Apartment Investment and Management Company, or Aimco (AIV), as the real estate investment trust (REIT) is popularly known, reported fiscal 2010 second quarter funds from operations (FFO) of $46.9 million or 40 cents per share compared to $38.7 million or 34 cents per share in the year-ago period. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
 
Excluding the non-recurring one-time items, FFO during the quarter was $47.8 million or 41 cents per share compared to $52.3 million or 45 cents per share in the year-earlier quarter. The recurring FFO for fiscal 2010 second quarter was well ahead of the Zacks Consensus Estimate of 33 cents.
 
During the quarter, total revenues stood at $295 million, compared to $291.6 million in the year-ago period. Total revenues for the reported quarter surpassed the Zacks Consensus Estimate of $272 million.
 
In the conventional real estate portfolio, Aimco had a weighted average ownership of 92%. Average rents in the conventional real estate portfolio decreased 4.4% during the quarter to $1,010 per unit from $1,056 during second quarter 2009. Same-store revenues in the conventional portfolio decreased $0.8 million or 0.5% primarily due to lower average rent, partially offset by higher average daily occupancy of 95.6% for second quarter 2010 compared to 92.8% for second quarter 2009.
 
In the affordable real estate portfolio, Aimco had a weighted average ownership of 62% during the quarter. Average occupancy decreased 10 bps year over year to 97.2%, while average rents increased 1.6% during the quarter to $780 per unit from $768 during second quarter 2009.
 
During the quarter, Aimco sold 7 conventional properties (1,327 units) and 4 affordable properties (597 units) for $102.2 million of gross proceeds, bulk of which was used to repay debt.
 
At quarter-end, Aimco had a total debt of $5 billion with debt service and fixed charge coverage ratios of 1.57x and 1.34x respectively. Subsequent to the end of the quarter, the company repaid $25 million of corporate term debt, and consequently had no outstanding recourse term debt. At quarter-end, Aimco had cash and cash equivalents of $78.3 million.
 
With strong second quarter results, Aimco increased its recurring FFO guidance for full year 2010 from the range of $1.25 to $1.35 per share to $1.37 to $1.45, while recurring FFO for third quarter 2010 is expected in the range of 32 cents to 36 cents per share. Same-store conventional net operating income during fiscal 2010 is expected to decline 1.0% to 2% compared to the previous year. We maintain our Neutral recommendation on the stock with a Zacks #3 Rank, which translates into a short-term “Hold” rating.
 
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