Chairman and Chief Executive Officer
Chief Financial Officer
Financial Results:AFFO Up 13%, Pro forma FFO Up 4%
|(all items per common share)||2014||2013|
|Funds From Operations (FFO)/ Pro forma Funds From Operations (Pro forma FFO)||$||0.50||$||0.48|
|Deduct Aimco share of Capital Replacements||$||(0.07||)||$||(0.10||)|
|Adjusted Funds From Operations (AFFO)||$||0.43||$||0.38|
Pro forma FFO - Year-over-year, first quarter Pro forma FFO increased 4% as a result of improved property operating results, lower offsite costs and lower interest expense. These positive results were somewhat offset by: sales of apartment communities; higher casualty losses as a result of severe weather in the Northeast and Midwest, and lower interest income.
Adjusted Funds from Operations - First quarter AFFO increased 13% when compared to first quarter 2013, as a result of Pro forma FFO growth, lower Capital Replacement spending associated with multi-phase capital projects started in prior years, and lower Capital Replacements due to the sale of approximately 7,000 apartment homes during 2013. As Aimco concentrates its investment capital in higher quality, higher price-point apartment communities, Capital Replacements are expected to decline as a percentage of net operating income. As a result, AFFO is increasing at a faster rate than is Pro forma FFO.
Operating Results: Conventional Same Store NOI Up 5.6%
Conventional Same Store Results
|Average Rent Per Apartment Home||$||1,322||$||1,281||3.2||%||$||1,315||0.5||%|
|Other Income Per Apartment Home||168||147||14.3||%||155||8.4||%|
|Average Revenue Per Apartment Home||$||1,490||$||1,428||4.3||%||$||1,470||1.3||%|
|Average Daily Occupancy||95.7||%||95.4||%||0.3||%||95.5||%||0.2||%|
|$ in Millions|
Rental Rates - 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 either as a new lease, where a vacant apartment is leased to a new customer, or as a renewal.
|Renewal rent increases||4.7||%||5.1||%||5.0||%||4.9||%|
|New lease rent increases||0.3||%||0.8||%||1.7||%||1.0||%|
|Weighted average rent increases||2.5||%||2.8||%||3.1||%||2.8||%|
Aimco's portfolio strategy seeks predictable rent growth from a portfolio of "A", "B" and "C" quality market-rate apartment communities, averaging "B/B+" in quality, and diversified among the largest coastal and job growth markets in the U.S., as measured by total apartment value. Aimco's target markets are primarily coastal markets, and also include several
Aimco measures asset quality based on 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 asset quality as follows: "A" quality assets are those with rents greater than 125% of local market average; "B" quality assets are those with rents 90% to 125% of local market average; and "C" quality assets are those with rents lower than 90% of local market average. For fourth quarter 2013, the most recent period for which REIS information is available,
Aimco expects to sell each year the lowest-rated 5% to 10% of its portfolio and to reinvest the proceeds from such sales in redevelopment and acquisition of higher-quality apartment communities. Through this disciplined approach to capital recycling, from 2010 through 2013, Aimco increased its year-end Conventional portfolio average monthly revenue per apartment home at a compound annual growth rate of more than 8%. This rate of growth reflects the impact of market rent growth, and more significantly, the impact of portfolio management through dispositions, redevelopment and acquisitions.
First quarter 2014 Conventional portfolio average monthly revenue per apartment home was
Dispositions -In first quarter 2014, Aimco sold three Conventional Apartment Communities and two
During first quarter 2014, Aimco invested
Construction continued at both Preserve at
In total, Aimco is forecasting a net investment of approximately
See Supplemental Schedule 10 to this Earnings Release for details of redevelopment projects underway, including updated cost and rent estimates.
Development: Progressing as Planned
During the first quarter 2014, Aimco invested
Balance Sheet and Liquidity:Leverage on Target
Components of Aimco Leverage
|AS OF |
|$ in Millions||Amount||% of Total|
|Aimco share of long-term, non-recourse property debt||$||4,150.7|
|Outstanding borrowings on revolving credit facility||110.1|
Aimco leverage targets are: Debt and Preferred Equity to EBITDA less than 7.0x; and EBITDA Coverage of Interest and Preferred Dividends greater than 2.5x. Aimco also focuses on Debt to EBITDA and EBITDA Coverage of Interest ratios. See the Glossary for definitions of these metrics.
|Debt to EBITDA||7.1x||7.5x|
|Debt and Preferred Equity to EBITDA||7.4x||7.8x|
|EBITDA Coverage of Interest||2.6x||2.4x|
|EBITDA Coverage of Interest and Preferred Dividends||2.5x||2.3x|
Future leverage reduction is expected both from earnings growth and from regularly scheduled property debt amortization funded from retained earnings.
Aimco recourse debt at March 31, 2014, was limited to its revolving credit facility, which Aimco uses for working capital and other short-term purposes, and to secure letters of credit.
At the end of the first quarter, Aimco had outstanding borrowings on its revolving credit facility of
Dividend - As previously announced, the Aimco Board of Directors declared a quarterly cash dividend of
|Net income per share|
|Pro forma FFO per share|
|AFFO per share|
|Conventional Same Store Operating Measures|
|NOI change compared to first quarter 2014||0.25% to 1.25%||n/a||n/a||n/a|
|NOI change compared to same period 2013||3.50% to 4.50%||3.00% to 5.00%||3.00% to 5.00%||5.1%|
|Revenue change compared to 2013||n/a||3.00% to 4.00%||3.00% to 4.00%||4.4%|
|Expense change compared to 2013||n/a||2.00% to 3.00%||2.00% to 3.00%||3.0%|
Earnings Conference Call Information
Live Conference Call:
Conference Call Replay:
Replay available until |
|International Dial-In Number: 1-412-317-6061||International Dial-In Number: 1-412-317-0088|
|Passcode: 8125818||Passcode: 10043920|
Live webcast and replay: http://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 at 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
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
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: second quarter and full year 2014 results, including but not limited to Pro forma FFO and selected components thereof; AFFO; and Aimco's development and redevelopment project investments, timelines and stabilized rents. 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; 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 projects; and our ability to comply with debt covenants, including financial coverage ratios.
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; the risk that our 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, dispositions, developments and redevelopments; 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 apartment communities presently owned or previously owned by Aimco. In addition, Aimco's 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 its 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, 2013, and the other documents Aimco files from time to time with the
Vice President Investor Relations