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Aimco's (AIV) Q2 FFO Surpasses, Revenues Miss Estimates

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Apartment Investment and Management Company (AIV - Free Report) , better known as Aimco, reported second-quarter 2020 pro-forma funds from operations (FFO) of 63 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. Also, the figure improved 5% from the year-ago quarter’s 60 cents.

Quarterly results benefited from solid liquidity position and substantial rent collections. However, declining occupancy and same-store revenues remain headwinds.

Notably, rental and other property revenues of $218.8 million in the reported quarter missed the Zacks Consensus Estimate of $219.8 million. Further, the revenue figure comes in 2.4% lower than the prior-year quarter’s $224.2 million.

In the second quarter, the company collected 97.2% of its total residential rents. Moreover, in July, the company collected 95.8% of its total residential rents.

Quarter in Detail

Same-store revenues (before utility reimbursements) slid 1.1% year over year to $180.8 million, while expenses (net of utility reimbursements) edged down 0.4% to $48.7 million. Consequently, same-store NOI declined 1.4% year over year to $132.1 million.

Same-store average daily occupancy declined 140 basis points (bps) year over year to 95.5%. Rental rates on new leases decreased 4.7%, whereas renewal rental rates dropped 0.1%.

Portfolio Activity

Aimco invested $62 million in five redevelopment and development activities during the June-end quarter. These five apartment communities, under development or redevelopment, have an estimated remaining cost of completion of around $213 million. The company projects nearly $151 million to be spent on these projects this year. Aimco also leased 59 redeveloped or newly-developed apartment homes.

During the reported quarter, the company sold one apartment community located in Annandale, VA, for $59 million. Net proceeds from the sale were $37 million.

Liquidity

As of Jun 30, 2020, Aimco’s total liquidity of $1.2 billion consisted of cash and restricted cash of $428 million, as well as a borrowing capacity of $793 million under its revolving credit facility.

Further, the company is making efforts to increase available credit by placing $609 million of new property loans (that will generate incremental proceeds of $371 million) and a $350-million bank term loan, in a bid to in bolster its liquidity position. In addition, the company closed the refinancing of another $80 million in July.

Furthermore, Aimco has now eliminated loan maturities for 2020 and will have average annual maturities of $262 million between 2021 and 2024.

Dividend Update

On Jul 28, the company announced a quarterly cash dividend of 41 cents per common share, sequentially flat and up 5% year on year. This dividend will be paid on Aug 28 to shareholders of record as of Aug 14, 2020.

The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other REIT Performances

SL Green Realty Corp. (SLG - Free Report) reported second-quarter 2020 FFO per share of $1.70, surpassing the Zacks Consensus Estimate of $1.55. The figure, however, compared unfavorably with the year-ago quarter’s $1.82.

CBRE Group Inc. (CBRE - Free Report) delivered adjusted earnings per share of 35 cents, beating the Zacks Consensus Estimate of 30 cents in the April-June quarter. However, the figure plummeted 57.1% year over year.

Duke Realty Corporation’s second-quarter core FFO per share of 38 cents surpassed the Zacks Consensus Estimate of 37 cents. The figure also increased from the year-ago tally of 36 cents.

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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