Oct. 30, 2009 (PR Newswire) --
DENVER, Oct. 30 /PRNewswire-FirstCall/ --
Third Quarter 2009 Highlights
-- Funds From Operations (FFO, as defined in the Glossary) - FFO of $0.41
per share, before operating real estate impairments of $0.22 per share,
was within the $0.36 to $0.42 per share guidance range.
-- Property Operations - During the third quarter, Aimco's share of total
conventional and affordable property net operating income was $145.1
million. Total conventional and affordable property net operating
income, adjusted for property acquisitions and dispositions, was 1.2%
lower than in third quarter 2008.
-- Same Store Results (as defined in the Glossary) - When comparing
third quarter 2009 to third quarter 2008, Same Store property net
operating income declined 5.4%, within the guidance range of
negative 5.0% to negative 6.0%. Same Store revenue declined 2.9%
and expenses increased 1.1%. Average daily occupancy declined 20
basis points from 95.0% for third quarter 2008 to 94.8% for third
quarter 2009, and increased 200 basis points from second quarter
2009.
-- Non-Same Store Results - Third quarter 2009 conventional
redevelopment net operating income increased 16.4% compared to third
quarter 2008 and affordable property operations, including
affordable redevelopment operations, generated net operating income
growth of 6.0% during the same period.
-- Capital Markets Activity
At the beginning of third quarter 2009, Aimco had $350 million of term debt outstanding, due first quarter 2011. During third quarter 2009, Aimco repaid $90 million of term debt with proceeds from property sales. An additional payment of $50 million was made after quarter's end, reducing the balance to $210 million.
Aimco has focused on reducing refunding risk by accelerating refinancing of property loans maturing prior to 2012. At the beginning of third quarter 2009, Aimco's share of property debt maturing during 2009 through 2011 was $221.3 million. During third quarter, through refinancing, repayment and property sales, Aimco reduced these maturities by $36.8 million. As of September 30, 2009, the balance of property debt maturing through 2011 totaled $184.5 million in nine loans. Of these loans, refunding risk has since been eliminated on all but four loans totaling $164.0 million which are expected to be refinanced at their maturity in 2011.
-- Property Sales and Asset Allocation - During third quarter 2009, Aimco
sold 28 properties for $366.6 million, generating $125.0 million in net
proceeds to Aimco, after distributions to limited partners, repayment of
existing property debt and transaction costs. Year-to-date through
September 30, 2009, Aimco has sold 58 properties generating net proceeds
to Aimco of $244.2 million. Aimco continues to market properties
located in its non-target markets and in lower rated locations within
its target markets.
-- Dividend - Aimco's Board of Directors declared a cash dividend of $0.10
per share on its Class A Common Stock for the quarter ended September
30, 2009. The dividend is payable November 30, 2009, to stockholders of
record on November 20, 2009.
2009 Outlook
-- Property Operations - Aimco remains focused on retaining existing
residents and maintaining expense control. Market rents have declined
during 2009, although the rate of decline has eased. As a result of
rental rate reductions, fourth quarter 2009 Same Store net operating
income is expected to decline 7.0% to 8.0% when compared to fourth
quarter 2008. For the full year 2009, Same Store net operating income
is expected to decline 4.0% to 5.0% compared to full year 2008.
Positive net operating income results in the redevelopment and
affordable property portfolios are expected to largely offset the
declines in the Same Store results.
-- Balance Sheet and Liquidity - Aimco continues to focus on balancing
sources and uses of capital without reliance on capital markets for
equity or debt, except for the refunding of property debt. Aimco plans
to meet liquidity requirements with limited use of its bank line of
credit, except to support letters of credit. Aimco's line of credit
requires compliance with certain coverage ratios with which Aimco
complies and expects to continue to comply. Aimco leverage is 95% long
term: 83% non-recourse property debt with a weighted average maturity of
8.7 years, and 12% perpetual preferred equity. On average,
approximately 5%, or $300 million, of Aimco's share of leverage is
subject to refunding in any one year. Aimco's term debt totaling $210
million at October 30, 2009, matures in first quarter 2011, and is
expected to be repaid prior to maturity with proceeds from property
sales.
-- Property Sales and Asset Allocation - Aimco intends to sell
approximately $450 million of additional non-target conventional and
affordable assets by year end to fund repayment of its term debt due
first quarter 2011. Once the term debt is repaid, future asset sales
will be used to increase Aimco's allocation of capital to well located
properties within its target markets.
-- FFO Outlook - Aimco's previously provided guidance for full year 2009
FFO, before operating real estate impairments and preferred stock
redemption related gains, was a range of $1.55 to $1.75 per share,
including $0.15 per share of dilution from 2009 property sales. Based
on year-to-date financial results and our projections for the remainder
of the year, we are narrowing our full year 2009 FFO guidance to $1.61
to $1.69 per share. For the fourth quarter 2009, FFO is expected to
range from $0.32 to $0.40 per share, inclusive of dilution from 2009
asset sales.
Management Comments
Chairman and Chief Executive Officer Terry Considine comments: "Aimco properties enjoyed high occupancy and property incomes from all portfolios taken together were stable. Same Store rents declined from 2008; however the rate of decline eased during third quarter. Property values appear to have stabilized after substantial declines from their 2007 high. Proceeds from property sales are repaying our term debt. Refunding risk has been further reduced by extending most property debt maturities before 2012. Business simplification has led to lower offsite costs, including G&A expenses, and provided a substantial offset to earnings dilution from property sales. Notwithstanding a solid quarter, business conditions remain fragile and unpredictable. We look to the future with optimism and also great caution."
President, Chief Investment Officer and Chief Financial Officer David Robertson adds: "During the quarter we sold $367 million of assets, plus an additional $124 million during October. Proceeds from these sales were used to pay down our term debt by $140 million, leaving a $210 million balance due in early 2011. We currently have an additional $800 million of assets either under contract or in negotiations, and we plan to sell approximately $450 million of this amount to repay our term debt, bringing total sales in 2009 to approximately $1.3 billion. Any additional sales will be used to fund investments in our existing portfolio or the acquisition of higher rated assets in our target markets."
Third quarter 2009 Financial Results
In accordance with United States Generally Accepted Accounting Principles (GAAP), all previously reported share and per share data have been adjusted to take into account the special dividends paid on December 1, 2008, and January 29, 2009, which resulted in the issuance of approximately 12.6 million and 15.6 million additional shares of Aimco's Class A Common Stock, respectively.
-- Net loss attributable to common stockholders for the quarter was $40.5
million, compared to net income of $159.5 million for the third quarter
2008. Lower gains on dispositions of consolidated and unconsolidated
real estate of $194.9 million, lower asset management and tax credit
revenues of $22.3 million, higher operating real estate impairment
losses of $23.3 million and higher depreciation and amortization expense
of $15.0 million were partially offset by a decrease in income
attributable to noncontrolling interests of $45.7 million and lower
general and administrative expenses of $11.7 million. Earnings per
share (EPS) attributable to common stockholders were a loss of $0.35 on
a diluted basis, compared with earnings of $1.35 per share in third
quarter 2008.
-- Funds from operations (diluted) (FFO) is a non-GAAP financial measure
defined in the glossary in the Supplemental Information (the Glossary).
FFO calculated in accordance with the definition prescribed by the
National Association of Real Estate Investment Trusts (NAREIT) was $22.3
million, or $0.19 per share, compared with $73.0 million, or $0.60 per
share, in third quarter 2008. FFO, before operating real estate
impairments and preferred stock redemption related gains, was $47.4
million, or $0.41 per share, down from $0.62 per share in third quarter
2008. Third quarter 2009 operating real estate impairments totaled
$0.22 per share and resulted from the expected fourth quarter sale of
four specific assets.
-- Adjusted funds from operations (diluted) (AFFO; a non-GAAP financial
measure defined in the Glossary) was $28.8 million, or $0.25 per share,
compared with $49.1 million, or $0.41 per share, in third quarter 2008.
AFFO includes deductions of $0.16 and $0.21 per share for capital
replacement expenditures in third quarter 2009 and third quarter 2008,
respectively.
Adjusted Diluted Per Share Results*
THIRD QUARTER YEAR- TO-DATE
2009 2008 2009 2008
---- ---- ---- ----
Earnings (loss) EPS ($0.35) $1.35 ($0.94) $2.93
-------------------- ------ ----- ------ -----
Funds from operations FFO $0.19 $0.60 $0.95 $1.69
-------------------------- ----- ----- ----- -----
FFO before operating real estate
impairments and preferred stock
redemption related gains $0.41 $0.62 $1.29 $1.76
-------------------------------- ----- ----- ----- -----
Adjusted funds from operations AFFO $0.25 $0.41 $0.86 $1.23
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* These per share results reflect the cumulative effect of the shares
issued as part of Aimco's special dividends paid in 2008 and on January
29, 2009. To estimate the approximate per share results before the effect
of Aimco's special dividends, multiply the reported per share results by a
factor of 1.48.
Property Operations
Property operating results discussed below represent Aimco's share of reported amounts.
Conventional Real Estate Operations
Conventional real estate operations relate to Aimco's diversified portfolio of market rate apartment communities. At the end of third quarter 2009, this portfolio included 266 properties with 82,142 units in which Aimco had a weighted average ownership of 90%. Average rents for the conventional real estate portfolio increased 5.6% from $987 per unit during third quarter 2008 to $1,042 per unit during third quarter 2009. During third quarter 2009, conventional real estate operations generated net operating income of $127.2 million. Aimco's Same Store portfolio net operating income was $106.1 million for third quarter 2009, down 5.4% from third quarter 2008, while conventional redevelopment property operations generated net operating income of $22.6 million during the quarter, an increase of 16.4% compared to third quarter 2008.
"Same Store" Results
In the third quarter 2009, the Same Store portfolio included 195 communities with 57,968 Effective Units (see the Glossary) based on Aimco's weighted average ownership of 91%.
Comparing Same Store results in third quarter 2009 with third quarter 2008, total revenue decreased $5.2 million, or 2.9%. The decrease in revenue was primarily the result of lower average daily occupancy, down 20 basis points from 95.0% to 94.8%, and lower average rent, down 3.5% or $36 per unit, from $1,026 per unit to $990 per unit.
