Aimco Reports Second Quarter 2020 Results

Company Release - 08/03/2020

DENVER--(BUSINESS WIRE)-- Apartment Investment and Management Company (“Aimco”) (NYSE: AIV) announced today second quarter results for 2020.

Chairman and Chief Executive Officer Terry Considine comments: “The second quarter 2020 economic contraction was the most abrupt and most severe in US history. The resilient Aimco business absorbed the financial blow and is now recovering from the shock of the pandemic and the ‘lockdown’ of the economy. In mid-March, the pace of Aimco leasing was cut in half. Ten weeks later at the end of May, we were behind plan by 1,000 new leases. In June and July, increased demand and excellent work by our site teams produced about 325 leases above plan, leaving a year-to-date shortfall of 675. We are at or near the bottom in monthly Average Daily Occupancy. Notwithstanding all that has happened, at the bottom line, our first half results met our pre-crisis expectations.”

“Looking forward, there are many reasons for concern: the fragile economy; the uncertain course of the pandemic; riots and political unrest; continuing lockdowns and the enormous increase in government borrowing and regulation. Nevertheless, I am optimistic about the Aimco portfolio and team, the apartment business itself, and the great experiment in freedom that is our country. Better times lie ahead.”

Chief Financial Officer Paul Beldin adds: “Since the onset of the crisis, Aimco has closed a $350 million term loan and $689 million of property financings. We have lowered the weighted average interest rate of our leverage to 3.69%; addressed all 2020 debt maturities; and increased liquidity and reduced refunding risk such that Aimco committed credit and cash on hand exceeds the total of (1) the $151 million cost to complete continuing long-cycle redevelopments and developments; plus (2) the $959 million of debt maturing in the next 30 months.”

“Second quarter AFFO of $0.55 per share was up 8% year-over-year. At our properties, Aimco recognized 98.4% of all residential rental revenue, treating the balance of 1.6% as bad debt. Of the 98.4%, 97.2% was paid in cash; 70 basis points is subject to recovery by offset against security deposits; and $1.0 million, or 50 basis points is considered collectable based on our review of individual customers’ credit.”

Financial Results: Second Quarter Pro forma FFO Per Share Up 5%; AFFO Per Share Up 8%

 

 

SECOND QUARTER

 

YEAR-TO-DATE

(all items per common share - diluted)

 

2020

 

2019

 

Variance

 

2020

 

2019

 

Variance

Net income

 

$

0.26

 

 

$

0.40

 

 

 

(35

%)

 

$

0.31

 

 

$

2.25

 

 

 

(86

%)

Nareit Funds From Operations (FFO)

 

$

0.57

 

 

$

0.56

 

 

 

2

%

 

$

1.24

 

 

$

1.17

 

 

 

6

%

Pro forma adjustments, net*

 

$

0.06

 

 

$

0.04

 

 

 

50

%

 

$

0.06

 

 

$

0.04

 

 

 

50

%

Pro forma Funds From Operations (Pro forma FFO)**

 

$

0.63

 

 

$

0.60

 

 

 

5

%

 

$

1.30

 

 

$

1.21

 

 

 

7

%

Deduct Capital Replacements

 

$

(0.08

)

 

$

(0.09

)

 

 

(11

%)

 

$

(0.15

)

 

$

(0.15

)

 

 

%

Adjusted Funds From Operations (AFFO)**

 

$

0.55

 

 

$

0.51

 

 

 

8

%

 

$

1.15

 

 

$

1.06

 

 

 

8

%

* See Supplemental Schedule 1 for a detailed list of pro forma adjustments to FFO.

 

** Aimco has not excluded from Pro forma FFO and AFFO $8.0 million, or $0.05 per share for the following COVID-19 related impacts: $2.6 million of net incremental interest expense primarily on Aimco’s $350 million term loan, which Aimco secured to increase liquidity; $2.5 million of incremental bad debt expense; $1.5 million of lower commercial revenue; $0.6 million of lower other income, resulting from local restrictions on Aimco’s ability to charge late fees; $0.8 million of other amounts resulting from COVID-19. Additionally, Aimco has not excluded from year-to-date 2020 Pro forma FFO and AFFO the write-off of $2.9 million of Aimco’s straight-line rent receivables for certain commercial tenants for which collectability of future rent is uncertain and, Aimco has not excluded from year-to-date 2020 AFFO, $2.2 million of deferred broker commissions related to the same commercial tenants.

Net Income (per diluted common share) – Year-over-year, second quarter net income decreased due primarily to fewer gains from dispositions and more prepayment penalties incurred during second quarter refinancing activity undertaken to increase liquidity and to benefit from current interest rates.

Pro forma FFO (per pro forma diluted common share) – Second quarter Pro forma FFO per share was up $0.03 year-over-year due primarily to the contribution from communities in lease-up, the net contribution from the Parkmerced loan, and lower G&A costs; offset partially by the impacts of the pandemic and lockdown mentioned previously and by ‘drag’, or lower contribution, from Redevelopment communities under construction.

Adjusted Funds from Operations (per pro forma diluted common share) – Second quarter AFFO per share increased $0.04 year-over-year due primarily to the $0.03 increase in Pro forma FFO per share and $0.01 due to lower capital replacement spending.

COVID-19 Response Update

Aimco’s top priority is the health and safety of its residents and teammates. Accordingly, Aimco has implemented enhanced cleaning procedures and physical distancing and remote working guidelines at its communities and corporate offices.

Seeing residents as individuals, each impacted differently by the pandemic and lockdown, Aimco teammates have undertaken to speak to every resident in need, to listen, and to help each to solve his or her problems.

Aimco also seeks to assist the communities where its residents and employees live and work. Since March, Aimco has provided free temporary furnished housing for healthcare providers at 21 Fitzsimons on the Anschutz Medical Campus, Parc Mosaic near Boulder Community Health, and River Club near Newark University Hospital.

In the second quarter, Aimco estimates that it incurred $8.0 million of incremental costs related to additional interest costs resulting from Aimco’s increased liquidity; incremental bad debt expense; lower commercial revenue; local restrictions on Aimco’s ability to charge late fees; and enhanced cleaning and safety procedures and other COVID-19 related items.

Rent Collection Update

Residential Rent Collection – Aimco measures residential rent collection as the amount of payments received as a percentage of all residential amounts billed. The table below represents the percentage of second quarter and July 2020 residential billed amounts.

 

2020

 

2nd Qtr.

April

May

June

July

Payments received during the period

 

95.3

%

 

95.6

%

 

95.1

%

 

95.0

%

 

95.8

%

Payments received after period close

 

1.9

%

 

3.1

%

 

1.7

%

 

1.1

%

n/a

 

Total payments received as of July 31, 2020

 

97.2

%

 

98.7

%

 

96.8

%

 

96.1

%

 

95.8

%

In the second quarter, Aimco recognized 98.4% of all residential revenue treating the balance of 1.6% as bad debt. Of the 98.4% of residential revenue recognized, Aimco collected in cash all but 120 basis points. The amounts uncollected and not reserved as bad debt include balances collateralized by security deposits, of approximately 70 basis points, or those considered collectable based on Aimco review of individual customers’ credit, of approximately 50 basis points, or $1.0 million.

In July, Aimco recognized 98.4% of all residential revenue treating the balance of 1.6% as bad debt. Of the 98.4% of residential revenue recognized, Aimco collected 95.8% in cash; 30 basis points is collateralized by security deposits and $1.6 million, or 2.3%, is expected to be collected in future periods… half of which is expected to be collected in August.

Operating Results: Second Quarter Same Store NOI Down 1.4%; Year-to-Date NOI Up 1.8%

 

SECOND QUARTER

YEAR-TO-DATE

 

Year-over-Year

Sequential

Year-over-Year

($ in millions)

2020

2019

Variance

1st Qtr.

Variance

2020

2019

Variance

Revenue, before utility reimbursements

$180.8

$182.8

(1.1%)

$186.8

(3.2%)

$367.6

$363.3

1.2%

Expenses, net of utility reimbursements

48.7

48.9

(0.4%)

48.4

0.6%

97.2

97.5

(0.4%)

NOI

$132.1

$133.9

(1.4%)

$138.4

(4.5%)

$270.4

$265.7

1.8%

Components of Same Store Revenue Growth – Same Store Revenue growth was impacted by lower average daily occupancy, increased bad debt expense, waived late fees, and reduced commercial rents. The table below summarizes the change in the components of Aimco’s Same Store revenue growth.

 

SECOND QUARTER

YEAR-TO-DATE

Same Store Revenue Components

Year-over-Year

Sequential

Year-over-Year

Residential Rents

 

2.5

%

 

0.4

%

 

2.7

%

Average Daily Occupancy

 

(1.4

%)

 

(2.1

%)

 

(0.3

%)

Residential Net Rental Income

 

1.1

%

 

(1.7

%)

 

2.4

%

Bad Debt

 

(1.2

%)

 

(1.1

%)

 

(0.6

%)

Late Fees and Other

 

(0.7

%)

 

(0.2

%)

 

(0.4

%)

Residential Revenue

 

(0.8

%)

 

(3.0

%)

 

1.4

%

Commercial Revenue

 

(0.3

%)

 

(0.2

%)

 

(0.1

%)

Second Quarter 2020 Same Store Revenue

 

(1.1

%)

 

(3.2

%)

 

1.3

%

Same Store Rental Rates – Aimco measures changes in rental rates by comparing, on a lease-by-lease basis, the effective rate on a newly executed lease to the effective 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 as a renewal. The table below details changes in new and renewal lease rates, as well as the weighted-average (blended) lease rates for leases executed in the respective period.

 

2nd Qtr.

Year-to-Date June 30,

2020

 

2020

2019

Variance

2020

2019

Variance

April

May

June

July

Renewal rent increases

 

5.1

%

 

5.2

%

 

(0.1

%)

 

5.4

%

 

5.2

%

 

0.2

%

 

6.0

%

 

5.3

%

 

4.7

%

 

3.4

%

New lease rent increases

 

(2.4

%)

 

2.3

%

 

(4.7

%)

 

(0.8

%)

 

1.8

%

 

(2.6

%)

 

0.9

%

 

(1.6

%)

 

(4.2

%)

 

(5.6

%)

Weighted average rent increases

 

1.8

%

 

3.8

%

 

(2.0

%)

 

2.5

%

 

3.5

%

 

(1.0

%)

 

4.2

%

 

2.2

%

 

0.7

%

 

(1.1

%)

Average Daily Occupancy

 

95.5

%

 

96.9

%

 

(1.4

%)

 

96.6

%

 

96.9

%

 

(0.3

%)

 

96.6

%

 

95.6

%

 

94.5

%

 

93.8

%

Redevelopment and Development

Redevelopment is Aimco’s second line of business where Aimco creates value by repositioning communities within the Aimco portfolio. Aimco also undertakes ground-up development when warranted by risk-adjusted investment returns, either directly or in connection with redevelopment of an existing apartment community. Aimco invests to earn risk-adjusted returns in excess of those expected from the apartment communities sold in “paired trades” to fund the redevelopment and development. Of these two activities, Aimco generally favors redevelopment because it permits adjustment of the scope and timing of spending to align with changing market conditions and customer preferences.

During the second quarter, Aimco invested $62 million in redevelopment and development. Aimco continued five long-cycle redevelopment and development projects already under construction, including the full redevelopment of the North Tower at Flamingo Point in Miami Beach, Florida, and 707 Leahy in Redwood City, California; and ground-up construction at The Fremont on the Anschutz Medical Campus in Aurora, Colorado; Eldridge Townhomes in Elmhurst, Illinois; and Prism in Cambridge, Massachusetts. Aimco’s estimated cost to complete these projects is $151 million, an amount readily funded from Aimco’s liquidity.

In June, Aimco resumed short-cycle redevelopments at Bay Parc in Miami, Florida, and the Center Tower at Flamingo Point in Miami Beach, Florida. Aimco’s estimated cost to complete these projects is $13.4 million.

At Parc Mosaic in Boulder, Colorado, construction is substantially complete. As of July 31, 2020, Aimco had leased 84% of the apartment homes at rents exceeding underwriting.

At The Fremont, on the Anschutz Medical Campus, 86 apartment homes have been delivered and 49% have been leased. Completion of this 253-apartment home community is expected in the fourth quarter.

At Eldridge Townhomes in Elmhurst, Illinois, 23 townhomes have been delivered and 91% of those have been leased. Construction is on track to deliver the remaining 35 townhomes by year end.

In May, construction resumed at 707 Leahy in Redwood City, California, following a five-week county-mandated work stoppage. Aimco has currently completed construction on 43 of the 110 apartment homes and leased 77% of those completed.

In June, COVID-19 related construction bans were lifted by the City of Cambridge allowing construction activities to resume at Prism. Completion of this 136-apartment home property is expected in the first quarter of 2021.

During the second quarter, Aimco leased 59 redeveloped or newly developed apartment homes. At June 30, 2020, Aimco’s exposure to lease-up at long-cycle redevelopment and development communities was 809 apartment homes; 44 homes where construction is complete, 289 homes expected to be delivered during the remainder of 2020, and 476 homes expected to be delivered in 2021.

Portfolio Management

Aimco’s portfolio of apartment communities is diversified across “A,” “B,” and “C+” price points, averaging “B/B+” in quality and is also diversified across several of the largest markets in the United States.

Portfolio Strategy – Aimco follows a disciplined paired trade policy in making investments. As part of its portfolio strategy, Aimco seeks to sell up to 10% of its portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, some developments, and selective acquisitions with projected Free Cash Flow internal rates of return higher than expected from the communities being sold. Aimco prefers well-located real estate where land is a significant percentage of total value and provides potential upside from development or redevelopment. Through this disciplined approach to capital recycling, Aimco increases the quality and expected growth rate of its portfolio.

 

SECOND QUARTER

 

2020

2019

Variance

Apartment Communities

125

128

(3)

Apartment Homes

32,938

34,061

(1,123)

Average Revenue per Apartment Home

$2,254

$2,218

2%

Portfolio Average Rents as a Percentage of Local Market Average Rents

112%

113%

(1%)

Percentage A (2Q 2020 Average Revenue per Apartment Home $2,942)

53%

52%

1%

Percentage B (2Q 2020 Average Revenue per Apartment Home $1,987)

29%

31%

(2%)

Percentage C+ (2Q 2020 Average Revenue per Apartment Home $1,758)

18%

17%

1%

NOI Margin*

71%

72%

(1%)

Free Cash Flow Margin

67%

67%

—%

* NOI margin is lower than Aimco’s Same Store NOI margin of 73% due primarily to the impact of Redevelopment communities that are not yet stabilized. As these communities stabilize, we expect NOI margin to be equal to, or better than, Aimco Same Store NOI margin.

Second Quarter Portfolio – For its entire portfolio, Aimco’s average monthly revenue per apartment home was $2,254 for second quarter 2020, a 2% increase compared to second quarter 2019. This increase is due primarily to year-over-year growth in Same Store rent, lease-up of redeveloped apartment homes, and sales of communities with average monthly rent per apartment home lower than that of the retained portfolio, offset partially by lower average fees and other revenue per apartment home.

In the second quarter, Aimco made no acquisitions.

Dispositions – In the second quarter, Aimco sold one apartment community located in Annandale, Virginia, with 219 apartment homes at a price of $59 million, 3% better than its estimated gross asset value one year prior. Net sales proceeds from this transaction were $37 million.

Subsequent to quarter end, Aimco received a non-refundable deposit on a community to be sold later in 2020. Aimco agreed to sell this community at a price of approximately $126 million, 3% better than its estimated gross asset value at December 31, 2019. Proceeds from this transaction are expected to be used to reduce leverage.

Mezzanine Loan Investment – As previously announced, in December 2019, Aimco made a five-year, $275 million mezzanine loan to a partnership owning Parkmerced Apartments, located in southwest San Francisco. The loan bears interest at a 10% annual rate, accruing if not paid from property operations. In the second quarter, Aimco accrued all interest due, as provided by the loan agreement and consistent with GAAP considering the loan is secured by more than $300 million of borrower equity junior to the Aimco loan.

Balance Sheet

Aimco Leverage

Aimco seeks to increase financial returns by using leverage with appropriate caution. Aimco limits risk through its balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; and Aimco builds financial flexibility by maintaining ample unused and available credit; holding properties with substantial value unencumbered by property debt; maintaining an investment grade rating; and using partners’ equity capital when it enhances financial returns or reduces investment risk.

Aimco leverage includes the Aimco share of long-term, non-recourse, property debt encumbering apartment communities, outstanding borrowings under the Aimco revolving credit facility, the term loan, and other leverage.

 

 

AS OF JUNE 30, 2020

$ in Millions

 

Amount

 

% of Total

 

Weighted Avg.

Maturity (Yrs.)*

Aimco share of long-term, non-recourse property debt

 

$

4,558

 

 

 

91

%

 

 

7.7

 

Term loan

 

 

350

 

 

 

7

%

 

 

0.8

 

Other leverage

 

 

101

 

 

 

2

%

 

 

9.7

 

Total Leverage

 

$

5,009

 

 

 

100

%

 

 

7.3

 

Cash, restricted cash, and investments in securitization trust assets

 

 

(525

)

 

 

 

 

 

 

 

 

Net Leverage

 

$

4,484

 

 

 

 

 

 

 

 

 

*Other leverage includes mezzanine equity instruments, including Aimco Preferred OP Units, redeemable at the holder’s option. Aimco has computed the weighted-average maturity of its total leverage assuming a 10-year maturity for its Preferred OP Units.

Leverage Ratios

Aimco target leverage ratios are Net Leverage to Adjusted EBITDAre below 7.0x and Adjusted EBITDAre to Interest Expense and Preferred Distributions greater than 2.5x. Aimco calculates Adjusted EBITDAre and Adjusted Interest Expense used in its leverage ratios based on current quarter amounts, annualized.

Proportionate Debt to Adjusted EBITDAre

 

7.9x

Net Leverage to Adjusted EBITDAre

 

8.1x

Adjusted EBITDAre to Adjusted Interest Expense

 

3.5x

Adjusted EBITDAre to Adjusted Interest Expense and Preferred Distributions

 

3.3x

Net Leverage to Adjusted EBITDAre increased by 0.4x from March 31, 2020, due primarily to a $6.1 million reduction in quarterly EBITDAre as a result of COVID-19.

Aimco expects to meet its leverage target through a combination of property NOI growth, including the $30 million of incremental NOI Aimco expects to receive from its “long-cycle” redevelopment communities now underway, and through approximately $350 million of property sales, including the previously mentioned under-contract property, expected to close in 2020.

Under its revolving credit facility and term loan, Aimco has agreed to maintain a fixed charge coverage ratio of 1.40x, as well as other covenants customary for similar revolving credit arrangements. For the period ended June 30, 2020, Aimco’s fixed charge coverage ratio was 2.02x. Aimco expects to remain in compliance with its covenants.

Financing Activity

During the second quarter, Aimco placed $609 million of new property debt, generating incremental proceeds of $371 million, and closed the refinancing of another $80 million in July. The loans have a weighted-average term to maturity of 9.3 years and a weighted-average interest rate of 2.9%, lowering Aimco’s weighted-average borrowing cost of leverage to 3.69%. Aimco addressed all of its 2020 loan maturities and reduced 2021 to 2024 maturities by 18%; resulting in average annual maturities of $262 million remaining for the four years.

Also, during the second quarter, Aimco secured a $350 million term loan. Proceeds from the loan were used primarily to repay borrowings on the revolving credit facility.

Liquidity

Aimco uses its credit facility primarily for working capital and other short-term purposes and to secure letters of credit. At June 30, 2020, Aimco held cash and restricted cash of $428 million and had the capacity to borrow up to $793 million under its revolving credit facility, bringing total liquidity to $1.2 billion.

Aimco also manages its financial flexibility by maintaining an investment grade rating and holding communities that are unencumbered by property debt. As of June 30, 2020, Aimco held unencumbered communities with an estimated fair market value of approximately $2.3 billion.

Equity Capital Activities

On July 28, 2020, the Aimco Board of Directors declared quarterly cash dividends of $0.41 per share of Class A Common Stock, an increase of 5% compared to the regular quarterly dividends paid in 2019. This amount is payable on August 28, 2020, to stockholders of record on August 14, 2020.

Earnings Conference Call Information

Live Conference Call:

Conference Call Replay:

Tuesday, August 4, 2020 at 12:00 p.m. ET

Replay available until November 4, 2020

Domestic Dial-In Number: 1-888-317-6003

Domestic Dial-In Number: 1-877-344-7529

International Dial-In Number: 1-412-317-6061

International Dial-In Number: 1-412-317-0088

Passcode: 9237894

Passcode: 10146438

Live webcast and replay: investors.aimco.com

 

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 real estate investment trust focused on the ownership and management of quality apartment communities located in select markets in the United States. Aimco is one of the country’s largest owners and operators of apartments, with ownership interests in 125 apartment communities in 17 states and the District of Columbia. 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.

Forward-looking Statements

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 2020 results, including but not limited to: Nareit FFO, Pro forma FFO and selected components thereof; AFFO; Aimco redevelopment and development investments and projected yield on such investments, timelines, and Net Operating Income contribution; expectations regarding sales of Aimco apartment communities and the use of proceeds thereof; and Aimco liquidity and leverage metrics.

These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties. Risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic and the lockdown on Aimco’s ability to maintain current or meet projected occupancy, rental rate and property operating results; the impact of the COVID-19 pandemic and the lockdown on those entities in which Aimco holds a partial interest, including Aimco’s interest in the partnership that owns Parkmerced Apartments; the effect of acquisitions, dispositions, redevelopments and developments; Aimco’s ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to Aimco redevelopment and development investments; expectations regarding Aimco sales of apartment communities and the use of proceeds thereof; the availability and cost of property-level and corporate debt; and Aimco’s 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 Aimco’s control, including, without limitation:

  • Real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which Aimco operates 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 of acquisitions, dispositions, redevelopments and developments; and changes in operating costs, including energy costs;
  • Impact of the COVID-19 pandemic and the lockdown on Aimco's residents, commercial tenants, and operations, including as a result of government restrictions and the overall impact on the real estate industry and economy generally, and the ongoing, dynamic and uncertain nature and duration of the pandemic, all of which heightens the impact of the other risks and factors described below;
  • Financing risks, including the availability and cost of capital markets’ financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; and the risk that earnings may not be sufficient to maintain compliance with debt covenants;
  • Insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; and
  • Legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of governmental regulations that affect Aimco and interpretations of those regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently 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 Aimco’s 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, 2019 and the section entitled “Risk Factors” in Item 1A of Aimco’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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.

Consolidated Statements of Operations

(in thousands, except per share data) (unaudited)

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2020

 

2019

 

2020

 

2019

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

 

$

218,808

 

 

$

224,200

 

 

$

443,360

 

 

$

454,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

 

74,123

 

 

 

75,647

 

 

 

149,603

 

 

 

154,606

 

Depreciation and amortization

 

 

97,689

 

 

 

91,924

 

 

 

198,165

 

 

 

185,489

 

General and administrative expenses

 

 

9,696

 

 

 

11,498

 

 

 

19,804

 

 

 

21,327

 

Investment management expenses

 

 

1,121

 

 

 

1,406

 

 

 

2,305

 

 

 

2,738

 

Other expenses, net

 

 

4,239

 

 

 

3,621

 

 

 

5,881

 

 

 

8,757

 

Total operating expenses

 

 

186,868

 

 

 

184,096

 

 

 

375,758

 

 

 

372,917

 

Interest income

 

 

2,843

 

 

 

3,065

 

 

 

7,366

 

 

 

5,791

 

Interest expense

 

 

(48,802

)

 

 

(39,541

)

 

 

(90,138

)

 

 

(80,950

)

Gain on dispositions of real estate

 

 

47,238

 

 

 

64,310

 

 

 

47,204

 

 

 

355,783

 

Mezzanine investment income, net

 

 

6,936

 

 

 

 

 

 

13,683

 

 

 

 

Income from unconsolidated real estate partnerships

 

 

170

 

 

 

231

 

 

 

352

 

 

 

303

 

Income before income tax benefit (expense)

 

 

40,325

 

 

 

68,169

 

 

 

46,069

 

 

 

362,445

 

Income tax benefit (expense)

 

 

2,879

 

 

 

1,827

 

 

 

6,112

 

 

 

(1,154

)

Net income

 

 

43,204

 

 

 

69,996

 

 

 

52,181

 

 

 

361,291

 

Noncontrolling interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss (income) attributable to noncontrolling interests in consolidated real estate partnerships

 

 

17

 

 

 

(70

)

 

 

(1

)

 

 

(161

)

Net income attributable to preferred noncontrolling interests in Aimco OP

 

 

(1,859

)

 

 

(1,933

)

 

 

(3,728

)

 

 

(3,867

)

Net income attributable to common noncontrolling interests in Aimco OP

 

 

(2,107

)

 

 

(3,534

)

 

 

(2,475

)

 

 

(18,671

)

Net income attributable to noncontrolling interests

 

 

(3,949

)

 

 

(5,537

)

 

 

(6,204

)

 

 

(22,699

)

Net income attributable to Aimco

 

 

39,255

 

 

 

64,459

 

 

 

45,977

 

 

 

338,592

 

Net income attributable to Aimco preferred stockholders

 

 

 

 

 

(5,187

)

 

 

 

 

 

(7,335

)

Net income attributable to participating securities

 

 

(43

)

 

 

(38

)

 

 

(86

)

 

 

(455

)

Net income attributable to Aimco common stockholders

 

$

39,212

 

 

$

59,234

 

 

$

45,891

 

 

$

330,802

 

Net income attributable to Aimco per common share – basic and diluted

 

$

0.26

 

 

$

0.40

 

 

$

0.31

 

 

$

2.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding – basic

 

 

148,535

 

 

 

148,367

 

 

 

148,527

 

 

 

146,994

 

Weighted-average common shares outstanding – diluted

 

 

148,553

 

 

 

148,599

 

 

 

148,670

 

 

 

147,220

 

 

Included in net income for the three months ended June 30, 2020 is $8.0 million of COVID-19 related impacts, including $2.6 million of net incremental interest expense on Aimco’s $350 million term loan, which Aimco secured to increase liquidity; $2.5 million of incremental bad debt expense; $1.5 million of lower commercial revenue; $0.6 million of lower other income, resulting from local restrictions on Aimco’s ability to charge late fees; and $0.8 million related to other amounts resulting from COVID-19.

 

Additionally, included in net income for the six months ended June 30, 2020 is the write-off of $2.9 million of Aimco’s straight-line rent receivable for certain commercial tenants for which collectability of future rent is uncertain and $2.2 million of deferred broker commissions.

Consolidated Balance Sheets

(in thousands) (unaudited)

 

 

 

June 30,

 

December 31,

 

 

2020

 

2019

Assets

 

 

 

 

 

 

 

 

Real estate

 

$

8,794,593

 

 

$

8,737,591

 

Accumulated depreciation

 

 

(2,786,104

)

 

 

(2,718,284

)

Net real estate

 

 

6,008,489

 

 

 

6,019,307

 

Cash and cash equivalents

 

 

398,408

 

 

 

142,902

 

Restricted cash

 

 

44,100

 

 

 

34,800

 

Mezzanine investment

 

 

293,427

 

 

 

280,258

 

Goodwill

 

 

37,808

 

 

 

37,808

 

Other assets

 

 

338,915

 

 

 

313,664

 

Total Assets

 

$

7,121,147

 

 

$

6,828,739

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Non-recourse property debt

 

$

4,565,673

 

 

$

4,251,339

 

Debt issue costs

 

 

(21,930

)

 

 

(20,749

)

Non-recourse property debt, net

 

 

4,543,743

 

 

 

4,230,590

 

Term loan, net

 

 

348,440

 

 

 

 

Revolving credit facility borrowings

 

 

 

 

 

275,000

 

Accrued liabilities and other

 

 

353,787

 

 

 

360,574

 

Total Liabilities

 

 

5,245,970

 

 

 

4,866,164

 

 

 

 

 

 

 

 

 

 

Preferred noncontrolling interests in Aimco OP

 

 

96,449

 

 

 

97,064

 

Redeemable noncontrolling interests in consolidated real estate partnership

 

 

4,492

 

 

 

4,716

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

1,489

 

 

 

1,489

 

Additional paid-in capital

 

 

3,491,277

 

 

 

3,497,367

 

Accumulated other comprehensive income

 

 

3,807

 

 

 

4,195

 

Distributions in excess of earnings

 

 

(1,798,561

)

 

 

(1,722,402

)

Total Aimco equity

 

 

1,698,012

 

 

 

1,780,649

 

Noncontrolling interests in consolidated real estate partnerships

 

 

(3,190

)

 

 

(3,296

)

Common noncontrolling interests in Aimco OP

 

 

79,414

 

 

 

83,442

 

Total Equity

 

 

1,774,236

 

 

 

1,860,795

 

Total Liabilities and Equity

 

$

7,121,147

 

$

6,828,739

 

Matt Foster, Director, Investor Relations
Investor Relations 303-793-4661, investor@aimco.com

Source: Apartment Investment and Management Company