -- Apartment Investment and Management Company ("Aimco") (NYSE: AIV ) announced today third quarter results for 2024, updated 2024 guidance, and provided highlights on recent and planned activities. Financial Results and Highlights Aimco's net loss attributable to common stockholders per share, on a fully dilutive basis, was for the quarter ended September 30, 2024 , as higher net contributions from multifamily property operations were offset by increases in interest expense and depreciation related to advancing and completing development projects. Third quarter 2024 revenue, expenses, and net operating income ("NOI") from Aimco's Stabilized Operating Properties increased 4.1%, 10.6%, and 1.6%, respectively, year-over-year, with average monthly revenue per apartment home increasing by 2.4% to and average daily occupancy increasing by 160 basis points to 96.8%. During the third quarter, Aimco substantially completed construction at its Strathmore Square project located in Bethesda, Maryland and began construction on an ultra-luxury residential tower located at 640 NE 34th Street ("34 th Street") in the Edgewater neighborhood of Miami, Florida . Total direct project costs for the 34 th Street development are expected to be $240 million with initial occupancy scheduled in mid-2027 and NOI yields are projected to exceed 7% on direct costs at stabilization. In October, Aimco announced agreements to sell, for a total price at Aimco's share of $203.8 million , its interests in two investments in Miami, Florida , The Hamilton , a recently completed redevelopment of a 276-unit apartment building, and a 2.8-acre development site at 3333 Biscayne Boulevard. As of October 31, 2024 , Aimco had acquired 4.5 million shares of its common stock during the year, at an average cost of per share. CEO Commentary Wes Powell , Aimco President and Chief Executive Officer, comments: "Aimco continues its efforts to add value through effective management of the Aimco portfolio and thoughtful capital allocation. "Continued consumer strength, and limited competitive new supply, across the majority of Aimco's markets have led to revenue per home reaching more than per month, increasing by 2.4% year-over-year, while at the same time average daily occupancy reached 96.8%, an increase of 160 basis points, year-over-year. For the full year, we now expect revenue to grow between 3.75% and 4.25% with NOI growth of between 2.50% to 3.75%, an increase of more than 200 basis points at the mid-point when compared to our initial expectations. "During the third quarter, Aimco began construction on a waterfront development project in Miami's Edgewater neighborhood. Upon completion, 34 th Street will be Miami's premier ultra-luxury rental apartment building fronting Biscayne Bay. The 38-story tower will contain 114 highly-appointed apartment homes, each with unobstructed water views and averaging over 2,500 square feet in size. The project will also contain highly tailored amenity offerings plus 7,000 square feet of waterfront restaurant space. We are pleased to be partnering with a leading global investment firm on this exciting project, such that Aimco's equity commitment has been fully funded through the contribution of our land and pre-development efforts along with an incremental $5 million "Aimco's additional projects in active development and lease-up are progressing on plan and are expected to be fully delivered by year end, with occupancy stabilization projected to occur during 2025. We now expect direct costs at Upton Place and Strathmore Square to be $6 million less than our prior estimate. Together these two projects contain more than 900 apartment homes and will add considerable value to the Aimco portfolio as they complete lease-up and stabilize over the next 12-24 months. "Aimco continues its focus on prudently allocating capital, which includes taking advantage of the disconnect between public and private valuations when those opportunities arise. "In October, we announced agreements to sell our recently completed redevelopment, The Hamilton , along with our interest in a nearby development site at 3333 Biscayne Boulevard for more than $200 million . Upon closing these sales will crystallize accretive investments and provide Aimco with approximately $90 million , after associated liabilities are retired, to return to stockholders during the first quarter of 2025. "Additionally, we are advancing efforts related to the sale of our two-property assemblage in Miami's Brickell neighborhood and remain committed to unlocking the value embedded within those exceptional assets. "We continue to believe that Aimco shares represent an accretive use of excess capital and, as of October 31, 2024 , had repurchased 4.5 million shares year-to-date bringing total repurchases since the start of 2022 to 14.1 million shares at an average cost per share of "I thank the Aimco team for their continued dedication and the Aimco Board of Directors who remain steadfast in their commitment to creating and unlocking value for Aimco stockholders." Operating Property Results Aimco owns a diversified portfolio of operating apartment communities located in eight major U.S. markets with average rents in line with local market averages. Results at Aimco's Stabilized Operating Properties were as follows: Third Quarter Year-to-Date Stabilized Operating Properties Year-over-Year Sequential Year-over-Year ($ in millions) Variance 2Q 2024 Variance Variance Average Daily Occupancy 96.8 % 95.2 % 1.6 % 96.3 % 0.5 % 97.0 % 96.5 % 0.5 % Revenue, before utility reimbursements 4.1 % 1.5 % 4.7 % Expenses, net of utility reimbursements 10.6 % (2.2) % 6.3 % Net operating income (NOI) 1.6 % 3.2 % 4.0 % Revenue in the third quarter 2024 was $39.3 million , up 4.1% year-over-year, resulting from a 2.4% increase in average monthly revenue per apartment home to and a 160-basis point increase in Average Daily Occupancy to 96.8%. Compared to the second quarter 2024, revenue was up 1.5% with a 1.0% increase in average monthly revenue per apartment home and a 50-basis point increase in Average Daily Occupancy. Effective rents on all leases during the third quarter 2024 were 3.9% higher, on average, than the previous lease and 59.9% of residents whose leases were expiring signed renewals. Year to date, as of October 31, 2024 , effective rents on all transacted leases were 3.7% higher, on average, than the previous lease. The median annual household income of new residents was in the third quarter 2024, representing a rent-to-income ratio of 19.3%, a decline of 70 basis points from the second quarter 2024. Expenses in the third quarter 2024 were up 10.6% year-over-year but down 2.2% compared to the second quarter 2024, primarily due to fluctuations in real estate taxes driven by increases in 2024, adjustments to estimated taxes, and the impact of favorable real estate tax appeals and valuations received during the third quarter 2023. NOI in the third quarter 2024 was $27.4 million , up 1.6% year-over-year and 3.2% over the second quarter 2024. Year-to-date, NOI was $81.1 million an increase of 4.0% over the first nine months of 2023. Value Add and Opportunistic Investments Development and Redevelopment Aimco generally seeks development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and Aimco has a comparative advantage over others in the market. Aimco's value add and opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements. As of September 30, 2024 , Aimco had two multifamily development projects under construction and two multifamily communities that have been substantially completed and are now in lease-up. These projects remain on track, as measured by construction budget and lease-up metrics. In addition to Aimco's core multifamily developments, The Benson Hotel and Faculty Club was completed in 2023 and remains in stabilization. Aimco also has a pipeline of future value add opportunities in Aimco's target markets of Southeast Florida , the Washington D.C. Metro, and Colorado's Front Range. During the third quarter, $29.6 million of capital was invested in Aimco's development and redevelopment activities, primarily funded through construction loan draws. Updates on active development projects and Aimco's pipeline include: In the third quarter, construction began in Miami's Edgewater neighborhood on 34 th Street, an ultra- luxury waterfront residential tower that will include a highly tailored amenity package and approximately 7,000 square feet of ground floor retail space. The rental homes will average more than 2,500 square feet, feature 9 – 10 foot ceilings, oversized private terraces, top-of-the-line finishes, and unobstructed views of Biscayne Bay. Aimco expects to welcome the first residents at this $240 million project in 3Q 2027 and stabilize occupancy in 4Q 2028. In Upper Northwest Washington D.C., construction at Upton Place is substantially complete with all 689 apartment homes delivered. As of October 31, 2024 , Aimco had leased or pre-leased 296 units and 268 homes were occupied, at rates ahead of our initial projections. Additionally, as of October 31, 2024 , approximately 90% of the project's 105K square feet of retail space had been leased with tenant fit-out ongoing. We now expect total direct project costs to be $2 million less than our previous estimate. In Bethesda, Maryland , construction was substantially completed at the first phase of Strathmore Square during the third quarter, with all 220 of the highly tailored apartment homes delivered. As of October 31, 2024 , Aimco had leased 68 units at rates ahead of our initial projections, and 58 homes were occupied. We now expect total direct project costs to be $4 million less than our previous estimate. In Corte Madera, California , construction is ongoing at Oak Shore where 16 luxury single-family rental homes and eight accessory dwelling units are being developed. As of October 31, 2024 , 19 of the residences had been delivered with the remaining scheduled for completion by year end. Of the 19 homes delivered to date, 12 were occupied and Aimco has pre-leased another three at rates ahead of our initial projections. In the third quarter 2024, Aimco invested $0.4 million into programming, design, documentation, and entitlement efforts related to select pipeline projects primarily located in South Florida and on the Anschutz Medical Campus in Aurora, Colorado . Consistent with Aimco's capital allocation strategy, it may choose to monetize certain of these assets prior to vertical construction in an effort to maximize value add and risk-adjusted returns. Investment & Disposition Activity Aimco is focused on prudently allocating capital and delivering strong investment returns. Consistent with Aimco's capital allocation philosophy, it monetizes the value within its assets when accretive uses of the proceeds are identified and invests when the risk-adjusted returns are superior to other uses of capital. Subsequent to quarter end, Aimco agreed to sell, for $203.8 million , its interests in two real estate investments in the Edgewater neighborhood of Miami , Florida. The all-cash transactions, described below, are expected to close by year-end 2024. Upon closing, Aimco plans to retire $110.1 million of associated liabilities, currently carrying an average rate of 8.6%, and expects to return approximately $90 million of capital to stockholders during the first quarter of 2025. The Hamilton, Aimco's recently completed major redevelopment is under contract for $190.0 million and the buyer's deposit is non-refundable. Aimco's interest in 3333 Biscayne Boulevard, a 2.8-acre development site, is under agreement to be purchased by Aimco's joint venture partner at a gross valuation of $66.5 million or $13.8 million at Aimco's share of the venture. Aimco continues to advance the sales process related to its Brickell Assemblage, which includes 1001 and 1111 Brickell Bay Drive in Miami, Florida . Aimco does not intend to comment or provide further information until a definitive agreement has been executed and buyer deposits have become nonrefundable. Balance Sheet and Financing Activity Aimco is highly focused on maintaining a strong balance sheet, including ample liquidity. As of September 30, 2024 , Aimco had access to $260.4 million , including $82.6 million of cash on hand, $27.8 million of restricted cash, and the capacity to borrow up to $150.0 million on its revolving credit facility. Aimco's net leverage as of September 30, 2024 , was as follows: as of September 30, 2024 Aimco Share, $ in thousands Amount Weighted Avg. Maturity (Yrs.) [1] Total non-recourse fixed rate debt Total non-recourse floating rate debt Total non-recourse construction loan debt Cash and restricted cash Net Leverage [1] Weighted average maturities presented exclude contractual extension rights. In the third quarter, Aimco secured commitments for $56 million of preferred equity and a $172 million construction loan for the financing of its 34 th Street development in Miami, Florida . As of October 31, 2024 , Aimco had fully funded its equity requirements to the venture, primarily through the contribution of land and predevelopment improvements. As of September 30, 2024 , 100% of Aimco's total debt was either fixed rate or hedged with interest rate cap protection. Considering investments under contract to sell and including contractual extensions, Aimco has no debt maturing prior to May 2026 Public Market Equity Common Stock Repurchases In the third quarter, Aimco repurchased 0.4 million shares of its common stock at a weighted average price of per share. As of October 31, 2024 , Aimco had repurchased 4.5 million shares, year-to-date, at an average cost of per share and since the start of 2022, Aimco had repurchased 14.1 million shares at an average cost of per share. In the third quarter, 33,496 units of the Aimco Operating Partnership's equity securities were redeemed in exchange for cash at a weighted average price per unit of . Year to date, 84,797 units were redeemed in exchange for cash at a weighted average price per unit of Commitment to Enhance Stockholder Value The Aimco Board of Directors, in coordination with management, remains intently focused on maximizing and unlocking value for Aimco stockholders and continues to engage regularly with several leading advisory firms, including Morgan Stanley & Co. LLC. Aimco's announced plans to reduce exposure to development activity and monetize certain assets represent a commitment to simplify the portfolio and unlock embedded value when there are opportunities to do so. These efforts will further improve Aimco's positioning in the market and provide increased flexibility as the Board of Directors continues its review and consideration of broader strategic actions to maximize stockholder value. In addition, in conjunction with our contemplated asset sales, we will prioritize return of capital to our stockholders as a key component of our capital allocation philosophy. There can be no assurance that the ongoing review will result in any particular transaction or transactions or other strategic changes or outcomes and the timing of any such event is similarly uncertain. The Company does not intend to disclose or comment on developments related to the foregoing unless or until it determines that further disclosure is appropriate or required. 024 Outlook 3Q 2024 $ in millions (except per share amounts), Square Feet in millions Forecast is full year unless otherwise noted YTD Results Forecast Prior Forecast Net income (loss) per share – diluted [1] Operating Properties Revenue Growth, before utility reimbursements 4.7 % Operating Expense Growth, net of utility reimbursements 6.3 % Net Operating Income Growth 4.0 % Recurring Capital Expenditures ~$13 Active Developments and Redevelopments Total Direct Costs of Projects in Occupancy Stabilization at Period End [2] Total Direct Costs of Projects Under Construction at Period End [2] Direct Project Costs Other Capitalized Costs Construction Loan Draws [3] JV Partner Equity Funding AIV Equity Funding [4] ~$5 Pipeline Projects Pipeline Size Gross Square Feet at Period End [5] Pipeline Size Multifamily Units at Period End [5] Pipeline Size Commercial Sq Ft at Period End [5] Planning Costs ~$4 Real Estate Transactions Acquisitions None None None Dispositions [6] None See Below See Below General and Administrative Leverage Interest Expense, net of capitalization [7] [1] Net income (loss) per share - diluted does not include any gains associated with potential transactions in 2024. [2] Includes land or leasehold value. [3] Construction loan draws in any given period may be impacted by the timing of project costs, the funding or release of retainage, and other factors. At Aimco share, in the first nine months of 2024, construction loan draws were $89.3 million. [4] Full year AIV equity funding is expected to be ~$5 million. Quarter-end balances may fluctuate depending on timing of construction loan draws. [5] Includes pipeline projects as presented on Supplemental Schedule 5b. In the third quarter 2024, Aimco removed one project from its pipeline with the change of 34th Street to active construction. [6] While Aimco does not provide specific guidance related to future transactions, in the first half of 2024, Aimco brought to market its Brickell Assemblage, a two-property waterfront assemblage located in Miami, Florida, and, in October, agreed to sell The Hamilton, its recently completed waterfront redevelopment in Miami's Edgewater neighborhood, and its interest in a 2.8-acre development site at 3333 Biscayne Boulevard. [7] Includes GAAP interest expense, exclusive of the amortization of deferred financing costs, and reduced by interest rate option payments which are included in the Realized and unrealized gains (losses) on interest rate options line on Aimco's income statement. Supplemental Information The full text of this Earnings Release and the Supplemental Information referenced in this release are available on Aimco's website at investors.aimco.com 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 measures not defined under accounting principles generally accepted in the United States , or GAAP. Certain Aimco terms and Non-GAAP measures are defined in the Glossary in the Supplemental Information and Non-GAAP measures reconciled to the most comparable GAAP measures. About Aimco Aimco is a diversified real estate company primarily focused on value add and opportunistic investments, targeting the U.S. multifamily sector. Aimco's mission is to make real estate investments where outcomes are enhanced through our human capital so that substantial value is created for investors, teammates, and the communities in which we operate. Aimco is traded on the New York Stock Exchange as AIV. For more information about Aimco, please visit our website www.aimco.com Team and Culture Aimco has a national presence with corporate headquarters in Denver, Colorado and Washington, D.C. Our investment platform is managed by experienced professionals based in three regions, where it will focus its new investment activity: Southeast Florida , the Washington D.C. Metro Area and Colorado's Front Range. By regionalizing this platform, Aimco can leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities. Above all else, Aimco is committed to a culture of integrity, respect, and collaboration. Forward-Looking Statements This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. The forward-looking statements in this document include, without limitation, statements regarding our future plans and goals, including the timing and amount of capital expected to be returned to stockholders, our pipeline investments and projects, our plans to eliminate certain near term debt maturities, our estimated value creation and potential, our timing, scheduling and budgeting, projections regarding revenue and expense growth, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, the potential for adverse economic and geopolitical conditions, which negatively impact our operations, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, developments, and redevelopments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios. We caution investors not to place undue reliance on any such forward-looking statements. These forward-looking statements are based on management's judgment as of this date, which is subject to risks and uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to: the risk that the 2024 plans and goals may not be completed, as expected, in a timely manner or at all; geopolitical events which may adversely affect the markets in which our securities trade, and other macro-economic conditions, including, among other things, rising interest rates and inflation, which heightens the impact of the other risks and factors described herein; real estate and operating 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 amount, location and quality of competitive new housing supply; the timing and effects of acquisitions, dispositions, developments and redevelopments; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete; financing risks, including the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently owned by us. 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 of 1986, as amended (the "Code") and depends on our ability to meet the various requirements imposed by the 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, 2023 , and subsequent Quarterly Reports on Form 10-Q and other documents Aimco files from time to time with the SEC. These filings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. These forward-looking statements reflect management's judgment and expectations as of this date, and Aimco undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, REVENUES: Rental and other property revenues OPERATING EXPENSES: Property operating expenses Depreciation and amortization General and administrative expenses Total operating expenses Interest income Interest expense [1] Realized and unrealized gains (losses) on interest rate contracts Realized and unrealized gains (losses) on equity investments Gains on dispositions of real estate Other income (expense), net Income (loss) before income tax benefit Income tax benefit (expense) Net income (loss) Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships Net (income) loss attributable to common noncontrolling interests in Aimco Operating Partnership Net income (loss) attributable to Aimco Net income (loss) attributable to common stockholders per share – basic Net income (loss) attributable to common stockholders per share – diluted Weighted-average common shares outstanding – basic Weighted-average common shares outstanding – diluted [1] Interest expense increased in the three and nine months ended September 30, 2024 from the same periods ending September 30, 2023, due primarily to increased construction loan draws and reduced capitalization as development projects are advanced and completed. Consolidated Balance Sheets (in thousands) (unaudited) September 30, December 31, Assets Buildings and improvements Land Total real estate Accumulated depreciation Net real estate Cash and cash equivalents Restricted cash Notes receivable Right-of-use lease assets - finance leases Other assets, net Total assets Liabilities and Equity Non-recourse property debt, net Non-recourse construction loans, net Total indebtedness Deferred tax liabilities Lease liabilities - finance leases Accrued liabilities and other Total liabilities Redeemable noncontrolling interests in consolidated real estate partnerships Equity: Common Stock Additional paid-in capital Retained earnings (deficit) Total Aimco equity Noncontrolling interests in consolidated real estate partnerships Common noncontrolling interests in Aimco Operating Partnership Total equity Total liabilities and equity SOURCE Apartment Investment and Management Company (Aimco) WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In GET STARTED
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