DENVER--(BUSINESS WIRE)--Apartment Investment and Management Company ("Aimco") (NYSE: AIV) announced today fourth quarter and full year results for 2022 and provided highlights on recent activities and an outlook for 2023.
Dear fellow and prospective stockholders,
Apartment Investment and Management Company ("Aimco") recently completed its second year following the spin-off of Apartment Income REIT, Corp ("AIR Communities"). Over that period we have taken decisive action to improve, simplify and organize our business as needed to maximize returns, minimize risk and position Aimco for continued growth.
Aimco's mission is to make real estate investments, primarily focused on the multifamily sector within targeted US markets, where outcomes are enhanced through our human capital and substantial value is created for investors, teammates, and the communities in which we operate. Our capital allocation is balanced between a geographically diversified portfolio of stabilized, cash flowing, apartment properties and the investment in (and management of) dynamic real estate development projects located in South Florida, the Washington D.C. Metro Area and Colorado's Front Range. We benefit from a senior management team with an average of more than 20 years of experience in the apartment investment, finance and development industry; including regional leaders who are experts in each of their local markets.
Today, I am excited to report on the team's many accomplishments during 2022 and to highlight our plans for the year ahead.
During 2022, Aimco made accretive investments in our development projects and pipeline by completing construction on, and leasing up, $669 million of apartment properties. We also secured high-quality future development opportunities in our target markets, adding the potential to construct more than 3,600 apartment homes and approximately 450K square feet of commercial use.
In addition to investing in future growth opportunities we acquired $25 million of Aimco shares, at an average cost of $7.21 per share.
We took advantage of strong valuations early in the year and monetized a sizeable portion of our assets, exiting investments valued at nearly $1 billion, including three stabilized apartment communities and four recently completed development projects at a weighted average NOI cap rate of 3.9%.
Our portfolio of stabilized apartment communities delivered strong growth as evidenced by average monthly revenue up by more than $200 per home, NOI margins expanding by 220 basis points, and NOI increasing by 14.2% to over $94 million.
We proactively fortified our balance sheet by refinancing or retiring more than $1 billion of near-term liabilities, eliminated substantially all of our floating rate exposure, and nearly doubled our average term to maturity. In addition, we entered into a strategic partnership with Alaska Permanent Fund Corporation to provide Limited Partner equity capital for up to $1 billion of future Aimco-led multifamily development projects.
Finally, we committed to important changes to our corporate governance provisions that will bring us to a best-in-class standard within the REIT industry and we achieved an all-time Aimco record employee engagement score of 4.5 out of 5 stars.
2022 proved to be a good year for Aimco but our focus is on the road ahead.
Notwithstanding a higher interest rate environment and diverging views regarding the likelihood, and relative severity, of an economic downturn, the rental housing sector has proven quite enduring over time and a lingering supply and demand imbalance provides additional support to the Aimco strategy.
During 2023, Aimco will continue our in-progress development projects, invest in the advancement of planning and entitlement efforts related to certain of our pipeline assets, asset manage our portfolio of stabilized apartment properties, look to reduce our exposure to alternative assets and maintain our strong balance sheet.
Our active development and redevelopment projects have a total planned investment value of $815 million (requiring approximately $45 million of additional Aimco capital to complete) and are currently in various stages of construction and lease-up. When stabilized they are forecasted to produce approximately $55 million of NOI, ahead of our original expectations due to market level rent growth, resulting in an expected NOI yield on cost of 6.8% for this portfolio of investments.
Our future development pipeline totals approximately 14 million square feet and has the potential to deliver approximately 6,500 new apartment homes and 1.7 million square feet of commercial space over the next ten years or so. These opportunities are high quality and well located with approximately 80% of our pipeline focused in Southeast Florida, 17% in Colorado's Front Range and 3% in the Washington D.C. Metro Area. Although we do not anticipate any new construction starts during 2023, we are advancing planning and entitlement efforts prudently such that incremental investment adds value independent of a decision to commence construction. During the year we plan to invest between $20 and $25 million to advance certain pipeline projects.
Beyond 2023, Aimco targets that between $1 billion and $2 billion of active development and redevelopment projects will be underway at any point in time, with the range driven by market conditions, the specific timing of project starts and completions and the potential to fully monetize certain development opportunities prior to vertical construction. Aimco equity invested in these projects is expected to range between 10% and 15% of the total development costs.
With regard to the timing and funding of Aimco's future development starts it is important to note that: 1) we will be guided by the projected risk adjusted returns on Aimco's equity as compared to alternative uses of capital, 2) Aimco's net cost to carry our current development pipeline is approximately $2 million annually due to the positive cashflow from the current improvements on our Brickell assemblage and the use of low cost options, and 3) we currently have embedded equity within our development pipeline that exceeds what is required to fully build-out the pipeline given our plan to finance projects through construction debt and joint venture equity. To provide more clarity on the depth, timing, and value potential within our development pipeline we have included a new schedule in this earnings release.
Our portfolio of over 5,500 stabilized apartment homes is diversified by geography and generates average monthly revenue per home of $2,170 (generally in line with local market averages) and our new customers in 2022 have median annual household incomes of more than $110,000. Our stabilized portfolio is expected to produce NOI in 2023 that is 5% to 7% higher than the prior year.
Turning to acquisitions and dispositions, given the forementioned depth and quality of our development pipeline, we are not planning any new acquisitions in 2023. Similarly, we do not forecast any real estate dispositions during the year but continue to advance plans to monetize our position in Parkmerced given various accretive uses of that capital, including share repurchases, reducing leverage, and investing in the pipeline.
Our balance sheet is solid. Aimco's property debt is primarily fixed rate loans on stabilized properties with an average term to maturity of 8.2 years and refunding requirements of less than $5 million in 2023. As we look to the most accretive risk-adjusted use of capital we may opportunistically pay down certain higher cost debt when prudent.
The Aimco team remains our most important asset and I am thankful for the team's good results, camaraderie, and commitment to excellence. As we continue to simplify our business and optimize results, we are narrowing our focus and plan to close our California office during the year. We will retain a full-time presence in our target investment markets of Southeast Florida, the Washington D.C. Metro area, and Colorado's Front Range.
As always, the future is far from certain. However, Aimco's strategic focus on rental housing and the specific actions taken over the past two years have positioned us to withstand market turbulence and given us the ability to prudently allocate capital to new opportunities should they be presented.
Above all else, the Aimco management team and Board remain steadfast in our commitment to actively explore all paths that would allow stockholders to realize the full value of their investment.
I thank you for your interest in Aimco!
Wes Powell
Chief Executive Officer
Financial Results and Recent Highlights
- Net income attributable to common stockholders per share, on a fully dilutive basis, was $(1.34) for the quarter ended December 31, 2022, compared to net income per share of $(0.01) for the same period in 2021, due primarily to a non-cash impairment charge related to the Parkmerced mezzanine investment.
- As of February 14, 2023, total shareholder return ("TSR") since the December 15, 2020 separation from AIR Communities was 40.5% and year-to-date was 7.7%.
- In the fourth quarter, Aimco and its joint venture partner began construction on the 220-apartment home development at Strathmore Square in Bethesda, Maryland.
- In 2022 and through February 14, 2023, Aimco has repurchased more than 4.2 million shares of its common stock at a weighted average price of approximately $7.24 per share.
- Fourth Quarter 2022 Revenue and NOI from Aimco's Stabilized Operating Properties were up 9.5% and 10.0%, respectively, year over year, with average revenue per apartment home of $2,170, up $215 year over year.
Value Add, Opportunistic & Alternative 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 December 31, 2022, Aimco had five active development and redevelopment projects located in four U.S. markets, in varying phases of construction and lease-up. These projects remain on track, as measured by construction budget and lease-up metrics. During the fourth quarter, Aimco invested $72.1 million in development and redevelopment activities. Updates include:
- In Miami, Florida, construction is nearing completion and fully renovated apartment homes are being leased at The Hamilton. Demand for rental housing in Southeast Florida remains robust, especially for unique luxury properties such as The Hamilton. The building welcomed its first residents in October 2022 and at year end the building was 50% occupied at rental rates significantly ahead of our underwritten projections. As of February 15, 2023, 75% of the building's 276 units were leased or pre-leased.
- In Bethesda, Maryland, construction began on the first phase of Strathmore Square which will contain 220 highly tailored apartment homes when complete in 2025. This infill project is located adjacent to the Grosvenor-Strathmore Metro station and the Strathmore Performing Arts Campus, and is 1.5 miles from The National Institutes of Health main campus. Funding for the $164.0 million project is fully secured with Aimco's equity commitment projected to be $31.5 million.
- In upper northwest Washington D.C., construction at Upton Place continues on schedule and on budget. The neighboring apartment community, City Ridge, is leasing up well and at rents that provide a positive indicator for Upton Place. Aimco plans to start pre-leasing Upton's 689 apartment homes during the summer of 2023 in anticipation of initial delivery in the fourth quarter of 2023. To date, 80% of the project's 105K square feet of retail space has been leased.
- 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. The Marin County submarket is significantly supply constrained with for-sale starter homes generally priced near $2 million. Aimco expects to deliver the first homes in the third quarter with pre-leasing efforts having begun in the first quarter of 2023.
- In Aurora, Colorado, The Benson Hotel and Faculty Club, a 106-key boutique hotel and event center, is slated for completion at the end of March 2023. As the only 'on campus' accommodations, The Benson will serve the surrounding Anschutz Medical Campus which includes The University of Colorado Medical School, UC Health Hospital, Children's Hospital Colorado, The Rocky Mountain VA Medical Center and the burgeoning Fitzsimons Innovation Community.
Alternative Investments
Aimco's current alternative investments are primarily those investments originated prior to the separation from AIR Communities and include a mezzanine loan secured by a stabilized multifamily property with an option to participate in future multifamily development, as well as three passive equity investments. Over time, we plan to significantly reduce capital allocated to these investments. Updates include:
- The borrower on Aimco's mezzanine loan, which is secured by the Parkmerced stabilized multifamily property plus phases two through nine of the site's future development opportunity, remains current on its first mortgage obligations. In the fourth quarter, given the decline in the underlying collateral value, Aimco recorded a non-cash impairment charge to reduce the value of the mezzanine investment to $158.6 million.
- Aimco recently entered into an agreement to sell the mezzanine loan for $167.5 million. Closing on the sale of the loan is subject to a reasonable due diligence period and certain approvals and, as such, is not guaranteed. If the sale is closed, Aimco expects to monetize the $1.5 billion notional swaption purchased in conjunction with the mezzanine loan investment to protect against future interest rate increases. These transactions could produce approximately $220 million of gross proceeds, representing a 75% recovery of the initial investments, and achieves Aimco's target to reduce capital allocated to alternative investments. Aimco expects to use proceeds on other accretive uses of capital including share repurchases, reducing leverage, and investing in its pipeline.
Investment Activity
Aimco is focused on growing the business, and delivering strong investment returns, through development and redevelopment activities, funded primarily through third-party capital. Updates include:
- In December 2022, Aimco closed on the $1.8 million purchase of land pursuant to one of its controlled options for multifamily development on the Anschutz Medical Campus in Aurora, Colorado. Aimco has begun planning for the next multifamily development on the site which is slated to include approximately 285 apartment homes.
- In February 2023, Aimco entered into an option agreement with the Fitzsimons Redevelopment Authority. If exercised, the option allows for the long-term lease of 4.8 acres of land located on the Anschutz Medical Campus in Aurora, Colorado that can accommodate approximately 850K square feet of commercial life science development built out over multiple phases. The option's annual cost is approximately $0.5 million.
- In December, Aimco's joint venture in Fort Lauderdale, Florida monetized a portion of its investment by closing on the sale of one of three land parcels it acquired in the first quarter of 2022 for development along Broward Avenue. The 0.8-acre land parcel was sold for $18.3 million, approximately double the original purchase price per acre.
Operating Property Results
Aimco owns a diversified portfolio of operating apartment communities located in eight major U.S. markets with average rents in line with local market averages.
Aimco's operating properties produced solid results for the quarter ended December 31, 2022.
Fourth Quarter | FULL YEAR | |||||||||
Stabilized Operating Properties | Year-over-Year | Sequential | Year-over-Year | |||||||
($ in millions) | 2022 | 2021 | Variance | 3Q 2022 | Variance | 2022 | 2021 | Variance | ||
Average Daily Occupancy | 97.4% | 98.8% | (1.4)% | 96.0% | 1.4% | 97.4% | 98.0% | (0.6%) | ||
Revenue, before utility reimbursements | $35.2 | $32.1 | 9.5% | $34.7 | 1.4% | $135.2 | $122.2 | 10.6% | ||
Expenses, net of utility reimbursements | 9.9 | 9.2 | 8.3% | 10.2 | (2.9%) | 40.8 | 39.6 | 3.0% | ||
Net operating income (NOI) | 25.2 | 23.0 | 10.0% | 24.5 | 3.2% | 94.4 | 82.7 | 14.2% | ||
*Excluded from the table above is one, 40-unit apartment community that Aimco's ownership includes a partnership share. | ||||||||||
- Revenue in the fourth quarter 2022 was $35.2 million, up 9.5% year-over-year, resulting from a $215 increase in average monthly revenue per apartment home to $2,170, offset by a 140-basis point decrease in Average Daily Occupancy to 97.4%.
- New lease rents increased 9.5% and Aimco retained 56.7% of residents whose leases were expiring during the quarter at rents 22.5% higher, on average, than the previous lease.
- The median annual household income of new residents was more than $120,000 in the fourth quarter 2022, representing a rent to income ratio of 19.2%.
- Expenses in the fourth quarter 2022 were up 8.3% due to higher real estate taxes, utilities, and insurance. Operating expenses, before real estate taxes, utilities, and insurance were down 0.5%.
- Net operating income in the fourth quarter 2022 was $25.2 million, up 10.0% year-over-year.
Other Real Estate Operations
Aimco also owns one commercial office building that is part of an assemblage with an adjacent apartment building.
Strong leasing momentum continued at 1001 Brickell Bay Drive, a waterfront office building in Miami, Florida, owned as part of a larger assemblage with substantial development potential. In 2022, Aimco executed leases on over 96,000 square feet of office space, at rates per square foot more than 10% higher than leases executed in the same period of 2021. At the end of 2022, the building was 86% occupied, up from 80% at the same time last year. Leases within the building have been executed on terms of less than four years or contain redevelopment provisions as needed to maximize the value of the underlying development rights.
Balance Sheet and Financing Activity
Aimco is highly focused on maintaining a strong balance sheet, including having at all times ample liquidity. As of December 31, 2022, Aimco had access to $379.8 million, including $206.5 million of cash on hand, $23.3 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 December 31, 2022, was as follows:
as of December 31, 2022 | ||||||||
Proportionate, $ in thousands | Amount | Weighted Avg.
| ||||||
Total non-recourse fixed rate debt | $ | 780,355 | 8.2 | |||||
Total non-recourse floating rate debt | 156,479 | 2.1 | ||||||
Total non-recourse construction loan debt | 118,230 | 3.2 | ||||||
Cash and restricted cash | (229,766 | ) | ||||||
Net Leverage | $ | 825,298 | ||||||
As of December 31, 2022, 98% of Aimco's total debt was either fixed rate or hedged with interest rate cap protection. Aimco's interest hedging instruments, purchased to provide protection against increases in interest rates, were valued at $62.3 million versus a cost basis of approximately $18.0 million.
Debt Repayments
- Aimco and its joint venture partner used the majority of the proceeds generated from the sale of the development lot on Broward Avenue in Fort Lauderdale to reduce the principal amount of the floating rate land loan from $40.0 million to $22.9 million.
Construction Financing
- In December, Aimco's joint venture for the development of Strathmore Square completed financing for the project which includes a $94 million construction loan with interest accruing at a rate of one-month Term SOFR, capped at 4.00%, plus 275 basis points with a floor of 5.00%, a $32.5 million mezzanine position accruing at 13%, and fixed-rate financing through the Amazon Housing Equity Fund for $6.5 million. When fully drawn Aimco expects the weighted average interest rate on leverage to be 7.8%.
Public Market Equity
Common Stock Repurchases
- In the fourth quarter, Aimco repurchased 2.6 million shares of its common stock at a weighted average price of $7.56 per share. For the full year 2022, Aimco repurchased 3.5 million shares of its common stock for $24.9 million, with a weighted average price of $7.21 per share. Aimco repurchased an additional 0.8 million shares in 2023, through February 14, at a weighted average price of $7.41 per share.
2023 Outlook
2023 Outlook | ||||||||
$ in millions (except per share amounts), Square Feet in millions | 2023 Full Year Forecast | Full Year 2022 | ||||||
Net income (loss) per share - diluted | $(0.33) - $(0.23) | $0.49 | ||||||
Active Developments and Redevelopments | ||||||||
Total Direct Costs of Projects Underway [1] | $815 | $870 | ||||||
Direct Project Costs | $165 - $185 | $209 | ||||||
Other Capitalized Costs | $30 - $31 | $36 | ||||||
Construction Loan Draws | $150 - $170 | $91 | ||||||
JV Partner Equity Funding | $0 | $31 | ||||||
AIV Equity Funding | ~$45 | $122 | ||||||
Pipeline Projects | ||||||||
Pipeline Size Gross Square Feet [1] | 14.0 | 12.6 | ||||||
Pipeline Size Multifamily Units [1] | 7,640 | 6,118 | ||||||
Pipeline Size Commercial Sq Ft [1] | 1.7 | 0.8 | ||||||
Planning Costs (AIV Share) | $20 - $25 | $18 | ||||||
Real Estate Transactions | ||||||||
Acquisitions | None | $153 | ||||||
Dispositions | None | $936 | ||||||
Operating Properties | ||||||||
Revenue Growth, before utility reimbursements | 5.0% - 7.0% | 10.6% | ||||||
Operating Expense Growth, net of utility reimbursements | 5.25% - 7.25% | 3.0% | ||||||
Net Operating Income Growth | 5.0% - 7.0% | 14.2% | ||||||
Recurring Capital Expenditures | $11 - $13 | $12 | ||||||
General and Administrative | $33 - $35 | $40 | ||||||
Leverage | ||||||||
Interest Expense, net of capitalization | $39 - $42 | $74 | ||||||
[1] Includes land or leasehold value, calculated as the quarterly average. | ||||||||
Active Developments and Redevelopments
Planned incremental direct capital investment in development and redevelopment projects during 2023 is expected to be between $165 - $185 million. Aimco's incremental equity investment is expected to be approximately $45 million with the remainder funded through previously committed third party debt and equity. Aimco expects to have projects with $815 million of total direct costs, inclusive of land or leasehold value, underway during 2023 and expects those projects to produce annual NOI of approximately $55 million once fully stabilized.
In 2023, Aimco plans to:
- Complete the construction and lease up of The Hamilton with NOI stabilization projected to occur in 2024;
- Deliver initial single family rental homes and begin the lease-up of Oak Shore with NOI stabilization projected to occur in 2025;
- Deliver initial apartment homes and begin the lease-up of Upton Place with NOI stabilization projected to occur in 2026; and
- Complete construction and welcome its first guests to The Benson Hotel and Faculty Club with NOI stabilization projected to occur in 2026.
Pipeline Development and Redevelopment Projects
Aimco's future pipeline is located in Southeast Florida, the Washington D.C. Metro Area and Colorado's Front Range. The pipeline is comprised of land assemblages that provide the opportunity for phased multifamily and mixed-use development, real estate where the development opportunity is worth more than the capitalized value of the current income producing assets, and Aimco-controlled options that provide opportunity to access future development rights. Aimco's current pipeline offers the opportunity to construct approximately 14 million square feet over the next ten years or so.
While Aimco maintains the optionality for future development, advances entitlement, and secures third party financing, the costs associated with carrying these assets is mitigated by the diversified nature of the pipeline assets, in particular the income generated by the operating assets at the Brickell assemblage and the low-cost options on future development at Strathmore Square and on the Anschutz Medical Campus.
Aimco expects to invest between $20 million and $25 million to advance planning and entitlement of certain of its future development pipeline projects during 2023. Aimco currently forecasts no new development starts in 2023. If pre-development schedules progress favorably, market and economic conditions support underwriting with NOI yield spreads of 150-200 bps above expected cap rates and we are able to secure favorable third-party financing, Aimco may accelerate the start of certain pipeline projects and begin construction activities late during the fourth quarter of 2023.
Real Estate Transactions
In 2023, Aimco does not plan for any acquisitions that will increase the size of its current development pipeline. Broadly, Aimco does not predict or guide to future transactions but continuously weighs the potential use of proceeds against the source.
Operating Properties
Aimco's stabilized operating portfolio includes properties with rents, on average, in line with local market rents, generally considered class B apartment communities. These properties are primarily located in suburban residential areas of Boston and Chicago with other select assets in Manhattan and Southeast Florida, and single assets in Denver, Nashville, Atlanta, and San Francisco. In the fourth quarter of 2022, Aimco's portfolio generated average monthly revenue per home of $2,170 and new residents had rent-to-income ratios of 19.2%, on average.
In 2023, Aimco forecasts revenues to grow between 5.0% and 7.0%, and operating expenses to increase between 5.25% and 7.25%, resulting in NOI increasing between 5.0% and 7.0%.
Leasing activity from 2022 will contribute approximately 5% to Aimco's stabilized operating portfolio revenue growth in 2023 with approximately +150 bps impact from 2023 lease transactions, at the midpoint of guidance, assuming flat occupancy year over year and -50 bps impact from other revenue items. Additionally, Aimco will add one property to its stabilized operating portfolio in 2023 that will have minimal impact on growth.
General and Administrative
As Aimco announced in the fall of 2022, it is now targeting real estate investment in just three markets, Southeast Florida, the Washington D.C. Metro Area, and Colorado's Front Range. Aimco is planning to exit the California market over time and has eliminated its satellite offices and reduced its regional offices to only its three target markets.
Aimco expects G&A costs in 2023 to be reduced by more than 10%, due to the narrowed geographic focus discussed above and the expiration of the consulting services agreement with AIR Communities that was put in place as part of the separation of the two companies in December 2020.
Leverage
Aimco uses leverage to capitalize its real estate portfolio and construction activities so that Aimco preserves liquidity and so that Aimco equity is invested in diverse projects and markets, mitigating concentration risk. Aimco prefers non-recourse property-level financing with fixed, or rate-capped floating interest rates. In addition, Aimco has a secured revolving credit facility providing additional liquidity.
In 2023, Aimco expects fixed rate and floating rate property loan balances to be in line with ending balances for 2022 and does not anticipate needing to draw on its $150 million revolving credit facility. Aimco does plan to draw between $150 and $170 million on in-place construction and mezzanine loans for planned costs related to active developments and redevelopments. Aimco has a single property loan maturing in 2023 with refunding requirements of less than $5 million. In December 2023, the initial term on Aimco's secured revolving credit facility expires and it is expected that Aimco will exercise its option to extend its maturity for one year.
Public Market Equity & Dividends
Aimco's primary goal is outsized risk-adjusted returns and accelerating growth for our shareholders. In addition to allocating capital to accretive real estate investments and maintaining a solid balance sheet, Aimco will continue to repurchase shares when prices are significantly below our internal estimated net asset value. As of December 31, 2022, Aimco had the authorization remaining to purchase approximately 12 million additional shares of its common stock.
Aimco does not presently intend to pay a regular quarterly cash dividend but may occasionally distribute amounts, as necessary, to comply with REIT requirements.
Commitment to Enhance Stockholder Value
As announced in the fall of 2022, the Aimco Board of Directors is overseeing the review of a broad range of options to enhance stockholder value. This effort is being led by Pat Gibson, the Chairwoman of Aimco's Investment Committee, who has considerable experience in the areas of real estate finance, transactions, and capital markets. There can be no assurance that the ongoing review will result in any transaction or other change or outcome. Aimco does not intend to comment further until it determines that further disclosure is appropriate or necessary.
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, 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 is able to leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities and is essential to the execution of our mission and realization of our vision.
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, including, but not limited to, the statements in this document regarding our future plans and goals, including 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, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, and changes to our corporate governance. We caution investors not to place undue reliance on any such forward-looking statements.
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. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of Aimco that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statement. Important factors, among others, that may affect actual results or outcomes include, but are not limited to: (i) the risk that the 2023 plans and goals may not be completed, as expected, in a timely manner or at all, (ii) the inability to recognize the anticipated benefits of the pipeline investments and projects, and (iii) changes in general economic conditions, including, increases in interest rates and other force-majeure events. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained.
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, 2021, 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 assumes no (and disclaims any) obligation to revise or update them to reflect future events or circumstances.
Consolidated Statements of Operations (in thousands, except per share data) (unaudited) | ||||||||||||||||
Three Months Ended
| Twelve Months Ended
| |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
REVENUES: | ||||||||||||||||
Rental and other property revenues | $ | 41,969 | $ | 46,722 | $ | 190,344 | $ | 169,836 | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
Property operating expenses | 15,408 | 16,113 | 71,792 | 67,613 | ||||||||||||
Depreciation and amortization [1] | 15,548 | 21,648 | 158,967 | 84,712 | ||||||||||||
General and administrative expenses [2] | 10,430 | 10,588 | 39,673 | 33,151 | ||||||||||||
Total operating expenses | 41,386 | 48,349 | 270,432 | 185,476 | ||||||||||||
Interest income | 2,016 | 559 | 4,052 | 2,277 | ||||||||||||
Interest expense | (7,977 | ) | (14,908 | ) | (73,842 | ) | (52,902 | ) | ||||||||
Mezzanine investment income, net [3] | (204,229 | ) | 7,781 | (179,239 | ) | 30,436 | ||||||||||
Realized and unrealized gains (losses) on interest rate options | 200 | (4,099 | ) | 48,205 | 6,509 | |||||||||||
Realized and unrealized gains (losses) on equity investments | 150 | 4,478 | 20,302 | 6,585 | ||||||||||||
Income from unconsolidated real estate partnerships | 120 | 230 | 579 | 973 | ||||||||||||
Gains on dispositions of real estate | 5,860 | - | 175,863 | - | ||||||||||||
Lease modification income [1] | - | - | 206,963 | - | ||||||||||||
Other income (expense), net [4] | (9,134 | ) | 2,715 | (13,373 | ) | 3,212 | ||||||||||
Income (loss) before income tax benefit | (212,412 | ) | (4,871 | ) | 109,422 | (18,550 | ) | |||||||||
Income tax benefit (expense) | 7,074 | 3,689 | (17,264 | ) | 13,570 | |||||||||||
Net income (loss) | (205,339 | ) | (1,182 | ) | 92,158 | (4,980 | ) | |||||||||
Net (income) loss attributable to redeemable noncontrolling interests in consolidated real estate partnerships | (3,383 | ) | (50 | ) | (8,829 | ) | (91 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships | (3,087 | ) | (274 | ) | (3,672 | ) | (1,136 | ) | ||||||||
Net (income) loss attributable to common noncontrolling interests in Aimco Operating Partnership | 10,718 | 88 | (3,931 | ) | 297 | |||||||||||
Net income (loss) attributable to Aimco | $ | (201,091 | ) | $ | (1,418 | ) | $ | 75,726 | $ | (5,910 | ) | |||||
Net income (loss) attributable to common stockholders per share - basic | $ | (1.34 | ) | $ | (0.01 | ) | $ | 0.50 | $ | (0.04 | ) | |||||
Net income (loss) attributable to common stockholders per share - diluted | $ | (1.34 | ) | $ | (0.01 | ) | $ | 0.49 | $ | (0.04 | ) | |||||
Weighted-average common shares outstanding - basic | 148,755 | 149,480 | 149,395 | 149,480 | ||||||||||||
Weighted-average common shares outstanding - diluted | 148,755 | 149,480 | 150,834 | 149,480 | ||||||||||||
[1] In the twelve months ended December 31, 2022, as a result of the lease termination agreement with AIR Communities (AIR) and in accordance with GAAP, Aimco accelerated $85.7 million of depreciation on the associated leasehold improvements. Also, Aimco reduced the right-of-use lease assets associated with these properties to zero and recognized lease modification income of $207.0 million. Per the terms of the lease termination agreement, Aimco received $200 million of cash payments from AIR in exchange for the return of the properties from Aimco to AIR. | ||||||||||||||||
[2] General and administrative expense includes $2.0 million and $6.6 million of expenses to be reimbursed to AIR, per agreement upon separation, for consulting services, with respect to strategic growth, direction, and advice, in the three and twelve months ended December 31, 2022, respectively. This agreement concluded on December 31, 2022. | ||||||||||||||||
[3] In the fourth quarter, Mezzanine investment income, net was a $204.2 million loss primarily due to the impairment charge related to Aimco's Parkmerced mezzanine investment. | ||||||||||||||||
[4] Other income (expense), net in the three months ended December 31, 2022 includes $6.2 million of advisory expenses related to the annual shareholder meeting. | ||||||||||||||||
Consolidated Balance Sheets (in thousands) (unaudited) | ||||||||
December 31, | December 31, | |||||||
2022 | 2021 | |||||||
Assets | ||||||||
Buildings and improvements | $ | 1,322,381 | $ | 1,257,214 | ||||
Land | 641,102 | 534,285 | ||||||
Total real estate | 1,963,483 | 1,791,499 | ||||||
Accumulated depreciation | (530,722 | ) | (561,115 | ) | ||||
Net real estate | 1,432,761 | 1,230,384 | ||||||
Cash and cash equivalents | 206,460 | 233,374 | ||||||
Restricted cash | 23,306 | 11,208 | ||||||
Mezzanine investments | 158,558 | 337,797 | ||||||
Interest rate options | 62,387 | 25,657 | ||||||
Unconsolidated real estate partnerships | 15,789 | 13,025 | ||||||
Notes receivable | 39,014 | 38,029 | ||||||
Right-of-use lease assets | 110,269 | 429,768 | ||||||
Other assets, net | 132,679 | 114,859 | ||||||
Total assets | $ | 2,181,223 | $ | 2,434,101 | ||||
Liabilities and Equity | ||||||||
Non-recourse property debt, net | $ | 929,501 | $ | 483,137 | ||||
Construction loans, net | 118,698 | 163,570 | ||||||
Notes payable to AIR | - | 534,127 | ||||||
Total indebtedness | 1,048,199 | 1,180,834 | ||||||
Deferred tax liabilities | 119,615 | 124,747 | ||||||
Lease liabilities | 114,625 | 435,093 | ||||||
Accrued liabilities and other | 106,600 | 97,400 | ||||||
Total liabilities | 1,389,039 | 1,838,074 | ||||||
Redeemable noncontrolling interests in consolidated real estate partnerships | 166,826 | 33,794 | ||||||
Equity: | ||||||||
Common Stock | 1,466 | 1,498 | ||||||
Additional paid-in capital | 496,482 | 521,842 | ||||||
Retained earnings (accumulated deficit) | 49,904 | (22,775 | ) | |||||
Total Aimco equity | 547,852 | 500,565 | ||||||
Noncontrolling interests in consolidated real estate partnerships | 48,294 | 35,213 |
| |||||
Common noncontrolling interests in Aimco Operating Partnership | 29,212 | 26,455 | ||||||
Total equity | 625,358 | 562,233 | ||||||
Total liabilities and equity | $ | 2,181,223 | $ | 2,434,101 | ||||
Contacts
Matt Foster, Sr. Director, Capital Markets and Investor Relations
Investor Relations 303-793-4661, investor@aimco.com
