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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________
FORM 8-K
_____________________________________________
CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) May 7, 2018
_____________________________________________
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(Exact name of registrant as specified in its charter)
_____________________________________________
 
MARYLAND
 
1-13232
 
84-1259577
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation or organization)
 
File Number)
 
Identification No.)
4582 SOUTH ULSTER STREET
SUITE 1100, DENVER, CO 80237
_____________________________________________
(Address of principal executive offices)
  
(Zip Code)
 
Registrant's telephone number, including area code: (303) 757-8101

NOT APPLICABLE
 (Former name or Former Address, if Changed Since Last Report)
_____________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. o





ITEM 2.02.    Results of Operations and Financial Condition.

The earnings release of Apartment Investment and Management Company (“Aimco”), dated May 7, 2018, attached hereto as Exhibit 99.1 is furnished herewith. Aimco will hold its first quarter 2018 earnings conference call on May 8, 2018, at 1:00 p.m. Eastern time. You may join the conference call through an internet webcast accessed through Aimco's website at www.aimco.com/investors. Alternatively, you may join the conference call by telephone by dialing 888-317-6003, or 412-317-6061 for international callers, and using passcode 1743062. If you wish to participate, please call approximately five minutes before the conference call is scheduled to begin.

If you are unable to join the live conference call, you may access the replay until August 8, 2018, by dialing 877-344-7529, or 412-317-0088 for international callers, and using passcode 10118742, or you may access the audiocast replay on Aimco's website at www.aimco.com/investors. Please note that the full text of the earnings release and supplemental schedules are available through Aimco's website at www.aimco.com/investors. The information contained on Aimco's website is not incorporated by reference herein.

ITEM 9.01.     Financial Statements and Exhibits.
    
The following exhibits are furnished with this report:
Exhibit Number
Description
First Quarter 2018 Earnings Release dated May 7, 2018

    




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 7, 2018

APARTMENT INVESTMENT AND MANAGEMENT COMPANY


/s/ Paul Beldin
___________________________________________
Paul Beldin
Executive Vice President and Chief Financial Officer



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
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Page
 
Earnings Release
 
 
 
Addendum A: Philadelphia Market Profile
 
 
 
 
Consolidated Statements of Operations
 
 
 
Consolidated Balance Sheets
 
 
 
 
Schedule 1    –   Funds From Operations and Adjusted Funds From Operations Reconciliation
 
 
 
Schedule 2    –   Funds From Operations and Adjusted Funds From Operations Information
 
 
 
Schedule 3    –   Property Net Operating Income
 
 
 
 
Schedule 4    –   Apartment Home Summary
 
 
 
Schedule 5    –   Capitalization and Financial Metrics
 
 
 
Schedule 6    –   Same Store Operating Results
 
 
 
 
Schedule 7    –   Real Estate Portfolio Data by Market
 
 
 
Schedule 8    –   Disposition and Acquisition Activity
 
 
 
Schedule 9    –   Real Estate Capital Additions Information
 
 
 
Schedule 10  –   Redevelopment/Development Portfolio
 
 
 
Glossary and Reconciliations of Non-GAAP Financial and Operating Measures
























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Aimco Reports First Quarter Results
Denver, Colorado, May 7, 2018 - Apartment Investment and Management Company (“Aimco”) (NYSE: AIV) announced today first quarter results for 2018.
Chairman and Chief Executive Officer Terry Considine comments: “Aimco had a solid first quarter. Operating results were on target, occupancy was up year-over-year, with high resident retention resulting from Aimco focus on customer selection and satisfaction. Average monthly revenue per apartment home reached $2,052, up 7% year-over-year. And Aimco was recognized as a top workplace in Colorado for the sixth consecutive year.
“Aimco agreed to $600 million in acquisitions: Bent Tree Apartments in Fairfax County, Virginia, and six properties in the Philadelphia area. Aimco plans to fund these acquisitions by the sale of its Asset Management business, the sale of Chestnut Hill Village and four Affordable properties, and issuance of OP Units at $53 per share.”
Chief Financial Officer Paul Beldin adds: “First quarter 2018 AFFO of $0.54 per share was $0.02 per share ahead of the midpoint of our guidance range and Pro forma FFO of $0.60 per share was $0.01 ahead of the midpoint of guidance. AFFO was ahead of the midpoint primarily due to stronger operations, including the contribution from Bent Tree, and the timing of capital projects moved to later in 2018. Aimco is updating its full year 2018 guidance to reflect both first quarter results and the effect of year-to-date transactions. We now expect AFFO to be in the range of $2.08 to $2.18 per share.”
Financial Results: First Quarter Pro forma FFO Up 3%; AFFO Up 6%
 
FIRST QUARTER
 
(all items per common share - diluted)
2018
 
2017
 
Variance
 
Net income
$
0.52

 
$
0.07

 
643
%
 
Funds From Operations (FFO) / Pro forma Funds From Operations (Pro forma FFO)
$
0.60

 
$
0.58

 
3
%
 
Deduct Aimco share of Capital Replacements
$
(0.06
)
 
$
(0.07
)
 
(14
%)
 
Adjusted Funds From Operations (AFFO)
$
0.54

 
$
0.51

 
6
%
 
Net Income (per diluted common share) - Year-over-year, first quarter net income increased due to higher gains on the sale of apartment communities and a higher tax benefit resulting from an intercompany transfer of assets related to the Asset Management business.
Pro forma FFO (per diluted common share) - Aimco’s first quarter Pro forma FFO increased by $0.02 per share, or 3%, on a year-over-year basis. Property results contributed the following to Pro forma FFO:
•
$0.02 from Same Store Property Net Operating Income growth of 2.7%, driven by a 2.6% increase in revenue, offset by a 2.1% increase in expenses; and
•
$0.01 from leasing activity related to renovated homes at Redevelopment communities, the second quarter 2017 reacquisition of a 47% interest in the Palazzo communities, and the first quarter 2018 acquisition of Bent Tree Apartments, offset in part by lower Property Net Operating Income from apartment communities sold in 2018 and 2017.
As compared to 2017, higher legal costs and other factors reduced Pro forma FFO by $0.01.
Adjusted Funds From Operations (per diluted common share) - The $0.02 increase year-over-year in Pro forma FFO per share plus $0.01 in lower capital replacement spending due to fewer apartment homes increased AFFO per share by $0.03, or 6%.

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Operating Results: First Quarter Same Store NOI Up 2.7%
 
FIRST QUARTER
 
Year-over-Year
Sequential
 
2018
2017
Variance
4th Qtr.
Variance
Average Rent per Apartment Home
$1,808
$1,762
2.6
%
$1,802
0.3
%
Other Income per Apartment Home*
105
109
(3.7
%)
109
(3.7
%)
Average Revenue per Apartment Home*
$1,913
$1,871
2.2
%
$1,911
0.1
%
Average Daily Occupancy
96.3
%
96.0
%
0.3
%
96.3
%
—
%
 
 
 
 
 
 
$ in Millions
 
 
 
 
 
Revenue, before utility reimbursements
$144.9
$141.2
2.6
%
$144.8
0.1
%
Expenses, net of utility reimbursements
38.9
38.1
2.1
%
35.6
9.4
%
NOI
$106.0
$103.1
2.7
%
$109.2
(3.0
%)
*
In 2018, Aimco changed its presentation of revenues and expenses to reflect utilities costs net of amounts reimbursed by residents, which were previously included in revenue. 2017 amounts have been revised to conform to this presentation.
Same Store Rental Rates - Aimco measures changes in rental rates by comparing, on a lease-by-lease basis, the rate on a newly executed lease to the rate on the expiring lease for that same apartment. Newly executed leases are classified either as a new lease, where a vacant apartment is leased to a new customer, or as a renewal. The table below details changes in new and renewal lease rates.
2018
Jan
Feb
Mar
1st Qtr.
Renewal rent increases
5.1
%
4.9
%
4.8
%
4.9
%
New lease rent increases
(0.1
%)
0.4
%
0.6
%
0.4
%
Weighted average rent increases
2.6
%
2.7
%
2.7
%
2.7
%
Average Daily Occupancy
96.3
%
96.2
%
96.2
%
96.3
%
Redevelopment
Redevelopment is Aimco’s second line of business where Aimco creates value by repositioning communities within the Aimco portfolio. Aimco also undertakes ground-up development when warranted by risk-adjusted investment returns, either directly in connection with the redevelopment of an existing apartment community, or on a more limited basis, at a new location. Aimco invests to earn risk-adjusted returns in excess of those expected from the apartment communities sold in paired trades to fund the redevelopment and development. Of these two activities, Aimco favors redevelopment because it permits adjustment of the scope and timing of spending to align with changing market conditions and customer preferences.
During the first quarter, Aimco invested $47 million in redevelopment and development. In Center City, Philadelphia, Aimco continued construction on the fourth and final tower of Park Towne Place. Initial move-ins have occurred and at the end of April, 31% of the tower is pre-leased.
Construction is underway, on plan and on budget at Parc Mosaic, Aimco’s $117 million, 226 apartment home community being developed on the site of its former Eastpointe community in Boulder, Colorado. Aimco expects Parc Mosaic will be available for occupancy in the summer of 2019.
During the first quarter, Aimco leased 59 apartment homes at its redevelopment communities. At March 31, 2018, Aimco’s exposure to lease-up at active redevelopment and development projects was approximately

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527 apartment homes, of which 201 were in the fourth tower of Park Towne Place and 215 were being constructed at Parc Mosaic.
Portfolio Management: Revenue Per Apartment Home Up 7% to $2,052
Aimco’s portfolio of apartment communities is diversified across “A,” “B” and “C+” price points, averaging “B/B+” in quality and is diversified across some of the largest markets in the U.S.
As part of its portfolio strategy, Aimco seeks to sell up to 10% of its portfolio annually and to reinvest the proceeds from such sales in accretive uses such as capital enhancements, redevelopments, occasional developments, and selective acquisitions with projected Free Cash Flow internal rates of return higher than expected from the communities being sold. Through this disciplined approach to capital recycling, Aimco has significantly increased the quality and expected growth rate of its portfolio.
 
FIRST QUARTER
 
2018
2017
Variance
Apartment Communities
134

141

(7
)
Apartment Homes
37,228

39,173

(1,945
)
Average Revenue per Apartment Home*
$
2,052

$
1,922

7
%
Portfolio Average Rents as a Percentage of Local Market Average Rents
113
%
112
%
1
%
Percentage A (1Q 2018 Average Revenue per Apartment Home $2,736)
49
%
51
%
(2
%)
Percentage B (1Q 2018 Average Revenue per Apartment Home $1,797)
35
%
35
%
—
%
Percentage C+ (1Q 2018 Average Revenue per Apartment Home $1,660)
16
%
14
%
2
%
NOI Margin
71
%
71
%
—
%
Free Cash Flow Margin
66
%
65
%
1
%
*
In 2018, Aimco changed its presentation of revenues and expenses to reflect utilities costs net of amounts reimbursed by residents, which were previously included in revenue. 2017 amounts have been revised to conform to this presentation.
First Quarter Real Estate Portfolio - For its entire portfolio, Aimco’s average monthly revenue per apartment home was $2,052 for first quarter 2018, a 7% increase compared to first quarter 2017. This increase is due to year-over-year growth in Same Store revenue as well as Aimco’s second quarter 2017 reacquisition of the 47% interest in the Palazzo communities, lease-up of redevelopment and acquisition properties, and the sale of apartment communities with average monthly revenues per apartment home lower than those of the retained portfolio.
Acquisitions - Aimco evaluates potential acquisitions with an eye for unique and opportunistic investments and funds acquisitions pursuant to its strict paired trade discipline. As previously announced, subsequent to quarter end, Aimco entered into a transaction to acquire six apartment communities in the Philadelphia area for a purchase price of $445 million. The portfolio includes 1,006 existing apartment homes, 110 apartment homes under construction, and 185,000 square feet of office and retail space. This “A” quality portfolio is located primarily in the Center City and University City submarkets of Philadelphia. Aimco anticipates its operation of the five operating communities will generate a year one NOI yield of 5.3%, and for all six communities, average revenue per apartment home of $2,200 and a ten-year expected free cash flow internal rate of return of about 8%.
The $445 million acquisition will be funded initially through taking title subject to $290 million of non-recourse property debt, issuance of $90 million in Aimco Properties, L.P. OP Units valued in the transaction at their estimated net asset value of $53 per unit, and payment of $65 million in cash funded from bank borrowings. The ultimate paired trade funding includes the sale of Chestnut Hill Village, located in north Philadelphia, and the sale of the Asset Management business, described below.

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On May 1, 2018, Aimco completed the acquisition of four of the six apartment communities including 665 apartment homes and 153,000 square feet of office and retail space. Aimco anticipates the acquisition of the fifth apartment community during the summer of 2018 and the acquisition of the final apartment community upon completion of construction, expected in the first half of 2019. Please refer to Addendum A following the release and before the supplemental schedules for additional information regarding the Philadelphia market and Aimco’s investments within the market.
In the first quarter, Aimco purchased for $160 million Bent Tree Apartments, a 748-apartment home community in Fairfax County, Virginia. Bent Tree is a “B” quality community located in a market Aimco knows well from its ownership of two nearby communities built by the same developer. Further, Aimco believes the same business plan used at these communities will produce greater than market rate NOI growth for Bent Tree. The community is expected to achieve a 5.6% year one NOI cap rate. Before consideration of capital enhancement opportunities, new lease rents are 4% higher than expiring leases, as compared to new lease rents that have decreased elsewhere in northern Virginia. Aimco funded the acquisition with bank borrowings pending the expected third quarter sale of the Asset Management business, described below.
Dispositions - In the first quarter, Aimco sold three apartment communities with 513 apartment homes for a gain of approximately $51 million, net of income tax, and gross proceeds of $72 million resulting in $65 million in net proceeds to Aimco. Two of these communities are located in southern Virginia and one is located in suburban Maryland. Proceeds from these sales were used to repay outstanding borrowings on Aimco’s revolving credit facility, effectively funding the equity portion of the Palazzo reacquisition as well as Aimco’s 2017 redevelopment and development activities.
At the end of the first quarter, Aimco completed the previously announced sale of its interests in the entities owning the La Jolla Cove property in settlement of legal actions filed in 2014 by a group of disappointed buyers who had hoped to acquire the property. Aimco provided seller financing with a stated value of $49 million and received net cash proceeds of approximately $5 million in the sale.
As previously announced, in April 2018, Aimco entered into a binding agreement to sell for $590 million its Asset Management business and the four Hunters Point affordable apartment communities. Aimco expects to close this transaction during the third quarter of 2018. After payment of closing costs and repayment of property level debt encumbering the Hunters Point apartment communities, the net proceeds to Aimco are expected to be approximately $512 million, which Aimco plans to use to: repay the borrowings on its credit facility used to fund the acquisition of Bent Tree Apartments and the acquisition of the apartment communities in the Philadelphia portfolio; reduce overall leverage; fund 2018 redevelopment; and redeem its Class A preferred stock, which is callable in second quarter 2019. Taken together, these transactions are expected to reduce Aimco’s AFFO by $0.03 per share and $0.04 per share in 2018 and 2019, respectively, before becoming accretive in 2021.

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Balance Sheet
Aimco Leverage
Aimco’s leverage strategy seeks to increase financial returns while using leverage with appropriate caution. Aimco limits risk through balance sheet structure, employing low leverage, primarily non-recourse and long-dated property debt; builds financial flexibility by maintaining ample unused and available credit as well as holding properties with substantial value unencumbered by property debt; and uses partners’ capital when it enhances financial returns or reduces investment risk.
Non-recourse Property Debt - During the first quarter, Aimco closed two non-recourse, fixed-rate property loans totaling $242 million. These loans have 10-year terms and a weighted average interest rate of 3.48%, 126 basis points above the corresponding treasury rates at the time of pricing. The net effect of 2018 fixed-rate property debt refinancing activities has been to lower Aimco’s weighted average fixed interest rate by nearly 10 basis points since December 31, 2017, to 4.55%, reducing prospective interest expense by more than $3 million.
Aimco also closed two non-recourse, variable-rate property loans totaling $119 million. These loans each have a five-year term and bear interest at 30-day LIBOR plus 1.25%. The five-year terms fill a hole in Aimco’s laddered maturities and, taken together with the planned repayment of the variable term loan, reduce Aimco exposure to increasing short-term interest rates to less than 7% of Aimco total leverage.
Aimco total leverage includes Aimco share of long-term, non-recourse, property debt encumbering apartment communities in its Real Estate portfolio, its term loan, outstanding borrowings under its revolving credit facility, and outstanding preferred equity. Aimco leverage excludes non-recourse property debt obligations of consolidated partnerships served by its Asset Management business.
 
AS OF MARCH 31, 2018
$ in Millions
Amount
% of Total
Weighted Avg. Maturity (Yrs.)
Aimco share of long-term, non-recourse property debt
$
3,710

87
%
7.4

Term loan
250

6
%
1.3

Outstanding borrowings on revolving credit facility
79

2
%
3.8

Preferred Equity*
226

5
%
40.0

Total leverage
$
4,265

100
%
8.7

Cash, restricted cash and investments in securitization trust assets
(174
)
 
 
Net Leverage
$
4,091

 
 
*    Aimco’s Preferred Equity is perpetual in nature; however, for illustrative purposes, Aimco has computed the weighted average maturity of its total leverage assuming a 40-year maturity for its Preferred Equity.

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Leverage Ratios
Aimco target leverage ratios are Proportionate Debt and Preferred Equity to Adjusted EBITDA below 7.0x and Adjusted EBITDA to Interest Expense and Preferred Dividends greater than 2.5x. Aimco calculates Adjusted EBITDA and Adjusted Interest Expense used in its leverage ratios based on current quarter amounts, annualized.
 
FIRST QUARTER 2018
Proportionate Debt to Adjusted EBITDA
 6.8x
Proportionate Debt and Preferred Equity to Adjusted EBITDA
 7.2x
Adjusted EBITDA to Adjusted Interest Expense
 3.6x
Adjusted EBITDA to Adjusted Interest Expense and Preferred Dividends
 3.2x
Aimco’s leverage ratios have been calculated on a pro forma basis to reflect the acquisition of Bent Tree Apartments and the disposition of three apartment communities during the period as if the transactions had closed on January 1, 2018.
Future improvement in leverage metrics is expected from the repayment of bank borrowings and property level debt with the proceeds from Aimco’s expected third quarter sale of its Asset Management business and the Hunters Point communities. Aimco also expects to use the proceeds from this sale to redeem its Class A preferred stock, which is callable in second quarter 2019. Aimco expects its Proportionate Debt to Adjusted EBITDA and Proportionate Debt and Preferred Equity to Adjusted EBITDA ratios to decrease by the end of 2018 to 6.3x and 6.7x, respectively.
Liquidity
At March 31, 2018, Aimco held cash and restricted cash of $91 million and had available capacity to borrow $509 million under its revolving credit facility, after consideration of outstanding borrowings of $79 million and $12 million of letters of credit backed by the facility. Aimco uses its credit facility primarily for working capital and other short-term purposes and to secure letters of credit.
Aimco also manages its financial flexibility by maintaining an investment grade rating and holding apartment communities that are unencumbered by property debt. At March 31, 2018, Aimco held unencumbered apartment communities with an estimated fair market value of approximately $2.0 billion.
Dividend - As previously announced, the Aimco Board of Directors declared a quarterly cash dividend of $0.38 per share of Class A Common Stock for the quarter ended March 31, 2018. On an annualized basis, this represents an increase of 6% compared to the dividends paid during 2017. This dividend is payable on May 31, 2018, to stockholders of record on May 18, 2018.

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2018 Outlook

($ Amounts represent Aimco Share)
YEAR-TO-DATE MARCH 31, 2018
FULL YEAR 2018
PREVIOUS FULL YEAR 2018
 
 
 
 
 
Net Income per share
$0.52
$4.05 to $4.55
$0.36 to $0.46
Pro forma FFO per share
$0.60
$2.39 to $2.49
$2.42 to $2.52
AFFO per share
$0.54
$2.08 to $2.18
$2.11 to $2.21
 
 
 
 
Select Components of FFO
 
 
 
Same Store Operating Measures
 
 
 
Revenue change compared to prior year
2.6%
2.10% to 3.10%
2.10% to 3.10%
Expense change compared to prior year
2.1%
2.60% to 3.60%
2.60% to 3.60%
NOI change compared to prior year
2.7%
1.70% to 3.10%
1.70% to 3.10%
 
 
 
 
Other Earnings
 
 
 
Asset Management Contribution
$10M
$22M to $24M
$36M
Tax Benefits
$4M
$16M to $18M
$16M to $18M
 
 
 
 
Offsite Costs
 
 
 
Property management expenses
$5M
$20M
$20M
General and administrative expenses
$11M
$44M
$44M
Total Offsite Costs
$16M
$64M
$64M
 
 
 
 
Capital Investments
 
 
 
Redevelopment/Development
$47M
$120M to $200M
$120M to $200M
Capital enhancements
$19M
$80M to $100M
$80M to $100M
 
 
 
 
Transactions
 
 
 
Property dispositions
$65M
$790M to $870M
$180M to $220M
Property acquisitions [1]
$160M
$551M
$0M
 
 
 
 
Portfolio Quality
 
 
 
Average revenue per apartment home [2]
$2,052
~$2,100
~$2,100
 
 
 
 
Balance Sheet
 
 
 
Proportionate Debt to Adjusted EBITDA
 6.8x
~6.3x
~6.5x
Proportionate Debt and Preferred Equity to Adjusted EBITDA
 7.2x
~6.7x
~6.9x
 
 
[1]
Aimco does not predict or guide to acquisitions. These amounts represent the value of assets acquired or under contract to be acquired in 2018. Aimco monitors potential transactions with an eye for unique and opportunistic investments and funds acquisitions pursuant to its strict paired trade discipline.
[2]
Previous full year guidance for average revenue per apartment home is adjusted to exclude amounts of utilities costs reimbursed by residents, which were previously included in revenue.
($ Amounts represent Aimco Share)
SECOND QUARTER 2018
 
 
Net income per share
$0.03 to $0.07
Pro forma FFO per share
$0.57 to $0.61
AFFO per share
$0.48 to $0.52

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Earnings Conference Call Information
Live Conference Call:
Conference Call Replay:
Tuesday, May 8, 2018 at 1:00 p.m. ET
Replay available until August 8, 2018
Domestic Dial-In Number: 1-888-317-6003
Domestic Dial-In Number: 1-877-344-7529
International Dial-In Number: 1-412-317-6061
International Dial-In Number: 1-412-317-0088
Passcode: 1743062
Passcode: 10118742
Live webcast and replay: www.aimco.com/investors
Supplemental Information
The full text of this Earnings Release and the Supplemental Information referenced in this release are available on Aimco’s website at www.aimco.com/investors.
Glossary & Reconciliations of Non-GAAP Financial and Operating Measures
Financial and operating measures found in this Earnings Release and the Supplemental Information include certain financial measures used by Aimco management that are measures not defined under accounting principles generally accepted in the United States (“GAAP”). Certain Aimco terms and Non-GAAP measures are defined in the Glossary in the Supplemental Information and Non-GAAP measures reconciled to the most comparable GAAP measures.
About Aimco
Aimco is a real estate investment trust focused on the ownership and management of quality apartment communities located in select markets in the United States. Aimco is one of the country’s largest owners and operators of apartments, with ownership interests in 184 communities in 22 states and the District of Columbia. Aimco common shares are traded on the New York Stock Exchange under the ticker symbol AIV, and are included in the S&P 500. For more information about Aimco, please visit our website at www.aimco.com.
Contact
Suzanne Sorkin, Vice President, Investor Relations/FP&A
Investor Relations 303-793-4661, investor@aimco.com

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Forward-looking Statements

This Earnings Release and Supplemental Information contain forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected results and specifically forecasts of second quarter and full year 2018 results, including but not limited to: FFO, Pro forma FFO and selected components thereof; AFFO; Aimco redevelopment/development investments and projected yield on such investments, timelines and Net Operating Income contribution; expectations regarding sales of Aimco apartment communities and the use of proceeds thereof; and Aimco liquidity and leverage metrics.
These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties. Risks and uncertainties include, but are not limited to: Aimco’s ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, redevelopments and developments; Aimco’s ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to Aimco redevelopments and developments; and Aimco’s ability to comply with debt covenants, including financial coverage ratios.
Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond Aimco’s control, including, without limitation:
•
Real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which Aimco operates and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing of acquisitions, dispositions, redevelopments and developments; and changes in operating costs, including energy costs;
•
Financing risks, including the availability and cost of capital markets’ financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; and the risk that earnings may not be sufficient to maintain compliance with debt covenants;
•
Insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; and
•
Legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of governmental regulations that affect Aimco and interpretations of those regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by Aimco.
In addition, Aimco’s current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on Aimco’s ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership.
Readers should carefully review Aimco’s financial statements and the notes thereto, as well as the section entitled “Risk Factors” in Item 1A of Aimco’s Annual Report on Form 10-K for the year ended December 31, 2017, and the other documents Aimco files from time to time with the Securities and Exchange Commission.
These forward-looking statements reflect management’s judgment as of this date, and Aimco assumes no obligation to revise or update them to reflect future events or circumstances. This press release does not constitute an offer of securities for sale.

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Addendum A
Philadelphia Market Profile
Philadelphia is a market that Aimco knows well and Aimco is excited by the opportunity to rebalance its portfolio there by adding high quality communities in attractive submarkets. When thinking about Philadelphia, Aimco is focused primarily on the Center City submarket as it holds 42% of all jobs in Philadelphia.
The education and medical sectors, or “eds and meds,” are at the foundation of Philadelphia’s stable economy, representing a solid resident base for Aimco’s communities. Philadelphia boasts a strong university system, including 90 institutions of higher education, with 19 colleges and universities in and around greater Center City. In fact, one in six doctors in the United States received some of his or her medical training in Philadelphia, and Philadelphia was one of the leaders in National Institutes of Health grants, ranking 4th nationally in 2017.
These institutions of higher education help support a highly educated labor pool as these universities produce talented graduates in high income fields. In recent years, Philadelphia has seen more students who are educated there staying as the market becomes increasingly attractive to the millennial generation. According to Campus Philly, students’ interest in staying in the Philadelphia area after graduation has increased nine percentage points since 2010, with 67% of current college students reporting they want to stay in greater Philadelphia after graduating.
These facts are more pronounced when examining the demographics of Center City. More than 71% of Center City residents have a bachelor’s degree or higher. When looking at the prime renter cohort aged 25-34, that number increases to 84%, similar to education levels in Palo Alto and Cambridge.
393375874_phillyattainmentofbachelors.jpg
This educated workforce is also drawn to Philadelphia by its thriving cultural scene. Philadelphia is home to 243 museums, art galleries, theater and dance companies, and music venues in Center City, placing it third in the nation in the number of arts and cultural institutions downtown, behind only Manhattan and Washington, D.C. Philadelphia is a highly walkable and bike-able city, making it well-positioned for those employers looking to attract millennials who want to live, work and play in close proximity. Millennials now represent 40% of the 190,000 downtown population according to the Center City District and Central Philadelphia Development Corporation.

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These characteristics translate to a market that provides steady and consistent rent growth with lower volatility than many gateway markets. Since 2002, according to REIS, Center City has had a compound annual rate of rent growth of approximately 3.3%, placing it number three among Aimco’s target markets, behind only Seattle and the Bay Area.
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However, these trends have not gone unnoticed by multifamily developers, and in 2016 and 2017 Aimco saw elevated levels of supply, especially in Center City, with approximately 1,500 units delivered each year. MPF Research forecasts approximately 1,900 units in 2018 with some relief in 2019 as only 1,400 units are expected to deliver. Aimco is optimistic that the market will absorb the upcoming supply in part due to its recent success at leasing up the redevelopments at Park Towne Place and The Sterling during this time. This belief is also driven by expectations for continued strong job growth. In 2018, Philadelphia has the third highest ratio of job growth to new supply among the 50 largest multifamily markets in the United States based on data from Green Street and MPF Research.
Upon the sale of Chestnut Hill Village later in 2018, Aimco’s Philadelphia portfolio will be located primarily in the desirable submarkets of Center City and University City. Three of the six acquired communities are
located within mature Center City neighborhoods, in close proximity to the nearest Aimco property. An additional acquired community is located in the heart of University City, the neighborhood west of the Schuylkill, defined by the University of Pennsylvania, Drexel University, and a growing economy marked by technology spin-offs from these two schools.
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393375874_phillymapa01.jpg

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12
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Consolidated Statements of Operations
 
 
 
 
 
(in thousands, except per share data) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2018
 
2017
 
REVENUES
 
 
 
 
 
Rental and other property revenues attributable to Real Estate
 
$
225,393

 
$
225,228

 
Rental and other property revenues of partnerships served by Asset Management business
 
18,808

 
18,562

 
Tax credit and transaction revenues
 
3,519

 
2,691

 
Total revenues
 
247,720

 
246,481

 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
Property operating expenses attributable to Real Estate
 
78,287

 
79,626

 
Property operating expenses of partnerships served by Asset Management business
 
9,195

 
9,198

 
Depreciation and amortization
 
92,548

 
87,168

 
General and administrative expenses
 
11,355

 
10,962

 
Other expenses, net
 
2,958

 
1,738

 
Total operating expenses
 
194,343

 
188,692


Operating income
 
53,377

 
57,789

 
Interest income
 
2,172

 
2,192

 
Interest expense
 
(47,795
)
 
(47,882
)
 
Other, net
 
224

 
465

 
Income before income taxes and gain on dispositions
 
7,978

 
12,564

 
Income tax benefit
 
37,388

 
4,985

 
Income before gain on dispositions
 
45,366

 
17,549

 
Gain (loss) on dispositions of real estate, inclusive of related income tax
 
50,324

 
(394
)
 
Net income
 
95,690

 
17,155

 
Noncontrolling interests:
 
 
 
 
 
Net income attributable to noncontrolling interests in consolidated real estate partnerships
 
(6,206
)
 
(951
)
 
Net income attributable to preferred noncontrolling interests in Aimco OP
 
(1,937
)
 
(1,949
)
 
Net income attributable to common noncontrolling interests in Aimco OP
 
(3,755
)
 
(557
)
 
Net income attributable to noncontrolling interests
 
(11,898
)
 
(3,457
)
 
Net income attributable to Aimco
 
83,792

 
13,698

 
Net income attributable to Aimco preferred stockholders
 
(2,148
)
 
(2,148
)
 
Net income attributable to participating securities
 
(119
)
 
(59
)
 
Net income attributable to Aimco common stockholders
 
$
81,525

 
$
11,491

 
 
 
 
 
 
 
Net income attributable to Aimco per common share – basic and diluted
 
$
0.52

 
$
0.07

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding – basic
 
156,609

 
156,259

 
 
 
 
 
 
 
Weighted average common shares outstanding – diluted
 
156,740

 
156,754

 
 
 
 
 
 
 

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Consolidated Balance Sheets
(in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
March 31, 2018
 
December 31, 2017
Assets
 
 
 
 
Real estate
 
$
8,110,787

 
$
7,927,753

Accumulated depreciation
 
(2,596,457
)
 
(2,522,358
)
Net real estate
 
5,514,330

 
5,405,395

Cash and cash equivalents
 
51,894

 
60,498

Restricted cash
 
38,999

 
34,827

Goodwill
 
37,808

 
37,808

Other assets
 
333,344

 
234,931

Assets held for sale
 
—

 
17,959

Assets of partnerships served by Asset Management business [1]:
 
 
 
 
Real estate, net
 
220,408

 
224,873

Cash and cash equivalents
 
18,374

 
16,288

Restricted cash
 
29,764

 
30,928

Other assets
 
10,369

 
15,533

Total Assets
 
$
6,255,290

 
$
6,079,040

 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
Non-recourse property debt secured by Aimco Real Estate communities
 
$
3,719,098

 
$
3,563,041

Debt issue costs
 
(18,119
)
 
(17,932
)
Non-recourse property debt, net
 
3,700,979

 
3,545,109

Term loan, net
 
249,729

 
249,501

Revolving credit facility borrowings
 
78,635

 
67,160

Accrued liabilities and other
 
207,202

 
200,540

 
 
 
 
 
 
Liabilities of partnerships served by Asset Management business [1]:
 
 
 
 
Non-recourse property debt, net
 
225,502

 
227,141

Accrued liabilities and other
 
17,404

 
19,812

Deferred income
 
11,814

 
12,487

Total Liabilities
 
4,491,265

 
4,321,750

 
 
 
 
 
 
Preferred noncontrolling interests in Aimco OP
 
101,378

 
101,537

Equity:
 
 
 
 
Perpetual preferred stock
 
125,000

 
125,000

Class A Common Stock
 
1,573

 
1,572

Additional paid-in capital
 
3,885,279

 
3,900,042

Accumulated other comprehensive income
 
3,544

 
3,603

Distributions in excess of earnings
 
(2,345,206
)
 
(2,367,073
)
Total Aimco equity
 
1,670,190

 
1,663,144

Noncontrolling interests in consolidated real estate partnerships
 
(2,755
)
 
(1,716
)
Common noncontrolling interests in Aimco OP
 
(4,788
)
 
(5,675
)
Total equity
 
1,662,647

 
1,655,753

Total liabilities and equity
 
$
6,255,290

 
$
6,079,040

 
 
[1]
In April 2018, Aimco announced the planned third quarter sale of the Asset Management business. The assets included under this heading will be sold and the liabilities will be assumed by the buyer as a result of the transaction.

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Supplemental Schedule 1
 
 
 
 
 
 
 
 
 
 
Funds From Operations and Adjusted Funds From Operations Reconciliation
Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017
(in thousands, except per share data) (unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
2018
 
2017
Net income attributable to Aimco common stockholders
 
$
81,525

 
$
11,491

Adjustments:
 
 
 
 
Real estate depreciation and amortization, net of noncontrolling partners’ interest
 
90,394

 
82,881

Gain on dispositions and other, net of noncontrolling partners’ interest
 
(47,023
)
 
(439
)
Income tax adjustments related to gain on dispositions and other items [1]
 
(30,720
)
 
1,032

Common noncontrolling interests in Aimco OP’s share of above adjustments
 
(557
)
 
(3,850
)
Amounts allocable to participating securities
 
(15
)
 
(38
)
FFO Attributable to Aimco common stockholders
 
$
93,604

 
$
91,077

Litigation costs, net of common noncontrolling interests in Aimco OP and participating securities [2]
 
349

 
—

Pro forma FFO Attributable to Aimco common stockholders
 
$
93,953

 
$
91,077

Capital Replacements, net of common noncontrolling interests in Aimco OP and participating securities
 
(9,767
)
 
(10,946
)
AFFO Attributable to Aimco common stockholders
 
$
84,186

 
$
80,131

 
 
 
 
 
 
Weighted average common shares outstanding
 
156,609

 
156,259

Dilutive common share equivalents
 
131

 
495

Total shares and dilutive share equivalents
 
156,740

 
156,754

 
 
 
 
 
 
Net income attributable to Aimco per common share – diluted
 
$
0.52

 
$
0.07

FFO / Pro forma FFO per share – diluted
 
$
0.60

 
$
0.58

AFFO per share – diluted
 
$
0.54

 
$
0.51

 
 
 
 
 
 
[1]
Income taxes related to gain on dispositions and other items for the three months ended March 31, 2018 includes a $33.6 million tax benefit related to an intercompany transfer of assets related to the Asset Management business. Aimco announced in April 2018 the planned sale of this business. Upon completion of the anticipated sale, the related taxes will be reflected within Aimco’s statement of operations within gain on dispositions of real estate, inclusive of related income tax. Accordingly, Aimco has excluded the benefit related to the reorganization from FFO.
[2]
Aimco is engaged in litigation with Airbnb to protect its property right to select its residents and their neighbors. Due to the unpredictable nature of these cases and associated legal costs, Aimco excludes such costs from Pro forma FFO and AFFO.


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Supplemental Schedule 2(a)
 
 
 
 
 
 
 
Funds From Operations and Adjusted Funds From Operations Information
 
(Page 1 of 2)
 
Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017
 
(consolidated amounts, in thousands) (unaudited)
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2018
 
2017
 
Real Estate [1]
 
 
 
 
 
Revenues, before utility reimbursements [2]
 
 
 
 
 
Same Store
 
$
145,520

 
$
141,906

 
Redevelopment/Development
 
43,768

 
41,880

 
Acquisition
 
6,543

 
3,699

 
Other Real Estate
 
19,333

 
18,732

 
Total revenues, before utility reimbursements
 
215,164

 
206,217

 
Expenses, net of utility reimbursements [2]
 
 
 
 
 
Same Store
 
39,125

 
38,284

 
Redevelopment/Development
 
14,259

 
14,175

 
Acquisition
 
2,197

 
1,799

 
Other Real Estate
 
6,585

 
6,271

 
Total expenses, net of utility reimbursements
 
62,166

 
60,529

 
Real Estate net operating income
 
152,998

 
145,688

 
 
 
 
 
 
 
Property management expenses
 
(5,163
)
 
(5,002
)
 
Casualties
 
(1,061
)
 
(1,865
)
 
Other expenses, net
 
(678
)
 
(426
)
 
Interest expense on non-recourse property debt
 
(41,190
)
 
(43,549
)
 
Interest income
 
1,849

 
1,721

 
FFO related to Sold and Held for Sale communities [3]
 
474

 
6,639

 
Contribution from Real Estate
 
107,229

 
103,206

 
 
 
 
 
 
 
Asset Management [4]
 
 
 
 
 
Net operating income of partnerships served by Asset Management business
 
10,721

 
10,516

 
Interest expense on non-recourse property debt of partnerships
 
(3,286
)
 
(3,230
)
 
FFO related to Sold and Held for Sale communities
 
—

 
168

 
Amount available for payment of Asset Management fees
 
7,435

 
7,454

 
Tax credit income, net
 
1,816

 
2,513

 
Other income
 
1,645

 
462

 
Asset management expenses
 
(1,375
)
 
(1,562
)
 
Contribution from Asset Management
 
9,521

 
8,867

 
 
 
 
 
 
 
General and administrative and investment management expenses
 
(11,355
)
 
(10,962
)
 
Depreciation and amortization related to non-real estate assets
 
(2,236
)
 
(2,438
)
 
Other expenses, net
 
(1,769
)
 
(409
)
 
Interest expense on corporate borrowings
 
(3,324
)
 
(996
)
 
Historic tax credit benefit
 
—

 
1,201

 
Other tax benefits, net
 
3,797

 
3,841

 
Preferred dividends and distributions
 
(4,085
)
 
(4,097
)
 
Common noncontrolling interests in Aimco OP
 
(4,312
)
 
(4,407
)
 
Amounts allocated to participating securities
 
(134
)
 
(97
)
 
Aimco share of amounts associated with unconsolidated partnerships
 
518

 
564

 
Noncontrolling interests’ share of the above amounts
 
(246
)
 
(3,196
)
 
FFO Attributable to Aimco common stockholders
 
$
93,604

 
$
91,077

 
Pro forma adjustment for litigation costs [5]
 
349

 
—

 
Pro Forma FFO Attributable to Aimco common stockholders
 
$
93,953

 
$
91,077

 
Capital Replacements, net of noncontrolling interests’ share
 
(9,767
)
 
(10,946
)
 
AFFO Attributable to Aimco common stockholders
 
$
84,186

 
$
80,131

 

Please see the following page for footnote descriptions

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Supplemental Schedule 2(a) (continued)
 
 
 
 
Funds From Operations and Adjusted Funds From Operations Information
(Page 2 of 2)
 
 
 
[1]
Contribution from Real Estate consists of property net operating income and other items of income or expense that relate to this portfolio, including property management expenses, casualty losses, interest expense related to non-recourse property debt encumbering the communities in this portfolio, and interest income Aimco earns on its investment in a securitization trust that holds certain Aimco property debt.
[2]
In 2018, Aimco changed its presentation of revenues and expenses to reflect utilities costs net of amounts reimbursed by residents, which were previously included in revenue. 2017 amounts have been revised to conform to this presentation.
[3]
In first quarter 2018, Aimco sold two apartment communities located in southern Virginia and one apartment community located in suburban Maryland. Aimco also sold its interests in the entities owning the La Jolla Cove property.
[4]
In April 2018, Aimco announced the planned third quarter sale of its Asset Management business.
[5]
Aimco is engaged in litigation with Airbnb to protect Aimco’s property right to select its residents and their neighbors. Due to the unpredictable nature of these cases and associated legal costs, Aimco excludes such costs from Pro forma FFO and AFFO. The amount presented is net of noncontrolling interests share of such costs.

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Supplemental Schedule 2(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Partially Owned Entities
 
 
 
 
 
 
Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017
(Proportionate amounts, in thousands) (unaudited)
 
 
 
 
 
Noncontrolling Interests [1]
 
Unconsolidated [2]
 
 
 
Three Months Ended March 31,
 
Three Months Ended March 31,
 
 
 
2018
 
2017
 
2018
 
2017
Real estate
 
 
 
 
 
 
 
 
Revenues, before utility reimbursements
 
$
776

 
$
6,517

 
$
560

 
$
570

Expenses, net of utility reimbursements
 
266

 
2,045

 
171

 
91

 
Net operating income
 
510

 
4,472

 
389

 
479

 
 
 
 
 
 
 
 
 
 
Property management expenses, net
 
(33
)
 
(124
)
 
(65
)
 
(61
)
Casualties
 
5

 
(12
)
 
—

 
—

Other Expense, net
 
(7
)
 
(26
)
 
—

 
—

Interest expense on non-recourse property debt on Real Estate Operations
 
(176
)
 
(1,431
)
 
(82
)
 
(86
)
FFO related to Sold and Held For Sale Apartment Communities
 
(40
)
 
192

 
—

 
—

 
Contribution from Real Estate
 
259

 
3,071

 
242

 
332

 
 
 
 
 
 
 
 
 
 
Contribution from Asset Management
 
—

 
134

 
275

 
232

 
 
 
 
 
 
 
 
 
 
Other non-property expenses, net
 
(13
)
 
(9
)
 
1

 
—

FFO
 
$
246

 
$
3,196

 
$
518

 
$
564

Noncontrolling interests share of pro forma adjustment for litigation costs
 
16

 
—

 
—

 
—

Pro Forma FFO
 
$
262

 
$
3,196

 
$
518

 
$
564

Noncontrolling interests’ share of Capital Replacements
 
(493
)
 
(699
)
 
—

 
—

AFFO
 
$
(231
)
 
$
2,497

 
$
518

 
$
564

 
 
 
 
 
 
 
 
 
 
Total apartment communities [3]
 
9
 
4
Total apartment homes [3]
 
3,592
 
142
Noncontrolling interests’ share of consolidated apartment homes/Aimco share of unconsolidated apartment homes [3]
 
3,404
 
72
 
 
 
 
 
 
 
 
 
 
[1]
Amounts represent the noncontrolling interests’ proportionate share of consolidated amounts. The decrease from 2017 to 2018 is primarily due to the June 30, 2017 reacquisition of the limited partners’ interest in the Palazzo joint venture.
[2]
Amounts represent Aimco’s proportionate share of the unconsolidated real estate partnerships’ operations.
[3]
Apartment community information excludes Sold or Held for Sale Communities.


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18
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Supplemental Schedule 3(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Net Operating Income - Real Estate
 
 
 
 
 
 
 
 
 
 
Trailing Five Quarters
 
 
 
 
 
 
 
 
 
 
 
(consolidated amounts, in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
Revenues, before utility reimbursements [1]
 
 
 
 
 
 
 
 
 
 
 
 
Same Store
 
$
145,520

 
$
145,440

 
$
145,120

 
$
143,037

 
$
141,906

 
 
Redevelopment/Development
 
43,768

 
43,365

 
44,015

 
42,434

 
41,880

 
 
Acquisition
 
6,543

 
4,846

 
4,662

 
4,268

 
3,699

 
 
Other Real Estate
 
19,333

 
19,183

 
19,426

 
18,857

 
18,732

 
 
Total revenues, before utility reimbursements
 
$
215,164

 
$
212,834

 
$
213,223

 
$
208,596

 
$
206,217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses, net of utility reimbursements [1]
 
 
 
 
 
 
 
 
 
 
 
 
Same Store
 
$
39,125

 
$
35,746

 
$
37,542

 
$
37,439

 
$
38,284

 
 
Redevelopment/Development
 
14,259

 
15,915

 
14,717

 
14,714

 
14,175

 
 
Acquisition
 
2,197

 
1,674

 
1,767

 
1,736

 
1,799

 
 
Other Real Estate
 
6,585

 
6,049

 
6,879

 
6,184

 
6,271

 
 
Total expenses, net of utility reimbursements
 
$
62,166

 
$
59,384

 
$
60,905

 
$
60,073

 
$
60,529

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Net Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
Same Store
 
$
106,395

 
$
109,694

 
$
107,578

 
$
105,598

 
$
103,622

 
 
Redevelopment/Development
 
29,509

 
27,450

 
29,298

 
27,720

 
27,705

 
 
Acquisition
 
4,346

 
3,172

 
2,895

 
2,532

 
1,900

 
 
Other Real Estate
 
12,748

 
13,134

 
12,547

 
12,673

 
12,461

 
 
Total Property Net Operating Income
 
$
152,998

 
$
153,450

 
$
152,318

 
$
148,523

 
$
145,688

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property net operating income in the table above is presented on a consolidated basis, which includes 100% of consolidated real estate partnership results and excludes the results of unconsolidated real estate partnerships, which are accounted for using the equity method of accounting.
 
 
 
 
[1]
In 2018, Aimco changed its presentation of revenues and expenses to reflect utilities costs net of amounts reimbursed by residents, which were previously included in revenue. 2017 amounts have been revised to conform to this presentation.
 



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19
393375874_landscape-2017q2a02.jpg


Supplemental Schedule 3(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property Net Operating Income - Sold and Held For Sale Communities
 
 
 
 
 
 
 
 
 
 
Trailing Five Quarters
 
 
 
 
 
 
 
 
 
 
(consolidated amounts, in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
Sold and Held for Sale Property Net Operating Income
 
 
 
 
 
 
 
 
 
 
Sold Apartment Communities:
 
 
 
 
 
 
 
 
 
 
Real Estate [1]
 
$
326

 
$
6,001

 
$
8,310

 
$
7,592

 
$
6,874

Asset Management
 
—

 
—

 
(36
)
 
52

 
263

Total Sold and Held for Sale Property Net Operating Income
 
$
326

 
$
6,001

 
$
8,274

 
$
7,644

 
$
7,137

 
 
 
 
 
 
 
 
 
 
 
Property net operating income for Sold and Held for Sale communities presented above reflects consolidated, or 100%, amounts and is included in the FFO related to sold and held for sale apartment communities lines on Supplemental Schedule 2.
 
 
[1]
In first quarter 2018, Aimco sold two apartment communities located in southern Virginia and one apartment community located in suburban Maryland. Aimco also sold its interests in the entities owning the La Jolla Cove property.


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20
393375874_portraita-2017q2a11.jpg

Supplemental Schedule 4
 
 
 
 
 
 
 
 
 
 
 
 
Apartment Home Summary
 
 
 
 
As of March 31, 2018
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
Number of
Apartment Communities
 
Number of
Apartment Homes
 
Aimco Share of Apartment Homes
Real Estate Portfolio:
 
 
 
 
 
 
Consolidated
 
 
 
 
 
 
 
Same Store
95

 
26,367

 
26,220

 
 
Redevelopment/Development
13

 
6,280

 
6,269

 
 
Acquisitions
2

 
1,211

 
1,211

 
 
Other Real Estate
20

 
3,228

 
3,199

 
Total Consolidated
130

 
37,086

 
36,899

 
Unconsolidated
4

 
142

 
72

 
Total Real Estate Portfolio
134

 
37,228

 
36,971

 
 
 
 
 
 
 
 
Asset Management:
 
 
 
 
 
 
Consolidated
39

 
6,211

 
n/a

 
Unconsolidated
7

 
687

 
n/a

 
Total Asset Management
46

 
6,898

 
n/a

 
 
 
 
 
 
 
 
Total
180

 
44,126

 
36,971

 
 


393375874_builcom-2017q2a03.jpg
21
393375874_portraita-2017q2a11.jpg

Supplemental Schedule 5(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capitalization and Financial Metrics
 
 
 
 
 
 
 
 
As of March 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leverage Balances and Characteristics [1]
 
 
 
 
 
 
 
 
 
Debt
 
Aimco Amounts
 
Aimco Share of Unconsolidated Partnerships
 
Noncontrolling Interests
 
Total Aimco Share
 
Weighted
Average
Maturity 
(Years)
 
Weighted Average Stated Interest Rate
Fixed rate loans payable
 
$
3,517,822

 
$
6,949

 
$
(16,505
)
 
$
3,508,266

 
7.5

 
4.55
%
Floating rate loans payable
 
118,613

 
—

 
—

 
$
118,613

 
4.9

 
3.07
%
Floating rate tax-exempt bonds
 
82,663

 
—

 
—

 
82,663

 
5.8

 
2.61
%
Total non-recourse property debt
 
$
3,719,098

 
$
6,949

 
$
(16,505
)
 
$
3,709,542

[2]
7.4

 
4.46
%
Term loan
 
250,000

 
—

 
—

 
250,000

 
1.3

[3]
3.23
%
Revolving credit facility borrowings
 
78,635

 
—

 
—

 
78,635

 
3.8

 
3.68
%
Preferred Equity
 
226,378

 
—

 
—

 
226,378

 
40.0

[4]
7.21
%
Total Leverage
 
$
4,274,111

 
$
6,949

 
$
(16,505
)
 
$
4,264,555

 
8.7

 
4.51
%
Cash and restricted cash
 
(90,893
)
 
—

 
1,182

 
(89,711
)
 
 
 
 
Securitization trust assets
 
(83,587
)
 
—

 
—

 
(83,587
)
[5]
 
 
 
Net Leverage
 
$
4,099,631

 
$
6,949

 
$
(15,323
)
 
$
4,091,257

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leverage Ratios [6]
 
 
 
 
 
 
 
 
 
 
 
 
 
First Quarter 2018
 
Debt to Adjusted EBITDA
 
 
 
 6.8x
 
Debt and Preferred Equity to Adjusted EBITDA
 
 
 
 7.2x
 
Adjusted EBITDA to Adjusted Interest
 
 
 
 3.6x
 
Adjusted EBITDA to Adjusted Interest and Preferred Dividends
 
 
 
 3.2x
 
 
Revolving Line of Credit Debt Coverage Covenants
 
 
 
 
Amount
 
Covenant
 
Fixed Charge Coverage Ratio
 
 
 
2.02x
 
1.40x
 
 
 
 
 
 
 
 
 
Credit Ratings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Standard and Poor’s
 
Corporate Credit Rating
 
BBB- (stable)
 
Fitch Ratings
 
Issuer Default Rating
 
BBB- (stable)
 
[1]
Aimco excludes the non-recourse property debt obligations of consolidated partnerships served by the Asset Management business from its net leverage calculations because they are not Aimco’s obligations and have limited effect on the amount of fees and other payments Aimco expects to receive. In April 2018, Aimco announced the planned third quarter sale of the Asset Management business.
[2]
Represents the carrying amount of Aimco’s debt. At March 31, 2018, Aimco’s debt had a mark-to-market asset of $4.5 million. Aimco computed the fair value of its debt utilizing a Money-Weighted Average Interest Rate on its fixed-rate property debt of 3.99%, which rate takes into account the timing of amortization and maturities, and a market rate of 4.01% that considers the duration of the existing property debt using a similar lending source, the loan-to-value and coverage, as well as timing of amortization and maturities.
[3]
Aimco’s term loan provides for a one year extension option, which has been included in the weighted average maturity.
[4]
Preferred Equity is perpetual in nature; however, for illustrative purposes, Aimco has computed the weighted average of its total leverage assuming a 40-year maturity for its Preferred Equity.
[5]
In 2011, $673.8 million of Aimco’s loans payable were securitized in a trust holding only these loans. Aimco purchased the subordinate positions in the trust that holds these loans for $51.5 million. These investments have a face value of $100.9 million and a carrying amount of $83.6 million, and are included in other assets (attributable to the Real Estate portfolio) on Aimco’s Consolidated Balance Sheet at March 31, 2018. The amount of these investments effectively reduces Aimco’s leverage.
[6]
Aimco’s leverage ratios have been calculated on a pro forma basis to reflect the acquisition of Bent Tree Apartments and the disposition of three apartment communities during the period as if the transactions had closed on January 1, 2018.

393375874_builcom-2017q2a03.jpg
22
393375874_portraita-2017q2a11.jpg

Supplemental Schedule 5(b)
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2018
 
 
 
 
 
 
Capitalization and Financial Metrics
 
 
 
 
 
(share, unit and dollar amounts in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aimco Share Non-Recourse Property Debt
 
 
 
Amortization
 
Maturities
 
Total
 
Maturities as a 
Percent of Total
 
Average Rate on
Maturing Debt
2018 2Q
 
$
19,298

 
$
—

 
$
19,298

 
—
%
 
—
%
2018 3Q
 
19,895

 
—

 
19,895

 
—
%
 
—
%
2018 4Q
 
20,874

 
35,530

 
56,404

 
0.98
%
 
4.15
%
Total 2018
 
60,067

 
35,530

 
95,597

 
0.98
%
 
4.15
%
 
 
 
 
 
 
 
 
 
 
 
 
2019 1Q
 
20,281

 
54,103

 
74,384

 
1.50
%
 
4.56
%
2019 2Q
 
19,804

 
212,577

 
232,381

 
5.89
%
 
5.77
%
2019 3Q
 
17,889

 
213,437

 
231,326

 
5.91
%
 
5.74
%
2019 4Q
 
18,662

 
—

 
18,662

 
—
%
 
—
%
Total 2019
 
76,636

 
480,117

 
556,753

 
13.30
%
 
5.62
%
 
 
 
 
 
 
 
 
 
 
 
 
2020
 
71,568

 
252,021

 
323,589

 
6.98
%
 
5.88
%
2021
 
56,256

 
635,258

[1]
691,514

 
17.60
%
 
5.27
%
2022
 
48,501

 
233,439

 
281,940

 
6.47
%
 
4.77
%
2023
 
39,331

 
254,524

 
293,855

 
7.05
%
 
4.05
%
2024
 
34,290

 
252,191

 
286,481

 
6.99
%
 
3.39
%
2025
 
28,325

 
187,447

 
215,772

 
5.19
%
 
3.53
%
2026
 
23,168

 
155,571

 
178,739

 
4.31
%
 
3.34
%
2027
 
15,132

 
215,557

 
230,689

 
5.97
%
 
3.37
%
Thereafter
 
249,895

 
203,866

 
453,761

 
5.65
%
 
3.32
%
Total
 
$
703,169

 
$
2,905,521

 
$
3,608,690

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