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Aimco Focuses on Portfolio Revamping: Should You Hold?
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We have updated our research report on Apartment Investment and Management Company (AIV - Free Report) – better known as Aimco – on Sep 9, 2016. This Denver, CO-based residential real estate investment trust (“REIT”) is engaged in the acquisition, ownership, management and redevelopment of apartment properties situated in some of the major coastal and job-growth markets in the U.S.
Aimco is revamping its portfolio through property sales and is reinvesting the proceeds in select apartment homes with higher rents, superior margins and greater-than-expected growth. Consequently, the company continues to sell 5–10% of its lowest-rated portfolio each year and plans to completely sell off its affordable portfolio over the next few years. Notably, in August, Aimco declared the acquisition of Indigo in Redwood City, CA. The move came as part of the company’s portfolio revamping strategy.
Going forward, Aimco’s robust portfolio, which is diversified both in terms of geography and price point, is expected to help it enjoy relatively stable revenues despite new supply in various markets. Moreover, its efforts to boost balance sheet and liquidity position are encouraging. Further, portfolio revamping efforts are expected to help the company improve its overall asset quality and achieve a favorable mix. Yet, even if the divestitures pay off in the long run, its near-term adverse effects on earnings cannot be ignored. Moreover, competition from other housing alternatives and any rise in rate of interest are concerns before the company.
Late in July, this REIT reported second-quarter 2016 pro forma funds from operations (“FFO”) of 59 cents per share, beating the Zacks Consensus Estimate of 57 cents and up 5% from the year-ago tally of 56 cents. Results were driven by improving operating portfolio performance, enhanced contribution from redevelopment & acquisition communities and higher non-core earnings. However, loss of income from apartment sales in 2015 adversely affected the bottom line.
Notably, the Zacks Consensus Estimate remained stable at $2.31 and $2.48 per share for 2016 and 2017, respectively.
Note: 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. All EPS numbers presented in this write up represent FFO per share.
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Aimco Focuses on Portfolio Revamping: Should You Hold?
We have updated our research report on Apartment Investment and Management Company (AIV - Free Report) – better known as Aimco – on Sep 9, 2016. This Denver, CO-based residential real estate investment trust (“REIT”) is engaged in the acquisition, ownership, management and redevelopment of apartment properties situated in some of the major coastal and job-growth markets in the U.S.
Aimco is revamping its portfolio through property sales and is reinvesting the proceeds in select apartment homes with higher rents, superior margins and greater-than-expected growth. Consequently, the company continues to sell 5–10% of its lowest-rated portfolio each year and plans to completely sell off its affordable portfolio over the next few years. Notably, in August, Aimco declared the acquisition of Indigo in Redwood City, CA. The move came as part of the company’s portfolio revamping strategy.
Going forward, Aimco’s robust portfolio, which is diversified both in terms of geography and price point, is expected to help it enjoy relatively stable revenues despite new supply in various markets. Moreover, its efforts to boost balance sheet and liquidity position are encouraging. Further, portfolio revamping efforts are expected to help the company improve its overall asset quality and achieve a favorable mix. Yet, even if the divestitures pay off in the long run, its near-term adverse effects on earnings cannot be ignored. Moreover, competition from other housing alternatives and any rise in rate of interest are concerns before the company.
Late in July, this REIT reported second-quarter 2016 pro forma funds from operations (“FFO”) of 59 cents per share, beating the Zacks Consensus Estimate of 57 cents and up 5% from the year-ago tally of 56 cents. Results were driven by improving operating portfolio performance, enhanced contribution from redevelopment & acquisition communities and higher non-core earnings. However, loss of income from apartment sales in 2015 adversely affected the bottom line.
Notably, the Zacks Consensus Estimate remained stable at $2.31 and $2.48 per share for 2016 and 2017, respectively.
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Currently, Aimco carries a Zacks Rank #3 (Hold).
Investors interested in the residential REIT industry can consider other stocks like Equity LifeStyle Properties, Inc. (ELS - Free Report) , Silver Bay Realty Trust Corp. and Sun Communities Inc. (SUI - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Note: 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. All EPS numbers presented in this write up represent FFO per share.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>