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Aimco's (AIV) Q4 FFO In line, Increases Y/Y; Revenues Beat
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Apartment Investment and Management Company (AIV - Free Report) – better known as Aimco – reported fourth-quarter 2016 pro forma funds from operations (“FFO”) of 60 cents per share, in line with the Zacks Consensus Estimate. The prior-year quarter figure was 58 cents.
For full-year 2016, pro forma FFO per share came in at $2.32 per share, beating the Zacks Consensus Estimate by a penny. The bottom-line figure for full-year 2015 was $2.23 per share.
The year-over-year rise in bottom line can be attributed to conventional same store property net operating income (“NOI”) growth, higher contribution from development, redevelopment and acquisition activities and lower casualty losses. These were partly offset by the loss of income from the sale of apartment communities and rise in interest expense.
For the reported quarter, total revenue came in at $249.5 million, beating the Zacks Consensus Estimate of $242.4 million, and exceeding the prior-year quarter figure by 1.5%.
For full-year 2016, total revenue came in at $995.9 million, exceeding the prior-year figure by 1.5%.
Quarter in Detail
In the Conventional real estate portfolio, same-store revenues increased 4.4% year over year to $160.7 million, while expenses fell 0.8% to $46.0 million. Consequently, same-store NOI climbed 6.6% to $114.7 million on a year-over-year basis.
Same-store average daily occupancy rose 0.4% year over year to 96.0%. Rental rates on new leases were down 1.9% from the expiring lease rates whereas rental rates on renewal leases were up 4.8% from the expiring lease rates.
As of Dec 31, 2016, Aimco held cash and restricted cash on hand of $131 million. Moreover, the estimated fair market value of the company’s unencumbered apartment communities was $1.6 billion.
Further, at the end of the quarter, Aimco’s outstanding borrowings on its revolving credit facility were $18 million and available capacity was $570 million, after considering $12 million of letters of credit backed by the facility.
Portfolio Activity
During the quarter, Aimco invested $38 million in redevelopment. Of this, $15 million was associated with the redevelopment of Park Towne Place and The Sterling, mixed-use communities in Center City Philadelphia.
As intended, Aimco continues to sell 5–10% of its lowest rated portfolio each year and uses the proceeds for acquisition and redevelopment of higher-quality apartments. The conventional percentage NOI in target markets was 88% in fourth quarter, unchanged year over year. Moreover, revenue per apartment home improved 8% year over year to $1,978 from $1,840 a year ago.
2017 Guidance
For 2017, Aimco expects pro forma FFO per share guidance in the range of $2.39–$2.49. The Zacks Consensus Estimate of $2.46 lies within the guided range.
For first-quarter 2017, Aimco expects pro forma FFO per share guidance in a band of 55–59 cents per share. The Zacks Consensus Estimate of 59 cents lies within this range.
Dividend
On Jan 31, 2017, Aimco declared a quarterly cash dividend of 36 cents per share of Class A Common Stock for the fourth quarter. This marks a sequential increase of 9%. The dividend will be paid on Feb 28, 2017 to stockholders on record as of Feb 17
In Conclusion
Aimco’s persistent property sales and reinvestment of proceeds in select apartment homes with higher rents and superior margins continue to strengthen its position in high-growth potential markets. Yet, even if the divestitures pay off in the long run, its near-term adverse effects on earnings cannot be ignored. Also, stiff competition poses a challenge for Aimco.
Nevertheless, the company has a solid portfolio, diversified both in terms of geography and price point. This raises hope for relatively stable revenues despite new supply in various markets.
We now look forward to the earnings releases of The Macerich Company (MAC - Free Report) , Highwoods Properties, Inc. (HIW - Free Report) and Liberty Property Trust which are expected next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, 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.
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Aimco's (AIV) Q4 FFO In line, Increases Y/Y; Revenues Beat
Apartment Investment and Management Company (AIV - Free Report) – better known as Aimco – reported fourth-quarter 2016 pro forma funds from operations (“FFO”) of 60 cents per share, in line with the Zacks Consensus Estimate. The prior-year quarter figure was 58 cents.
For full-year 2016, pro forma FFO per share came in at $2.32 per share, beating the Zacks Consensus Estimate by a penny. The bottom-line figure for full-year 2015 was $2.23 per share.
The year-over-year rise in bottom line can be attributed to conventional same store property net operating income (“NOI”) growth, higher contribution from development, redevelopment and acquisition activities and lower casualty losses. These were partly offset by the loss of income from the sale of apartment communities and rise in interest expense.
For the reported quarter, total revenue came in at $249.5 million, beating the Zacks Consensus Estimate of $242.4 million, and exceeding the prior-year quarter figure by 1.5%.
For full-year 2016, total revenue came in at $995.9 million, exceeding the prior-year figure by 1.5%.
Quarter in Detail
In the Conventional real estate portfolio, same-store revenues increased 4.4% year over year to $160.7 million, while expenses fell 0.8% to $46.0 million. Consequently, same-store NOI climbed 6.6% to $114.7 million on a year-over-year basis.
Same-store average daily occupancy rose 0.4% year over year to 96.0%. Rental rates on new leases were down 1.9% from the expiring lease rates whereas rental rates on renewal leases were up 4.8% from the expiring lease rates.
As of Dec 31, 2016, Aimco held cash and restricted cash on hand of $131 million. Moreover, the estimated fair market value of the company’s unencumbered apartment communities was $1.6 billion.
Further, at the end of the quarter, Aimco’s outstanding borrowings on its revolving credit facility were $18 million and available capacity was $570 million, after considering $12 million of letters of credit backed by the facility.
Portfolio Activity
During the quarter, Aimco invested $38 million in redevelopment. Of this, $15 million was associated with the redevelopment of Park Towne Place and The Sterling, mixed-use communities in Center City Philadelphia.
As intended, Aimco continues to sell 5–10% of its lowest rated portfolio each year and uses the proceeds for acquisition and redevelopment of higher-quality apartments. The conventional percentage NOI in target markets was 88% in fourth quarter, unchanged year over year. Moreover, revenue per apartment home improved 8% year over year to $1,978 from $1,840 a year ago.
2017 Guidance
For 2017, Aimco expects pro forma FFO per share guidance in the range of $2.39–$2.49. The Zacks Consensus Estimate of $2.46 lies within the guided range.
For first-quarter 2017, Aimco expects pro forma FFO per share guidance in a band of 55–59 cents per share. The Zacks Consensus Estimate of 59 cents lies within this range.
Dividend
On Jan 31, 2017, Aimco declared a quarterly cash dividend of 36 cents per share of Class A Common Stock for the fourth quarter. This marks a sequential increase of 9%. The dividend will be paid on Feb 28, 2017 to stockholders on record as of Feb 17
In Conclusion
Aimco’s persistent property sales and reinvestment of proceeds in select apartment homes with higher rents and superior margins continue to strengthen its position in high-growth potential markets. Yet, even if the divestitures pay off in the long run, its near-term adverse effects on earnings cannot be ignored. Also, stiff competition poses a challenge for Aimco.
Nevertheless, the company has a solid portfolio, diversified both in terms of geography and price point. This raises hope for relatively stable revenues despite new supply in various markets.
Currently, Aimco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Apartment Investment and Management Company Price, Consensus and EPS Surprise
Apartment Investment and Management Company Price, Consensus and EPS Surprise | Apartment Investment and Management Company Quote
We now look forward to the earnings releases of The Macerich Company (MAC - Free Report) , Highwoods Properties, Inc. (HIW - Free Report) and Liberty Property Trust which are expected next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, 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.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>