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Section 1: 8-K (8-K)

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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) November 6, 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 7.01.    Regulation FD.
On November 7-8, 2018, representatives of Apartment Investment and Management Company (“Aimco”), including Terry Considine, Chairman of the Board and Chief Executive Officer, and Paul Beldin, Executive Vice President and Chief Financial Officer, will meet with investors. During those meetings, Aimco representatives will distribute the attached presentations. The presentations are furnished herewith as Exhibit 99.1 and Exhibit 99.2.
ITEM 9.01.     Financial Statements and Exhibits.
(d)    The following exhibits are furnished with this report:
Exhibit Number
Description
Apartment Investment and Management Company Investor Presentation - November 2018
Apartment Investment and Management Company Net Asset Value Presentation - September 30, 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: November 6, 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)

investorpresentationnare
Indigo Redwood City, CA Nareit REITworld 2018 Conference Investor Presentation November 2018


 
CREATING VALUE OVER TIME: THE RECORD Aimco’s primary measure of long-term financial performance is Economic Income. This metric reflects Aimco shareholder value creation as measured by the per share change in Net Asset Value plus Cash Dividends paid. • Since IPO through 3Q 2018(1), Aimco Economic Income has compounded at 14.0% annually. • Over the last five years, through 3Q 2018, Aimco Economic Income has compounded at 11.5% annually. • Updated Aimco Net Asset Value (NAV) estimate as of 3Q 2018 = $56 per share. Over the last five years, Aimco has produced consistent results, demonstrated by: • Same Store revenue growth CAGR of 4.0% Operations • YTD 3Q 2018 peer leading Same Store NOI margin of 74%, with 810 bps of margin expansion over the last five years, ~540 bps better than peer average of ~270 bps of margin expansion. Redevelopment • ~$1B Redevelopment and Development spending which created ~$400M of value. • Sale of $2.9B of lower rated assets Portfolio Management • Exit from the affordable housing business • Improved quality of earnings. Balance Sheet • Growth in Aimco’s unencumbered pool from $0.2B in 3Q13 to $2.3B in 3Q18. (1) Represents Aimco’s last published Net Asset Value of $56/sh at 9/30/2018 and share price at IPO as a proxy for NAV. 2


 
CREATING VALUE OVER TIME: THE PROMISE Going forward, Aimco maintains its commitment to excellence in operations, disciplined capital allocation via its paired trade philosophy, and guarding its safe and flexible balance sheet. • 2019 Same Store revenue will benefit from 30 bps YOY increase based on existing Operations book of business. 30 bps higher Average Daily Occupancy in 2018 provides a foundation for a stronger 2019. • 2019 Economic Income will benefit from increased spending to $300M, targeting Redevelopment ~$120M of value creation. • Maintain disciplined capital allocation strategy via paired trades with an eye toward opportunistic transactions. Portfolio Management • Maintain a portfolio diversified by geography and price point. • High quality of earnings: > 95% of AFFO from “core real estate operations.”(1) • Ongoing commitment to a safe and flexible balance sheet. • >$3B unencumbered properties following ~$1B 4Q18 refinancing activity. Balance Sheet • Interest savings of ~$13M following 4Q18 debt refinancing activity; additional savings from the planned May ‘19 redemption of $125M of 6.875% preferred stock. (1) Earnings outside of “core real estate operations” represents AFFO contribution from Low Income Housing Tax Credit (LIHTC) communities, Asset Management, and historic tax credits and other tax benefits. 3


 
AIMCO CULTURE & LEADERSHIP TEAM Aimco is defined by its intentional focus on a collaborative and productive culture based on respect for others and personal responsibility, reinforced by a preference for promotion from within based on talent development and succession planning to produce a strong, stable team that is the enduring foundation of Aimco success. Aimco benefits from a long-tenured Senior Leadership Team with an average of 15 years of service. Paul Beldin John Bezzant Lisa Cohn Terry Considine Miles Cortez Steve Crane Matt Eilen EVP & EVP & EVP & Chairman & EVP & Real Estate Tax Property Operations Chief Financial Officer Chief Investment General Counsel CEO Chief Administrative 15 Years Finance 10 Years Officer 16 Years 43 Years Officer 8 Years 12 Years 17 Years Michael Englhard Patti Fielding Richard Hawthorne Kristina Howe Jennifer Johnson Keith Kimmel Stephanie Lambert Didi Meredith Redevelopment EVP: Debt & Treasurer Redevelopment Property Operations Human Resources EVP Redevelopment Property Operations Construction Services President: Construction Services Shared Services 14 Years Property Operations Finance West Operations 5 Years Aimco Investment Partners 10 Years 16 Years 16 Years 17 Years 12 Years 21 Years Leann Morein Kevin Mosher Sandra Neely Susan Pickens Wes Powell Patti Shwayder Martin Sprang Lynn Stanfield Compliance Property Operations IT IT EVP Government Relations Asset Quality & EVP Finance & Tax 24 Years East Operations New Hire 24 Years Redevelopment & Communications Service 17 Years 11 Years 14 Years 16 Years 12 Years 4


 
OPERATIONS UPDATE COMPLETED A STRONG 2018 SUMMER LEASING SEASON • May-September 2018 blended lease rate growth was 3.4% and Average Daily Occupancy (“ADO”) was 96.3%. • 2018 Same Store Revenue growth expected to be 3.0% and Same Store NOI growth between 2.9% and 3.1%. • Strong operating results led to $0.03 per share AFFO guidance increase since 2Q 2018, recovering 2018 dilution from the sale of the Asset Management business(1). 2019 REVENUE OUTLOOK • Market rate growth in Aimco submarkets in 2019 is expected to be SIMILAR to 2018 according to third party forecasts(2). • EARN-IN from Aimco’s year-end 2018 rent roll will contribute an incremental 30 bps to 2019 Same Store revenue growth than the 2017 rent roll contributed to 2018 Same Store revenue growth. • Aimco expects to finish 2018 with Same Store ADO 30 bps HIGHER than in 2017, providing a springboard into 2019. (1) Taken together, the dilution from the sales of Chestnut Hill Village, the Hunters Point properties, and Aimco’s Asset Management business, partially offset by the acquisitions of Bent Tree and the Philadelphia portfolio, was expected to reduce AFFO per share by $0.03 in 2018. (2) REIS and Axiometrics. 5


 
REDEVELOPMENT REDEVELOPMENT PROVIDES CONSISTENT VALUE CREATION • For the five years ended 2017, Aimco spent $1B on Redevelopment and Development, creating ~$400M of value. • In 2018, Aimco will spend $180M on Redevelopment and Development, targeting 40% value creation. • In 2019, Aimco plans to increase this spending to $300M. • Of the $300M planned for 2019, $200M represents projects that are currently in-process including Parc Mosaic, Flamingo, the Anschutz Expansion, Elm Creek, as well as other smaller projects. • Aimco plans an additional $100M in spending in 2019 on Redevelopment and Development based on Aimco’s deep redevelopment project pipeline. 2019 POTENTIAL REDEVELOPMENT PROJECTS MINNEAPOLIS Calhoun Beach Club (Expanded Scope) DENVER NEW YORK CITY Anschutz Expansion East 88th & 2nd Ave (Additional Phases) PHILADELPHIA BAY AREA Chestnut Hall 707 Leahy GREATER GREATER LA WASHINGTON, DC Villas at Park La Brea Bent Tree SAN DIEGO Mariner's Cove MIAMI Bay Parc (Additional Phases) Flamingo South Beach (Expanded Scope) The menu shown above is representative of the communities whose redevelopment or development is being considered in 2019. Actual projects and their scope may differ materially from the above. 6


 
PORTFOLIO MANAGEMENT 2018 CAPITAL ALLOCATION DECISIONS • In 2018, Aimco sold $825M of lower-rated properties and issued $65M of OP units at NAV of $53 per share(1) for a total $890M in sources of capital. • 2018 dispositions included the $590M sale of its Asset Management business and Hunters Point affordable communities, completing the five year exit from the affordable housing business. • In 2018, Aimco will have reinvested the $890M of capital sources in accretive uses with higher expected FCF IRRs, including: o Acquisitions: $468M o Redevelopment/Development: $180M o Capital Enhancements: $95M o Net Leverage Reduction: $72M o Stock Buyback: $75M completed in Oct.’18 at $43.89/sh (1) Aimco’s published NAV estimate at the time of Philadelphia acquisition announcement. 7


 
PORTFOLIO MANAGEMENT LOOKING TOWARDS 2019 Aimco allocates capital in accordance with its FCF IRR paired trade discipline and on a leverage-neutral basis. Aimco considers unlevered risk- Aimco considers execution risks Aimco considers its cost of equity adjusted returns from a menu of capital such as: capital, including: uses including: • Capital Enhancements • Geographic market concentrations • Sale of lower-rated properties • Redevelopment • Price point concentrations • Sale of partial interests in higher- • Development • Entitlement risk rated properties • Acquisitions • Construction risk • Issuance of shares at or above NAV • Leverage reduction • Lease-up risk • Share buybacks • Aimco’s 2019 base case contemplates: o ~$300M in Redevelopment and Development spending and $80-$100M of Capital Enhancements funded by property sales; o Additional transactions, accretive on a risk-adjusted basis, such as: • Under-managed communities: (e.g. Bent Tree Apartments) • OP unit transactions: (e.g. Philadelphia portfolio) • Stock buybacks: (e.g. AIV repurchased 1.7M shares in Oct.’18 and has existing authorization for 17.6M additional shares) 8


 
HIGH QUALITY BALANCE SHEET AIMCO LIMITS RISK THROUGH BALANCE SHEET STRUCTURE • Employ low leverage: 35% property debt loan-to- value at 3Q 2018 • Finance primarily with non-recourse property debt and preferred equity: 94% and 6%, respectively, of Aimco total leverage at 3Q 2018 • Maintain financial flexibility: • Ample committed credit: $593M of $600M available at 3Q 2018 • A pool of unencumbered properties: Valued at $2.3B at 3Q 2018 • Ready access to property market liquidity: ~$1B of lower rated assets offered for sale at 3Q 2018 • Maintain investment grade rating as confirmation of the safety of Aimco’s balance sheet 9


 
HIGH QUALITY BALANCE SHEET FURTHER BALANCE SHEET IMPROVEMENTS EXPECTED IN 2019 During 4Q18, Aimco expects to address ~$1B of its $1.6B of 2019-2021 debt maturities, which will: • IMPROVE MATURITY LADDER so that no single year has more than 10% of total maturities(1) • Maintain LOW ENTITY RISK as these property loans are NON-RECOURSE • Reduce weighted average interest rate by ~35 bps, providing annual INTEREST SAVINGS of ~$13M • Extend weighted average DURATION of property debt from 7.0 years to 8.2 years • INCREASE UNENCUMBERED PROPERTIES to >$3B by YE18 By growing its value of unencumbered properties, Aimco has increased the FLEXIBILITY of its balance sheet, and also improved its FINANCIAL CAPACITY to execute opportunistically. (1) $247M of property debt is payable at par in 2020 but does not mature until 2021; Aimco intends to address this debt in 2020. 10


 
POTENTIAL 2019 RISKS Aimco regularly assesses risks that may impact its business and takes prudent precautions to ensure that the company is well-positioned. Mitigating Factors • Aimco maintains a portfolio that is diversified by geography and price point to mitigate the New Supply impact of competitive new supply. Aimco exposure to new supply is expected to be less in 2019 than in 2018 and is discussed on pg. 12. • Aimco resident retention averaged 52% over the five years ended 3Q 2018, limiting the U.S. Economy impact of new lease pricing if the market were to decline. • After 4Q 2018 expected refinancings, Aimco has limited exposure to increasing interest Interest Rates rates: $3.5B (91% of total leverage) is fixed-rate; $650M (17% of total leverage) matures in next three years. • Aimco government affairs and legal teams work directly with federal, state and local governments and also through industry groups to make relevant government decision making better informed, for example: o Aimco teams participated with the industry coalition to oppose Prop 10 in California. Political Risk • Aimco works with federal, state and local governments to protect the right of property owners to select their residents and their neighbors. o Aimco is engaged in litigation with Airbnb to cause it to cease brokering, promoting, and profiting from short-term rentals that violate Aimco apartment leases and cause trespassing on Aimco communities. 11


 
EXPOSURE TO NEW SUPPLY • Aimco considers competitive new supply to be significant primarily to “A” price point communities in submarkets with projected completions of more than 2.0% of existing stock. Based on third-party forecasts of new supply, Aimco properties representing 9% of GAV will be so affected in 2019, down from 23% at the beginning of 2018. • Even where markets face elevated new supply, the quality of the Aimco offering or its location, or an increase in local demand, for example from job growth, can reduce or offset the impact of new supply. % Aimco GAV 2019 Invested in "A" Completions 2019 New Jobs Submarket Graded as a % of per Unit Market Submarket Communities Stock(1) Completed(2) Aimco Specific Mitigating Factors Philadelphia Center City 6.4% 3.2% 7 Declining supply outlook with strong job growth expected in 2019. Supply pressure could exist, however it is expected to be delivered at a higher Denver Littleton 0.4% 4.1% 3 price point than current Aimco rents. Supply pressure could exist in Central DuPage, however new jobs data suggests Chicago Central DuPage County 1.0% 4.0% 6 2019 supply should be absorbed. Midtown Atlanta 0.4% 7.1% New supply completions are expected to continue into 2019 and pressure could Atlanta 5 exist, however new supply is expected to be delivered at a higher price point than Buckhead 0.2% 7.4% current Aimco rents. New supply completions are expected to continue into 2019 and pressure could Nashville West Nashville 0.4% 5.8% 6 exist, however new supply is expected to be delivered at a higher price point than current Aimco rents. Total % of Aimco GAV Exposed 8.8% Declining Maintaining Increasing to Supply Outlook High Supply High Supply • Additionally, select Aimco “B” submarket graded communities may face supply pressure based on the direct proximity of new product being delivered, e.g. Yacht Club in Miami and 3400 Avenue of the Arts in Orange County, which both have lease-ups directly across the street. • Based on the 3Q 2018 updated forecasts for new supply, the following Aimco submarkets are no longer identified as “at-risk:” Mid-Wilshire (Los Angeles)(3), South San Mateo County (Bay Area), North Aurora (Denver), Southeast DuPage County (Chicago), Uptown/St. Louis Park (Minneapolis), and La Jolla/University City (San Diego). (1) Based on submarket data for deliveries in 2019 as a percentage of 4Q18 forecasted stock as of 3Q 2018, available from Axio/MPF Research. (2) Employment figures are based on market data as reported by Green Street Advisors (Sept 2018). As a rule of thumb, at least five new jobs are necessary to absorb one unit of new supply. (3) Mid-Wilshire forecasted supply dropped from ~2.0% completions as a percent of existing stock in 2018 to 1.6% in 2019. Source: Axio/MPF Research. 12


 
WHY INVEST IN AIMCO? • Best-in-Class Operations: Lower resident turnover through intentional focus on customer selection and satisfaction drives peer- leading margins. • Paired-Trade Capital Allocation Discipline: Aimco adheres to a disciplined paired-trade strategy comparing unlevered expected returns on all of its capital allocation uses to the unlevered expected returns of equity capital. • Aimco invests up to 3% of its GAV annually in repositioning existing properties and constructing new ones, adding on average, $0.40 to Net Asset Value for every dollar invested in the last 5 years, and at FCF IRRs of >10%. • Since 2016, even in a fully priced market, Aimco has made $1.3B of opportunistic acquisitions where Aimco had a unique “advantage” that provided for outsized value creation. o Indigo, Palazzo (reacquisition of 47% interest from JV partner), Bent Tree Apartments, and Philadelphia portfolio; o These acquisitions were funded with paired trade activities that increased expected FCF IRR by ~300 bps. • Geographically Diversified: Targeting 12 of the largest markets in the nation, including the only publicly traded apartment REIT with significant investments in Philadelphia and Chicago, and one of only two with significant investments in Miami. • Safe and Flexible Balance Sheet: Aimco is the only REIT in its peer group that primarily uses safe, non-recourse, property level financing while maintaining an investment grade rating as confirmation of the safety of its balance sheet. 13


 
FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected results and specifically forecasts of 2018 results and 2019 expectations, including but not limited to: AFFO and selected components thereof; Aimco redevelopment and development investments and projected value creation from such investments; Aimco refinancing activities; 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. Pursuant to its existing authority to repurchase up to 19.3M shares, the company may make repurchases from time to time in the open market or in privately negotiated transactions at the company’s discretion and in accordance with the requirements of the SEC. The timing and amount of repurchases, if at all, will depend on market pricing as well as other conditions. 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 presentation does not constitute an offer of securities for sale. Glossary & Reconciliations of Non-GAAP Financial and Operating Measures Financial and operating measures discussed in this document include certain financial measures used by Aimco management, that are measures not defined under accounting principles generally accepted in the United States, or GAAP. Certain Aimco terms and Non-GAAP measures are defined in the Glossary and Reconciliations of Non-GAAP Financial and Operating Measures included in Aimco’s Third Quarter 2018 Earnings Release dated November 1, 2018. 14


 
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Section 3: EX-99.2 (EXHIBIT 99.2)

aivnav3q2018final11618


 
INTRODUCTION Net Asset Value is calculated as the market value of a company's assets less its liabilities and obligations. Net Asset Value is used by many investors in real estate companies because the value of company assets can be readily estimated, even for non-earning assets such as land or properties under development. Net Asset Value has the advantage of incorporating the investment decisions of the many thousands of real estate investors. It enhances comparability among companies that have differences in their accounting. It avoids distortions that can result from application of GAAP to investment properties and ownership structures. While Net Asset Value is not identical to liquidation value in that some costs and benefits are disregarded, it is often considered a floor with upside for any value ascribed to the operating platform. Net Asset Value also provides an objective basis for the perceived quality, or predictability, of future cash flows as well as their expected growth as these are factors considered by real estate investors. As a result, Net Asset Value can be a valuable starting point for projecting future earnings. 2


 
GENERAL DISCLOSURES The information provided in this presentation is intended to assist users in estimating Aimco’s Net Asset Value per share. This is not an offer to sell securities and does not constitute legal, tax, investment or other professional advice on any subject matter. Information provided is not all-inclusive and should not be relied upon as being all-inclusive. This presentation describes a process to calculate Aimco's estimated Net Asset Value per share as of September 30, 2018. This value will fluctuate over time. Aimco's estimated Net Asset Value per share is based upon subjective judgments, assumptions and opinions and includes certain risks and uncertainties. Risks and uncertainties include, but are not limited to: Aimco's ability to maintain current or meet projected occupancy, rental rates 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 its redevelopments and developments; and Aimco's ability to meet timelines and budgeted rental rates related to its lease-up properties. 3


 
GENERAL DISCLOSURES (CONTINUED) This Net Asset Value per share information is intended to measure Aimco’s value as a going concern, consistent with International Financial Reporting Standards (“IFRS”), and is not necessarily representative of the amount a stockholder could expect to receive in a liquidation event, now or in the future. Certain opportunities are excluded as are transaction costs, transfer taxes, income taxes, and any real estate tax adjustments that may impact the value a stockholder might receive and a buyer might ascribe to Aimco’s communities (see page 8). Aimco's estimated Net Asset Value is based on management's judgments, assumptions and opinions as of this date, and Aimco assumes no obligation to revise or update them to reflect future events or circumstances. Actual results may differ materially from management's forecasts as of this date 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 our earnings may not be sufficient to maintain compliance with debt covenants; 4


 
GENERAL DISCLOSURES (CONTINUED) • Insurance risk, 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 its 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. 5


 
VALUATION METHODOLOGY Real Estate - Aimco estimated the value of its communities using methods management believes to be appropriate based on the characteristics of the communities. For valuation purposes, Aimco segregated its portfolio into the following categories: Stabilized Portfolio; Redevelopment Communities Under Construction; and Other Real Estate. Communities in these categories were valued as follows: • Stabilized Portfolio - includes 122 communities valued using a direct capitalization rate ("cap rate") method based on annualized 3Q 2018 property NOI, less a 2% management fee, and market cap rates. This valuation method was utilized for approximately 84% of real estate fair value. • Redevelopment Communities Under Construction - includes six communities valued based on discounting projected future cash flows. This valuation method was utilized for approximately 12% of real estate fair value. • Other Real Estate Portfolio - includes five recently acquired communities valued at purchase price and certain land investments at Aimco's carrying value. This valuation method was utilized for approximately 4% of real estate fair value. 6


 
VALUATION METHODOLOGY (CONTINUED) Other Tangible Assets - consist of cash, restricted cash, accounts receivable and other assets for which Aimco reasonably expects to receive cash through the normal course of operations. Debt - the fair value of Aimco's debt takes into account the duration of the property debt as well as its loan to value and debt service coverage. Other Tangible Liabilities - consist of accounts payable, accrued liabilities and other tangible liabilities Aimco reasonably expects to settle in cash through the normal course of operations. Preferred Equity - the fair value of Aimco's preferred equity includes a mark-to-market adjustment for listed securities based on their closing share price on September 30, 2018. 7


 
VALUATION METHODOLOGY (CONTINUED) Other Items of Note • Real estate values are based on Aimco's current uses and most importantly do not include the value of unused or underused land or air rights. • Real estate values generally do not take into consideration transaction costs or other items such as real estate tax adjustments that may impact the value a buyer might ascribe to Aimco's communities. • This calculation of Aimco’s Net Asset Value includes the value of assets less liabilities and obligations as of September 30, 2018 and does not include asset acquisitions or dispositions subsequent to September 30, 2018. • This calculation of Aimco’s Net Asset Value does not include the value of fee income such as property management revenues, or non-recurring investment management revenues. • This calculation of Aimco’s Net Asset Value does not consider enterprise value. • Additional details of Aimco's calculations and methodologies are included on the following pages. 8


 
September 30, 2018 Estimated Net Asset Value: $56 per share* $78 $1 -$23 Fair Value of Real Estate Fair Value of Other Tangible Fair Value of Leverage Assets and Liabilities Cash and restricted cash Carrying value of debt + Other tangible assets + Mark-to-market adjustment - Other tangible liabilities + Fair value of preferred equity Estimated NAV per share increased by $2 from the first quarter 2018 calculation. The increase in NAV as presented is primarily due to NOI growth. Fair Value of Real Estate: IFRS permit measurement of investment property at fair value. While Aimco does not report under IFRS, it believes the estimation of the fair value of real estate provided herein is determined consistently with IFRS requirements for investment properties. *Refer to additional details and disclosures beginning on page 11. 9


 
September 30, 2018 Estimated Fair Value of Real Estate: $78 per share* Stabilized Real Estate Portfolio Annualized 3Q 2018 NOI Less: Management fee of 2% of revenue Divided By: NOI cap rate of 4.96% Redevelopment Portfolio Cash flows discounted from property stabilization to September 30, 2018. Other Real Estate Portfolio Other Investments: Certain land valued at carrying value. Recent Acquisitions: Bent Tree community and the four Philadelphia communities valued at their purchase price. *Refer to additional details and disclosures beginning on page 11. 10


 
Fair Value of Real Estate as of September 30, 2018 ($M) Stabilized Portfolio NOI, less management fee $ 536 (1) NOI cap rate 4.96% (2) Stabilized Portfolio Value $ 10,806 Non-Stabilized Portfolio Redevelopment communities under construction $ 1,569 (3) Other Real Estate 483 (4) Non-Stabilized Portfolio Value $ 2,052 Fair Value of Real Estate $ 12,858 *Refer to Footnotes beginning on page 14. 11


 
Fair Value of Other Assets and Liabilities, Preferred Equity and Debt as of September 30, 2018 ($M) Consolidated Ownership Fair Value Amounts Adjustments (5) Adjustments Adjusted Amounts Other Tangible Assets Cash and cash equivalents $ 58 $ (2) $ — $ 56 Restricted cash 46 — — 46 Goodwill and other intangible assets 49 — (49) — (6) Other tangible assets 301 (13) — 288 Fair Value of Other Tangible Assets $ 454 $ (15) $ (49) $ 390 Other Tangible Liabilities Deferred income $ 35 $ — $ (35) $ — (7) Accounts payable 44 — — 44 Other tangible liabilities 164 (1) — 163 Fair Value of Other Tangible Liabilities $ 243 $ (1) $ (35) $ 207 Fair Value Other Tangible Assets and Liabilities, Net $ 211 $ (14) $ (14) $ 183 Preferred Equity Preferred noncontrolling interests in Aimco Operating Partnership $ 101 $ — $ — $ 101 Perpetual preferred stock 125 — 2 $ 127 (8) Fair Value of Preferred Equity $ 226 $ — $ 2 $ 228 Debt Non-recourse property debt $ 3,665 $ (10) $ (64) $ 3,591 Term loan, net — — — — Revolving credit facility borrowings — — — — Fair Value of Debt $ 3,665 $ (10) $ (64) $ 3,591 (9) Fair Value of Leverage $ 3,891 $ (10) $ (62) $ 3,819 *Refer to Footnotes beginning on page 14. 12


 
Net Asset Value as of September 30, 2018 ($M, except per share amounts) Fair Value of Real Estate $ 12,858 Fair Value of Other Tangible Assets and Liabilities, Net $ 183 Fair Value of Leverage $ (3,819) Net Asset Value $ 9,222 Total Shares, Units and Dilutive Share Equivalents Outstanding 166 (10) Net Asset Value per Share * $ 56 It bears repeating that this NAV per share calculation is made at a point in time and its result may be expected to fluctuate based on subsequent events. Many factors influence this calculation including operating results, changes in use or density, the broader economy, and alternative investment opportunities. Our methodology relies on CBRE reporting of cap rates applicable to transactions in 1H 2018 which incorporated the facts and circumstances then prevalent. If cap rates were to increase or decrease by 25 basis points, then Aimco’s GAV and NAV would change by ~$600M which equates to $3.50 per share. *Refer to Footnotes beginning on page 14. 13


 
Footnotes 1. Represents Stabilized Portfolio Proportionate Property NOI for the three months ended September 30, 2018, annualized, and adjusted for an assumed property management fee. Market property management fees range between 1.5% and 3.0% with larger, higher quality portfolios at the lower end of that range. For the purposes of this calculation of Net Asset Value, Aimco has assumed a 2% management fee. For the purposes of this calculation of Net Asset Value, 3Q 2018 Property NOI is multiplied by four to arrive at annualized Property NOI. Three Months Ended September 30, 2018 Consolidated Ownership Adjusted Stabilized Portfolio NOI ($000s) Amount Adjustments Adjustments Amounts Rental and other property revenues Same Store $ 149,561 $ (684) $ — $ 148,877 Acquisitions, Redevelopment and Development 62,662 (68) (33,489) a 29,105 Other Real Estate 11,426 563 — b 11,989 Total rental and other property revenues $ 223,649 $ (189) $ (33,489) $ 189,971 Less: Direct property operating expenses Same Store $ (39,246) $ 219 $ — $ (39,027) Acquisitions, Redevelopment and Development (19,961) 26 10,749 a (9,186) Other Real Estate (3,928) (120) 14 b (4,034) Total property operating expenses $ (63,135) $ 125 $ 10,763 $ (52,247) Property Net Operating Income $ 160,514 $ (64) $ (22,726) $ 137,724 Less: Assumed property management fee of 2% of revenue (4,473) 4 670 (3,799) Property Net Operating Income after 2% management fee $ 156,041 $ (60) $ (22,056) $ 133,925 Annualized Property Net Operating Income $ 624,164 $ (240) $ (88,224) $ 535,700 Refer to the following pages for explanation of adjustments for purposes of computing Stabilized Portfolio Property NOI. 14


 
Footnotes (continued) 1. (continued) a. Represents revenues and expenses related to six redevelopment communities currently under construction: Villas at Park La Brea, located in Los Angeles, California; Parc Mosaic, located in Boulder, Colorado; Flamingo South Beach, located in Miami Beach, Florida; Bay Parc, located in Miami, Florida; and Park Towne Place and The Sterling, both located in Center City Philadelphia, Pennsylvania. Also included in these adjustments are the revenue and expense items related to Bent Tree Apartments, located in Centreville, Virginia and purchased in February 2018; and the four communities located in Center City and University City, Philadelphia, Pennsylvania and purchased in May 2018. Aimco's redevelopment communities currently under construction are valued based on discounted cash flows as described in notes 3 and 4 starting on page 17. For the purposes of this Net Asset Value calculation, Villas at Park La Brea, Parc Mosaic, Flamingo South Beach, Bay Parc, Park Towne Place and The Sterling are included in Aimco's Redevelopment Portfolio value. For the purpose of this Net Asset Value calculation, Bent Tree Apartments and the Philadelphia portfolio are included in Other Real Estate Portfolio, valued at the purchased price. After excluding the results related to the communities described above, stabilized NOI related to redevelopment and development communities represents the results of operations from the following communities: the Palazzo at Park La Brea and Palazzo East at Park La Brea, located in Los Angeles, California; Broadway Lofts, located in San Diego, California; Saybrook Pointe, located in San Jose, California; Yorktown, located in Lombard, Illinois; One Canal, located in Boston, Massachusetts; Indigo, located in Redwood City, California; and Calhoun Beach Club, located in Minneapolis, Minnesota. b. Represents revenue and expenses related primarily to Aimco’s investment in land. Such properties are included in Aimco's Net Asset Value at their carrying value. 2. Represents Aimco's estimated current NOI cap rate for its Stabilized Portfolio, which was calculated by Aimco on a property- by-property basis, based primarily on information published by CBRE in its 1H 2018 Cap Rate Survey. CBRE is a nationally recognized provider of real estate data. Such Survey includes ranges of current cap rates based on the following community characteristics: market in which the community is located; infill or suburban location within the market; property quality grade; and whether the community is stabilized or value-add. In estimating the appropriate current cap rate for its Stabilized Portfolio, Aimco categorized communities in the portfolio using the framework described above and, using its judgment and detailed knowledge of each community’s condition and location, other than the exceptions noted below, Aimco selected an appropriate current cap rate from within the range provided in CBRE's Cap Rate Survey. The results of this analysis are detailed on the following page. 15


 
Footnotes (continued) 2. (continued) 3Q 2018 Stabilized Portfolio Range of CBRE Cap Rates for Aimco's Portfolio Average Average Revenue Rent as a per Percentage Average Aimco Apartment Apartment of Market Quality Selected Communities Homes Home Average Grade Low High Cap Rate Atlanta 5 817 $1,708 146% A 4.9% 5.6% 5.2% Bay Area 12 2,632 3,025 103% B 4.2% 4.7% 4.4% Boston 15 4,689 1,975 83% C+ 5.3% 6.2% 5.5% Chicago 10 3,246 1,669 116% B 5.3% 5.6% 5.6% Denver 7 1,925 1,647 117% B 5.0% 5.6% 5.3% Greater New York 18 1,040 3,432 107% B 4.6% 5.4% 4.4% a Greater Washington, DC 12 5,085 1,589 87% C+ 5.5% 6.2% 5.7% Los Angeles 12 4,097 3,010 152% A 4.2% 4.6% 4.3% Miami 3 873 2,257 145% A 4.3% 4.7% 4.5% Philadelphia 2 499 1,963 138% A 5.0% 5.5% 5.1% San Diego 12 2,423 1,917 104% B 4.8% 5.3% 5.4% b Seattle 2 239 2,313 125% A 4.8% 5.1% 4.9% Other Markets 12 3,756 1,741 118% B 5.2% 5.6% 5.4% Total/Weighted Average 122 31,321 $2,106 112% B 4.7% 5.3% 4.96% a. Aimco estimates the current NOI cap rates for its communities located in New York City are on average 20 basis points lower than the low end of the range of cap rates that is indicated by the results of Aimco's analysis using the CBRE Cap Rate Survey. Aimco believes this lower cap rate is appropriate because the Survey reflects cap rates for the New York City metro area while Aimco's portfolio is concentrated in Manhattan, where today's cap rates are lower. b. Based on the quality of its communities and locations within the market, Aimco estimates the current NOI cap rate for its San Diego portfolio is slightly higher than the high end of the range of cap rates indicated by the results of Aimco's analysis using the CBRE Cap Rate Survey. 16


 
Footnotes (continued) 3. Represents the value of six communities currently under redevelopment: Villas at Park La Brea, located in Los Angeles, California; Parc Mosaic, located in Boulder, Colorado; Flamingo South Beach & Bay Parc Plaza, located in Miami, Florida; and Park Towne Place and The Sterling, both located in Center City Philadelphia, Pennsylvania. Such communities are valued based on discounted cash flows using the following assumptions: a. Revenues: based on in-place rents, projected submarket rent growth to property stabilization based on the average of projections published by REIS and AXIOmetrics, and the completion of redevelopment or development. b. Expenses: estimated operating costs adjusted for inflation as projected by Moody's Economy.com; management fee equal to 2% of projected revenue. c. Cost to complete construction: based on current estimates. Please see Supplemental Schedule 10 to Aimco’s 3Q 2018 Earnings Release for additional information and descriptions of these redevelopments. d. Terminal value: based on current market cap rate plus 5 basis points per year from September 30, 2018, to property stabilization. e. Sales cost: 0.50% - 0.70% of terminal value. f. Discount rate: 6.30% - 6.40% depending on construction and lease-up progress at September 30, 2018. 17


 
Footnotes (continued) 4. Represents the recent acquisition of Bent Tree and the four communities in Philadelphia valued at purchase price, and certain land valued at carrying value. 5. Represents adjustments to reflect Aimco’s share of the financial results of unconsolidated real estate partnerships and to exclude the non-controlling interest partners’ share of the financial results of consolidated real estate partnerships. 6. For the purposes of this Net Asset Value calculation, no realizable value has been assigned to goodwill or other intangible assets. 7. Deferred income includes below market lease liabilities, which were recognized under GAAP in connection with purchase of the related apartment communities. Deferred income also includes cash received by Aimco in prior periods required under GAAP to be deferred upon receipt and recognized in income in future periods. For the purposes of this Net Asset Value calculation, Deferred Income is excluded and its impact on NAV is zero. 8. Represents the fair value of Aimco's preferred stock, which is estimated by Aimco as the closing stock price on September 30, 2018, less accrued dividends. Such accrued dividends are assumed to be accounted for in the closing stock price and these amounts are also included on Aimco's balance sheet in accrued liabilities. As such, an adjustment is made to the value of Aimco's preferred stock so as not to overstate the fair value of Aimco's liabilities and preferred stock on a combined basis. 9. Represents the carrying amount of Aimco’s debt. At September 30, 2018, Aimco’s debt had a mark-to-market asset of $64.0 million. The fair value of Aimco’s debt takes into account the duration of the property debt as well as its loan to value and debt service coverage. 10. Represents total shares of Aimco common stock, common partnership units of the Aimco Operating Partnership held by entities other than Aimco, and potential dilutive share equivalents outstanding, which information may be found in Supplemental Schedule 5b to Aimco’s 3Q 2018 Earnings Release. 18


 
Definitions AIMCO OPERATING PARTNERSHIP (OP): AIMCO Properties, L.P., a Delaware limited partnership, is the operating partnership in Aimco's UPREIT structure. Aimco owns approximately 95% of the common partnership units of the Aimco OP. PORTFOLIO QUALITY RATINGS: Aimco measures the quality of apartment communities in its Real Estate portfolio based on average rents of its apartment homes compared to local market average rents as reported by a third-party provider of commercial real estate performance and analysis. Under this rating system, Aimco classifies as “A” quality apartment communities those earning rents greater than 125% of the local market average, as “B” quality apartment communities those earning rents between 90% and 125% of the local market average; “C+” quality apartment communities those earning rents greater than $1,100 per month, but lower than 90% of the local market average; and “C” quality apartment communities those earning rents less than $1,100 per month and lower than 90% of the local market average. 19


 
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