Apartment Investment and Management Company (AIV), or Aimco as the real estate investment trust (REIT) is popularly known, reported fiscal 2010 fourth quarter funds from operations (FFO) of $35.7 million or 31 cents per share compared to $16.1 million or 14 cents 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 reported quarter was $45.3 million or 39 cents per share compared to $30.2 million or 26 cents in the year-earlier quarter. The recurring FFO for fiscal 2010 fourth quarter was well ahead of the Zacks Consensus Estimate of 35 cents. During the quarter, total revenues stood at $293.5 million, compared to $286.7 million in the year-ago period. Total revenues for the reported quarter surpassed the Zacks Consensus Estimate of $277 million.
For full year 2010, Aimco reported FFO of $160.9 million or $1.38 per share compared to $126.0 million or $1.09 in the previous year. Excluding the non-recurring one-time items, FFO during the reported fiscal was $176.7 million or $1.51 per share compared to $178.8 million or $1.55 in 2009. The recurring FFO for fiscal 2010 was well ahead of the Zacks Consensus Estimate of $1.41. For full year 2010, total revenues stood at $1.1 billion, unchanged from that recorded in 2009. 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 92%. Average rents in the conventional real estate portfolio decreased 0.8% during the quarter to $1,045 per unit from $1,053 during fourth quarter 2009. Rental rates on new leases in the conventional real estate portfolio were 0.9% higher than the expiring lease rates. Fourth quarter renewal rates were 1.6% higher than expiring lease rates during the quarter.
Same-store revenues in the conventional portfolio increased 1.6% year-over-year to $189.4 million primarily due to higher average daily occupancy of 96.7% for fourth quarter 2010 compared to 95.3% for fourth quarter 2009.
In the affordable real estate portfolio, Aimco had a weighted average ownership of 65% during the quarter. Average occupancy was 97.6% at quarter-end, an increase of 0.7% from fourth quarter 2009, while average rent per unit increased 3.8% from $780 to $810. Conventional property operations generated 88% of Aimco’s fourth quarter 2010 property net operating income (NOI), while affordable real estate portfolio generated the balance 12%.
During fourth quarter 2010, Aimco purchased the non-controlling limited partners’ interests in 2 properties for $19.9 million. Also during the quarter, Aimco sold 8 conventional properties (1,877 units) and 12 affordable properties (1,264 units) for $117.9 million of total gross proceeds, bulk of which was used to repay debt.
At year-end 2010, Aimco had a total debt of $4.9 billion with debt service and fixed charge coverage ratios of 1.57x and 1.33x respectively. At year-end 2010, Aimco had cash and cash equivalents of $111.3 million compared to $81.3 million in the previous year. Aimco’s recourse debt at December 31, 2010, was limited to its revolving credit facility. At quarter-end, Aimco had no outstanding borrowings on its revolving credit facility and available capacity was $260.3 million, net of $39.7 million of letters of credit backed by the facility.
During fourth quarter 2010, Aimco issued 0.6 million shares under its At-the-Market (ATM) offering program at a weighted average price of $24.50 each, generating $14.4 million in proceeds. The company utilized the proceeds from the equity offering to fund its acquisitions.
With strong quarterly and fiscal results, Aimco expects recurring FFO for full year 2011 in the range of $1.46 to $1.56 per share, while recurring FFO for first quarter 2011 is expected in the range of 33 cents to 37 cents. Same-store conventional NOI during fiscal 2011 is expected to decline 2.5% to 4.5% compared to the previous year.
We maintain our long-term ‘Neutral’ recommendation on the stock, which presently has a Zacks #2 Rank translating into a short-term ‘Buy’ rating. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank (short-term ‘Hold’) for Equity Residential (EQR), one of the competitors of Aimco.
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