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Can Aimco (AIV) Ride Out Slow Housing Demand in Q2 Earnings?
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Apartment Investment & Management Co. (AIV - Free Report) — commonly known as Aimco — is slated to report second-quarter 2020 results on Aug 3, after market close. While the company’s quarterly funds from operations (FFO) per share are expected to have improved, its revenues are anticipated to have witnessed a year-over-year decline.
In the last reported quarter, the Denver, CO-based residential real estate investment trust (REIT) reported Nareit FFO of 67 cents per share, surpassing the Zacks Consensus Estimate of 66 cents. Results benefited from decent growth in same-store property net operating income (NOI), higher occupancy and increase in rents.
Aimco has a mixed earnings surprise history. Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on two occasions, missed in one and reported in-line results in the other. It reported a surprise of 0.37%, on average. This is depicted in the chart below:
Apartment Investment and Management Company Price and EPS Surprise
Let’s see how things have shaped up for this announcement.
The April-June period, which marks the start of the prime leasing season for the U.S. apartment market, has not been a favorable one this time as the pandemic has impacted the economy and substantial job cuts at the beginning of the quarter affected leasing activities.
Per the latest report from real estate technology and analytics firm RealPage , the second quarter witnessed demand for just 33,966 units across the country’s 150 largest markets. This marks roughly one-fourth of the average apartment product absorption realized in the second quarter in the past five years.
The majority of the demand was seen in June as leasing activity in several locations were limited in the previous months. Moreover, Sun Belt markets topped second-quarter apartment demand. However, a number of gateway markets suffered net move-outs during the to-be-reported quarter, and urban core neighborhoods struggled the most.
Amid this, Aimco is expected to have witnessed significant declines in leasing activities and occupancy in the second quarter. In fact, new leasing has become very competitive, resulting in aggressive rental concessions and moderating pricing power of landlords.
Accordingly, the company witnessed a decline in same-store rental rates for new leases in April and May. Additionally, for April and May, same-store average daily occupancy declined 40 basis points (bps) and 140 bps year over year to 96.6% and 95.6%, respectively.
These are expected to have hindered same-store property NOI and revenue growth for the second quarter. In May, Aimco disposed of Ravensworth Apartments for $58.9 million. Lost revenues from such dispositions are also expected to have impacted the company’s top line in the to-be-reported quarter.
Notably, the Zacks Consensus Estimate for second-quarter revenues is pegged at $219.8 million, indicating a decline of 2% from the year-ago quarter’s reported figure.
Nonetheless, resilience in Aimco’s operating platform amid the economic turbulence enabled it to collect 98% and 95% of its April and May cash rents, respectively.
Further, the company has been making efforts to improve portfolio quality through property sales and reinvestment of the proceeds in select apartment homes with relatively higher projected free cash flow internal rates of return. Such revamping efforts are expected to have driven growth in the company’s average revenues per apartment home during the April-June period.
Prior to the second-quarter earnings release, there is a lack of any solid catalyst for becoming optimistic about the company’s prospects. In fact, the Zacks Consensus Estimate for the second-quarter FFO per share has been unchanged at 61 cents over the past month. Nonetheless, it suggests 1.7% growth year over year.
Here is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a beat in terms of FFO per share for Aimco this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a beat. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Aimco currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a beat this quarter:
National Storage Affiliates Trust (NSA - Free Report) , set to report quarterly numbers on Aug 6, presently has an Earnings ESP of +0.44% and a Zacks Rank of 3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Can Aimco (AIV) Ride Out Slow Housing Demand in Q2 Earnings?
Apartment Investment & Management Co. (AIV - Free Report) — commonly known as Aimco — is slated to report second-quarter 2020 results on Aug 3, after market close. While the company’s quarterly funds from operations (FFO) per share are expected to have improved, its revenues are anticipated to have witnessed a year-over-year decline.
In the last reported quarter, the Denver, CO-based residential real estate investment trust (REIT) reported Nareit FFO of 67 cents per share, surpassing the Zacks Consensus Estimate of 66 cents. Results benefited from decent growth in same-store property net operating income (NOI), higher occupancy and increase in rents.
Aimco has a mixed earnings surprise history. Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on two occasions, missed in one and reported in-line results in the other. It reported a surprise of 0.37%, on average. This is depicted in the chart below:
Apartment Investment and Management Company Price and EPS Surprise
Apartment Investment and Management Company price-eps-surprise | Apartment Investment and Management Company Quote
Let’s see how things have shaped up for this announcement.
The April-June period, which marks the start of the prime leasing season for the U.S. apartment market, has not been a favorable one this time as the pandemic has impacted the economy and substantial job cuts at the beginning of the quarter affected leasing activities.
Per the latest report from real estate technology and analytics firm RealPage , the second quarter witnessed demand for just 33,966 units across the country’s 150 largest markets. This marks roughly one-fourth of the average apartment product absorption realized in the second quarter in the past five years.
The majority of the demand was seen in June as leasing activity in several locations were limited in the previous months. Moreover, Sun Belt markets topped second-quarter apartment demand. However, a number of gateway markets suffered net move-outs during the to-be-reported quarter, and urban core neighborhoods struggled the most.
Amid this, Aimco is expected to have witnessed significant declines in leasing activities and occupancy in the second quarter. In fact, new leasing has become very competitive, resulting in aggressive rental concessions and moderating pricing power of landlords.
Accordingly, the company witnessed a decline in same-store rental rates for new leases in April and May. Additionally, for April and May, same-store average daily occupancy declined 40 basis points (bps) and 140 bps year over year to 96.6% and 95.6%, respectively.
These are expected to have hindered same-store property NOI and revenue growth for the second quarter. In May, Aimco disposed of Ravensworth Apartments for $58.9 million. Lost revenues from such dispositions are also expected to have impacted the company’s top line in the to-be-reported quarter.
Notably, the Zacks Consensus Estimate for second-quarter revenues is pegged at $219.8 million, indicating a decline of 2% from the year-ago quarter’s reported figure.
Nonetheless, resilience in Aimco’s operating platform amid the economic turbulence enabled it to collect 98% and 95% of its April and May cash rents, respectively.
Further, the company has been making efforts to improve portfolio quality through property sales and reinvestment of the proceeds in select apartment homes with relatively higher projected free cash flow internal rates of return. Such revamping efforts are expected to have driven growth in the company’s average revenues per apartment home during the April-June period.
Prior to the second-quarter earnings release, there is a lack of any solid catalyst for becoming optimistic about the company’s prospects. In fact, the Zacks Consensus Estimate for the second-quarter FFO per share has been unchanged at 61 cents over the past month. Nonetheless, it suggests 1.7% growth year over year.
Here is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a beat in terms of FFO per share for Aimco this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a beat. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Aimco currently has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Stocks That Warrant a Look
Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a beat this quarter:
Digital Realty Trust (DLR - Free Report) , slated to release second-quarter earnings on Jul 30, has an Earnings ESP of +2.70% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
National Storage Affiliates Trust (NSA - Free Report) , set to report quarterly numbers on Aug 6, presently has an Earnings ESP of +0.44% and a Zacks Rank of 3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>