Apartment Investment and Management Company (AIV), or Aimco as the real estate investment trust (REIT) is popularly known, reported fiscal 2011 fourth quarter funds from operations (FFO) of $52.2 million or 43 cents per share compared to $41.4 million or 35 cents in the year-ago period. Funds 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 reported quarter was $50.4 million or 42 cents per share compared to $45.3 million or 39 cents in the year-earlier quarter. The recurring FFO for fiscal 2011 fourth quarter marginally beat the Zacks Consensus Estimate by a penny.
During the quarter, total revenues stood at $272.9 million, compared to $271.1 million in the year-ago period. Total revenues for the reported quarter were in line the Zacks Consensus Estimate.
For full year 2011, Aimco reported FFO of $191.3 million or $1.52 per share compared to $199.9 million or $1.52 in the previous year. Excluding the non-recurring one-time items, FFO during the reported fiscal was $187.7 million or $1.49 per share compared to $199.7 million or $1.51 in 2010.
The recurring FFO for fiscal 2011 was well ahead of the Zacks Consensus Estimate of $1.44. For full year 2011, total revenues stood at $1.1 billion, almost similar to that recorded in 2010. Total revenues for the reported fiscal were in line with the Zacks Consensus Estimate.
In the conventional real estate portfolio, Aimco had a weighted average ownership of 94%. Average rents in the conventional real estate portfolio increased 9.0% during the quarter to $1,143 per unit. Rental rates on new leases in the conventional real estate portfolio were 0.7% higher than the expiring lease rates.
Fourth quarter renewal rates were 5.2% higher than expiring lease rates during the quarter. Same-store revenues in the conventional portfolio increased 3.3% year-over-year to $189.3 million, while same-store net operating income increased 5.8% due to a 4.5% increase in average rents to $1,124 per unit from $1,076 during fourth quarter 2010.
In the affordable real estate portfolio, Aimco had a weighted average ownership of 73% during the reported quarter. Average occupancy was 97.7% at quarter-end, while average rent per unit increased 3.0% from $862 to $888. Conventional property operations generated 88% of Aimco’s fourth quarter 2011 property net operating income, while affordable real estate portfolio generated the balance 12%.
During fourth quarter 2011, Aimco sold 7 conventional properties (1,947 units) and 20 affordable properties (2,185 units) for $180.3 million of total gross proceeds, bulk of which was used to repay debt.
At year-end 2011, Aimco had a total debt of $4.7 billion with debt service and fixed charge coverage ratios of 1.61x and 1.37x respectively. At year-end 2011, Aimco had cash and cash equivalents of $91.1 million compared to $111.3 million in the previous year. Aimco’s recourse debt at December 31, 2010, was limited to its revolving credit facility.
During the quarter, Aimco obtained a new three-year revolving credit facility worth $500 million in its concerted effort to strengthen liquidity and reduce refinancing risk. The new credit facility replaced the existing $300 million credit facility that was scheduled to mature in May 2013.
The renewed credit facility is scheduled to mature in December 2014 and has an accordion feature that would enable Aimco to extend the maturity by two 1-year periods subject to the fulfillment of certain conditions.
Besides extending the debt maturity and the borrowing capacity of Aimco, the new credit facility reduces the capital outflow with a significantly low interest rate. The new credit facility bears an interest at LIBOR plus 2.75%, while that of the erstwhile credit facility was LIBOR plus 4.25%.
With strong quarterly and fiscal results, Aimco expects FFO for full year 2012 in the range of $1.72 to $1.82 per share, while FFO for first quarter 2012 is expected in the range of 33 cents to 37 cents.
We maintain our long-term Neutral recommendation on the stock, which presently has a Zacks #3 Rank translating into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank for Equity Residential (EQR), one of the competitors of Aimco.
APARTMENT INVT (AIV): Free Stock Analysis Report
EQUITY RESIDENT (EQR): Free Stock Analysis Report
