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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) June 3, 2019
_____________________________________________
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
Securities registered pursuant to section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Aimco Investment and Management Company Class A Common Stock
AIV
New York Stock Exchange





ITEM 7.01.    Regulation FD.
On June 4-5, 2019, representatives of Apartment Investment and Management Company (“Aimco”), including Terry Considine, Chairman of the Board and Chief Executive Officer, Paul Beldin, Executive Vice President and Chief Financial Officer, and Wes Powell, Executive Vice President, Redevelopment, 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 - June 2019
Apartment Investment and Management Company Net Asset Value Presentation as of March 31, 2019





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: June 3, 2019
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
SAYBROOK POINTE SAN JOSE, CA Nareit REITweek Conference Investor Presentation June 2019


 
CREATING VALUE OVER TIME: THE RECORD Aimco’s primary measure of long-term financial performance is Economic Income. Measuring Aimco shareholder value creation by the per share change in Net Asset Value (NAV) plus Cash Dividends paid, Aimco Economic Income has compounded: (1) o Since IPO through 1Q 2019 , at 14% annually; and o Over the last five years, through 1Q 2019, at 10.6% annually, reflecting lower leverage and stable, full pricing for assets. • Aimco publishes its NAV estimate semi-annually; as of 1Q 2019: NAV = $56 per share. Aimco has produced solid results, demonstrated by: Same Store operations, for the five years ending 2018: • Net Operating Income (NOI) CAGR ranking third among peers and 20 bps above peer average with Operations a peer-leading Same Store expense CAGR, 60 bps lower than the nearest peer; • Peer-leading Same Store NOI margin of 74%, with 820 bps of margin expansion, 3.5x better than peer-average margin expansion of ~230 bps. • ~$1B of Redevelopment and Development spending over the five years ending March 2019, Redevelopment creating ~$400M of value. • Sale of $3.2B of lower-rated assets over the five years ending March 2019; funding the purchase of $1.7B of properties, $1B of redevelopments and developments, $0.4B of share repurchases, and $0.1B of other net uses. Portfolio Management • Exit from the affordable housing business. • Improved quality of earnings. Improved the safety and flexibility of Aimco’s Investment Grade balance sheet: • Maintained the safety of non-recourse amortizing debt and long duration weighted average maturity to minimize refunding risk. Aimco’s refunding risk is the 3rd lowest of the peer group; 20 bps better than peer average.(2); Balance Sheet • Improved flexibility by: o Increasing revolving credit facility 33% to $800M; o Increasing pool of unencumbered properties from $0.4B to ~$3B. Because Aimco does not use corporate debt which requires the backing of such a pool, the entirety of these “hard assets” is available to secure access to “dry powder” even when capital markets are in distress. (1) Represents Aimco’s last published Net Asset Value of $56/sh at 3/31/2019 and share price at IPO as a proxy for NAV. (2) Refunding risk is calculated as the average annual refunding exposure as a percentage of GAV as estimated by Green Street Advisors. 2


 
CREATING VALUE OVER TIME: THE PROMISE Going forward, Aimco maintains its commitment to excellence in operations, disciplined capital allocation per its paired trade philosophy, and a safe, flexible, and investment grade balance sheet. Through May, Aimco: • Operations are tracking ahead of original expectations, accordingly Aimco is raising Operations 2019 Same Store revenue and NOI guidance 20 basis points at the midpoint of their respective ranges. • Redevelopment is increasing annual spending YOY by ~40% to $225-$275M … Redevelopment targeting ~$100M of value creation to boost 2019 Economic Income. • Maintains its disciplined capital allocation strategy through paired trades, while Portfolio Management regularly looking for opportunistic transactions. • Maintains a portfolio diversified by geography and price point. • Has a high quality of earnings with 98% of 2019 AFFO from “core real estate operations.”(1) Balance Sheet • Has no loan maturities remaining in 2019. Only 2% of total leverage is due in 2020. • Redeemed its 6.875% Class A perpetual preferred stock, lowering Aimco’s cost of leverage. (1) Earnings outside of “core real estate operations” represents AFFO contribution from Asset Management, historic tax credits, and other tax benefits. 3


 
AIMCO’S EARNINGS QUALITY • The contribution from real estate operations to Aimco bottom line has increased steadily since the planned exit from the affordable and asset management businesses was announced in 2011, and is expected to be 98% of AFFO in 2019. o Aimco’s 2019 Same Store portfolio is expected to contribute an incremental $0.11, or 5% AFFO growth. o Other Earnings expected in 2019, defined as contributions from affordable, asset management, and tax related income, are forecast to be just 2% of AFFO, or $0.05 per share, down 90% over the same eight years. At the midpoint, 2019 AFFO guidance is $2.17 per share. • $2.12 from Core Earnings; seven-year CAGR = 16% • $0.05 from Other Earnings 4


 
OPERATIONS UPDATE 2019 SAME STORE UPDATE Through May, Aimco has: • Completed about 50% of leasing activity expected for the year; • Increased average daily occupancy (“ADO”) year-over-year by 80 bps; and • Improved blended lease rates year-over-year by 3.3%. CHANGES IN SAME STORE 1Q Apr May YTD RENTAL RATES 2019 2019 2019(1) Leases RENEWALS 5.2% 5.0% 5.3% 5.2% NEW LEASES 0.8% 1.6% 2.0% 1.4% WT. AVG. 2.9% 3.4% 3.7% 3.3% AVERAGE DAILY 97.0% 97.0% 97.0% 97.0% OCCUPANCY (“ADO”) 2019 SAME STORE GUIDANCE Based on results through May and with half of our leasing activity for 2019 now completed, Aimco updated its ranges for full year Same Store guidance to: New Prior FY 2019 FY 2019 REVENUE GROWTH 3.10% to 3.90% 2.80% to 3.80% +20 bps at the midpoint EXPENSE GROWTH 2.00% to 3.00% 2.00% to 3.00% No change NOI GROWTH 3.10% to 4.50% 2.70% to 4.50% +20 bps at the midpoint (1) May leasing data is updated as of 5/31/2019, and is considered preliminary, actual results published with the 2Q 2019 Earnings Release may differ. 5


 
INNOVATION & PRODUCTIVITY • Focus on efficient, productive operations: Aimco uses Controllable Operating Expenses ("COE"), defined as property level expenses before taxes, insurance, and utilities, as one measure of operating efficiency. o 2019 COE growth expected to be 50 bps. (1) o For the five years ended 2018, Aimco COE growth was 1.1%, 100 bps below peer average. o For the ten years ended 2018, Aimco COE growth was flat. • Innovation is the foundation of Aimco cost control efforts. Innovative activities include: Same Store Expense Growth 2013 - 2018 Redesign work: moving administrative tasks to the o 120 Shared Service Center to reduce cost and allows CAGR 3.1% Peer Avg site teams to focus on sales and service. 115 o Standardize processes and purchases: reducing complexity, and increasing volume discounts. 110 2.0% Aimco 1.1% Aimco COE o Invest consistently: focus on total lifecycle costs by 105 installing more durable in-unit materials such as plank flooring instead of carpet, and granite 100 countertops instead of laminate. 95 2013 2014 2015 2016 2017 2018 o Leverage Technology: meet today’s customer preference for on-line self-service and convenience, while also reducing costs through such innovations as software controls, package lockers, and smart home technology. (1) Peer group consists of AVB, CPT, EQR, ESS, and UDR. Peer average COE is calculated, per Aimco’s COE definition, as the CAGR of peer averages. SS Expense breakout is not publicly reported by MAA in 2014, therefore it was excluded from the 5-year average. For the four years ended 2018, Aimco COE growth was 1.3%, 70 bps below peer average (including MAA). 6


 
REDEVELOPMENT REDEVELOPMENT PROVIDES CONSISTENT VALUE CREATION • Over the past five years, Aimco spent $1B on Redevelopment and Development, creating ~$400M of value. • In 2019, Aimco plans to spend $225-$275M on Redevelopment and Development, targeting 40% value creation or $100M. • Of the planned spending for 2019, two-thirds represents projects that are currently in-process including Parc Mosaic, Flamingo, The Fremont, Elm Creek, as well as other smaller projects. • The remaining one-third of 2019 spending is expected from new starts taken from Aimco’s deep redevelopment pipeline, including 707 Leahy which was announced with the 1Q 2019 Earnings Release. 2019/2020 POTENTIAL REDEVELOPMENT PROJECTS MINNEAPOLIS Calhoun Beach Club (Expanded Scope) DENVER NEW YORK CITY Anschutz Expansion East 88th & 2nd Ave (Additional Phases) PHILADELPHIA Chestnut Hall GREATER GREATER LA WASHINGTON, DC Villas at Park La Brea Bent Tree SAN DIEGO Mariner's Cove MIAMI Bay Parc (Additional Phases) Flamingo Point (Additional Phases) The menu shown above is representative of the communities whose redevelopment or development is being considered in 2019. Actual projects and their scope will differ depending on approvals. 7


 
REDEVELOPMENT CYCLE SMALL PHASE REDEVELOPMENTS - INVENTORY MANAGEMENT • When practical, Aimco prefers small phase redevelopments which provide optionality to improve its offering and flexibility to adjust volume to market demand. • Managing inventory to meet demand allows for predictable NOI growth proportional to value creation. MAJOR REDEVELOPMENTS • Aimco engages in “large phase” or major redevelopment when the scope of the project, or structure of the community, requires investment in larger building systems or common areas. • Major redevelopments have comparable value creation, but their longer cycle time increases risk and current period earnings dilution. REDEVELOPMENT CYCLE • Aimco Economic Income based on value creation is generally consistent over time, while current period contribution to AFFO is more volatile, often reduced during construction and until the community is stabilized, as described below. Stabilized Construction Lease-Up Post Redev Pre-Construction Phase NOI Stabilization Value Creation Initial Value Creation Continued Value Creation Value Creation Fully Opportunity •GAV is created as •GAV increases as Realized •Based on location and redevelopment dollars construction is completed •Full accretion from investment ability to reposition the are spent and lease-up begins and incremental value asset in the market creation AFFO Dilution AFFO Dilution AFFO Growth Opportunity •Down units and •Vacancy during lease up, Full AFFO Earnings •Stabilized NOI, with the disruption to leasing increased marketing •Maximized earnings potential potential to outpace the from construction, expenses, and minimal or through intentional community market through partially offset w/ no capitalized interest offset design, targeted marketing, repositioning capitalized interest and successful repositioning •Achieved up to 2 years after construction completion Current Example Current Example 2019 Lease-Ups Current Example •88th and 2nd Ave •707 Leahy •Parc Mosaic (2Q19 Initial •The Sterling Occupancy) 8


 
PORTFOLIO MANAGEMENT 2018 & 2019 YTD CAPITAL ALLOCATION • Since the beginning of 2018, Aimco has sold ~$1 billion of real estate, these were lower-rated communities in less desirable submarkets. • Aimco reinvested these proceeds in communities located in more attractive submarkets and with higher expected FCF IRRs. Property Share Total Property Spread on Acquisitions Buyback Investment Sales Reinvestment Proceeds / Investment $563M $394M $957M $941M ($16M) NOI Cap Rate 5.3% 5.6% 5.4% 5.2% +20 bps FCF Cap Rate 4.9% 5.2% 5.1% 4.7% +40 bps FCF IRR 8.5% 8.0% 8.3% 6.5% +180 bps Average Rent per Unit $2,021 $2,055 $2,039 $1,512 +$527 • In 2018, Aimco also sold its Asset Management business for $300M. The Asset Management 2019 FCF yield would have been 9%, but this was a low quality income stream that would decrease to zero in 2025. 9


 
PORTFOLIO MANAGEMENT 2019 CAPITAL PLANS Aimco allocates capital in accordance with its FCF IRR paired-trade discipline and on a leverage-neutral basis. Aimco considers unlevered risk- Aimco considers portfolio implications Aimco considers its cost of unlevered adjusted returns from a menu of capital and execution risks such as: equity 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 • Competitive new supply rated properties • Acquisitions • Entitlement risk • Issuance of shares or OP units • Leverage reduction • Construction risk • Share buybacks • Lease-up risk 10


 
PORTFOLIO MANAGEMENT 2019 CAPITAL PLANS (cont.) • Aimco continues to be active in the pursuit of value-creating opportunities both inside and outside its portfolio. o Future transactions, while opportunistic, are expected to reflect expectations similar to previous Aimco transactions, such as: Capital Allocation Category Description Aimco Example Covered-land plays Land value that approaches or exceeds the current Eastpointe/Parc Mosaic developed value. Under-managed communities Communities that benefit from Aimco’s peer-leading Bent Tree & Avery Row operational platform and management. OP unit transactions Estate planning where Aimco’s REIT platform offers Philadelphia portfolio benefit to the seller. Acquisition of new construction Aimco bears lease-up risk but no construction risk. Vivo Stock buybacks Selling assets at market prices to reinvest in the AIV has existing authorization to Aimco portfolio at a meaningful discount to NAV. repurchase 10.6M shares 11


 
HIGH QUALITY BALANCE SHEET AIMCO LIMITS RISK THROUGH BALANCE SHEET STRUCTURE • Manage refunding risk with low leverage: • 31% LTV at 1Q 2019 • 25% LTV subject to refunding after consideration of annual amortization, funded through retained earnings, and perpetual preferred securities • 2.8% average annual refunding risk as a percent of asset value • Limit entity risk: • Finance primarily with non-recourse property debt and preferred equity: 99% • Increase financial flexibility: • Ample available credit: $800M revolving credit facility up by one-third from $600M a year ago, with $723M available at 1Q 2019 • A pool of unencumbered properties: Valued at ~$3B, up by more than half from $2B a year ago. • Maintain investment grade rating as confirmation of the safety of Aimco’s balance sheet 12


 
HIGH QUALITY BALANCE SHEET Since January 2018, through refinancing activity, Aimco has Refunding risk is lower than total leverage due to principal lowered the weighted average interest rate on its property debt amortization paid from retained earnings. by 52 bps and extended the duration of this debt. By growing the value of its unencumbered properties, Aimco has improved the safety and flexibility of its balance sheet. (1) $247M of property debt is payable at par in 2020 but does not mature until 2021; Aimco intends to repay this debt in 2020. (2) Aimco’s revolving credit facility matures in January 2022. 13


 
TEAM AND CULTURE Focus intentionally on a collaborative and productive culture based on respect for others, 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. TEAM ENGAGEMENT • Out of hundreds of participating companies, Aimco is one of only seven recognized as a "Top Place to Work" in Colorado for each of the past seven years. • For the past five years, Aimco team engagement scores, on a 1 to 5 scale, have averaged better than 4. TALENT AND SUCCESSION PLANNING • In 2018, Aimco invested $1.9M in team member training and development. • Aimco prefers promotion from within and maintains a talent pipeline for every executive officer position, including the CEO. • Aimco plans in advance for succession. Positions are filled considering the business strategy and needs at the time of a vacancy, with the candidates’ skills, experience, expertise, leadership, and fit. • The Aimco Board of Directors participates actively in succession planning and reviews in detail the executive talent pipeline and candidate development annually. Further, the Board engages directly and regularly with executive officers and the candidates for their succession. 14


 
AIMCO SENIOR LEADERSHIP TEAM Aimco benefits from a long-tenured team with an average of 15 years of Aimco 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 16 Years Finance 11 Years Officer 16 Years 44 Years Officer 9 Years 12 Years 17 Years Michael Englhard Patti Fielding Richard Hawthorne Kristina Howe Jennifer Johnson Keith Kimmel Didi Meredith Redevelopment EVP: Debt & Treasurer Redevelopment Property Operations Human Resources EVP Property Operations Construction Services President: Construction Services & Marketing 14 Years Property Operations West Operations 6 Years Aimco Investment Partners 11 Years 17 Years 17 Years 13 Years 22 Years Leann Morein Kevin Mosher Wes Powell Patti Shwayder Martin Sprang Lynn Stanfield Andrea Young Compliance Property Operations EVP Government Relations Asset Quality & EVP Finance & Tax IT 24 Years East Operations Redevelopment & Communications Service 17 Years New Hire 11 Years 15 Years 16 Years 12 Years 15


 
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. 17. • Aimco resident retention was 56% for the twelve months ended March 31, 2019, (up 150 U.S. Economy bps YOY) limiting the impact of new lease pricing if rental demand were to decline nationally. • Aimco has limited exposure to rising interest rates: $3.7B (92% of total leverage) is fixed- Interest Rates rate for a weighted average term of 8.9 years; only ~$575M of property loans (14% of total leverage) mature by 2021. • Aimco government affairs and legal teams work directly with federal, state, and local governments and also through industry groups to make government decision making, relevant to Aimco business, better informed, for example: Aimco teams participated in the industry coalition that opposed Prop 10 in California in Political Risk o 2018 and continue to work with various groups in several states to defeat onerous rent control measures. • Aimco works with federal, state and local governments to protect the right of property owners to select their residents and their neighbors. 16


 
EXPOSURE TO NEW SUPPLY • Aimco considers competitive new supply to be significant primarily to “A” price point communities in submarkets with completions projected to be more than 2.0% of existing stock. Based on third-party forecasts of new supply, Aimco properties representing 19% of GAV may 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 Deliveries delayed from 2018 have caused this submarket to screen at our Los Angeles Mid-Wilshire 8.9% 2.0% 3 elevated supply threshold. New supply pressure continues; however it is declining from 2018 and strong job Philadelphia Center City 6.5% 3.9% 7 growth suggests supply should be absorbed. New supply outlook for 2019 is lower than in 2018; and new jobs data suggests Chicago Central DuPage County 0.9% 2.4% 5 2019 supply should be absorbed. New supply is declining from 2018; and new jobs data suggests 2019 supply Minneapolis Uptown/St. Louis Park 0.9% 2.1% 6 should be absorbed. New supply is expected to be elevated; however, it is expected to be a different Denver Littleton 0.4% 5.2% 3 product type with appeal to a different customer, i.e., mostly 1-bedroom units vs. Aimco’s townhome community. New supply completions are expected to continue into 2019 and to pressure Atlanta Midtown Atlanta 0.5% 7.0% 6 rents at Aimco properties. New supply completions are expected to continue into 2019 and to pressure Nashville West Nashville 0.4% 5.9% 5 rents at Aimco’s property. New supply completions are expected to pressure rents at Avery Row, Aimco’s Washington D.C. North Arlington 0.2% 3.6% 6 newest acquisition, however this is a 67-unit property, currently 97% occupied with only ~20 new leases expected in 2019. Total % of Aimco GAV Exposed 18.7% Declining Continuing Increasing Supply Outlook High Supply Supply Outlook • In addition, certain Aimco communities, although graded “B” in their submarkets, face supply pressure based on the 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. (1) Based on submarket data for deliveries in 2019 as a percentage of 1Q19 forecasted stock as of 1Q 2019, available from Axio/MPF Research. (2) Employment figures are based on market data as reported by Green Street Advisors (Apr 2019). As a rule of thumb, at least five new jobs are necessary to absorb one unit of new supply. 17


 
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 expected unlevered returns on all of its capital allocation uses to the expected unlevered costs of capital. • Aimco invests at FCF IRRs of >10% 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. • Since 2016, notwithstanding a fully priced market, Aimco has made $1.3B of opportunistic acquisitions where Aimco had a comparative “advantage” that provided outsized value creation. o Indigo, Palazzo (reacquisition of 47% interest from JV partner), Bent Tree Apartments, Philadelphia portfolio, and Avery Row; o These acquisitions, funded with paired trade sales, 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 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. 18


 
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 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 an additional 10.6M 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, 2018, 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 First Quarter 2019 Earnings Release dated May 2, 2019. 19


 
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Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


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INTRODUCTION

Net Asset Value is calculated as the market value of a company's assets less its liabilities and obligations. Net Asset Value is considered useful by some investors 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 thousands of real estate investors, enhancing comparability among companies that have differences in their accounting, and avoiding disparity that can result from application of GAAP to investment properties and various 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 value ascribed to the operating platform. Net Asset Value also provides an objective basis for the perceived quality and 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.
 











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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 estimate Aimco's Net Asset Value per share as of March 31, 2019. 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.

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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;

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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, 2018, and the other documents Aimco files from time to time with the Securities and Exchange Commission.

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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 119 communities valued using a direct capitalization rate ("cap rate") method based on annualized 1Q 2019 proportionate property NOI, less a 2% management fee, and market cap rates. This valuation method was utilized to determine approximately 88% of real estate fair value.

Redevelopment and Development Communities Under Construction - includes four communities valued based on discounting projected future cash flows. This valuation method was utilized to determine approximately 9% of real estate fair value.

Other Real Estate Portfolio - includes five recently acquired communities, two ground-up development communities, and certain land investments valued at Aimco's cost. This valuation method was utilized to determine approximately 3% of real estate fair value.


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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 the quality of property pledged as its security, 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 - Aimco’s publicly traded preferred equity is valued at par. On April 15, 2019, Aimco called its Class A Perpetual Preferred Stock for redemption on May 16, 2019.

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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 March 31, 2019 and does not include asset acquisitions or dispositions subsequent to March 31, 2019.

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.

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March 31, 2019 Estimated Net Asset Value: $56 per share*

$80
 
$2
 
-$26
 
 
 
 
 
 
 

Fair Value of Real Estate
 

Fair Value of Other Tangible Assets and Liabilities
 

Fair Value of Leverage
 
 
 
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 was unchanged from the third quarter 2018 calculation. The accretive share repurchases funded by property sales were offset by an increase in the debt mark-to-market liability.






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    


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March 31, 2019 Estimated
Fair Value of Real Estate:
$80 per share*

398180772_chart-0c626facb0cb61e53a4a01.jpg
Stabilized Real Estate Portfolio
Annualized 1Q 2019 NOI
Less:     Management fee of 2% of revenue
Divided By:     NOI cap rate of 4.9%
 
Redevelopment and Development Portfolio
Cash flows discounted from property stabilization to March 31, 2019.
 
Other Real Estate Portfolio
Other Investments: Two ground-up development communities and certain land investments valued at cost.

Recent Acquisitions: Avery Row and the four Philadelphia communities valued at their acquisition price plus initial capital expenditures.
 




*Refer to additional details and disclosures beginning on page 11.                                    10    


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Fair Value of Real Estate as of March 31, 2019 ($M)

Stabilized Portfolio
 
 
NOI, less management fee
$
544

(1)
NOI cap rate
4.9
%
(2)
Stabilized Portfolio Value
$
11,102

 
 
 
 
Non-Stabilized Portfolio
 
 
Redevelopment communities under construction
$
1,133

(3)
Other Real Estate
380

(4)
Non-Stabilized Portfolio Value
$
1,513

 
 
 
 
Fair Value of Real Estate
$
12,615

 

















*Refer to Footnotes beginning on page 14.
11



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Fair Value of Other Assets and Liabilities, Preferred Equity and Debt as of March 31, 2019 ($M)

 
Consolidated Amounts
Ownership Adjustments (5)
Fair Value Adjustments
Adjusted Amounts
 
Other Tangible Assets
 
 
 
 
 
Cash and cash equivalents
$
162

$
(1
)
$

$
161

 
Restricted cash
36



36

 
Goodwill and other intangible assets
141


(141
)

(6)
Other tangible assets
301

(13
)

288

 
Fair Value of Other Tangible Assets
$
640

$
(14
)
$
(141
)
$
485

 
 
 
 
 
 
 
Other Tangible Liabilities
 
 
 
 
 
Deferred income and intangible liabilities
$
113

$

$
(113
)
$

(7)
Accounts payable
46



46

 
Other tangible liabilities
134

(1
)

133

 
Fair Value of Other Tangible Liabilities
$
293

$
(1
)
$
(113
)
$
179

 
 
 
 
 
 
 
Fair Value Other Tangible Assets and Liabilities, Net
$
347

$
(13
)
$
(28
)
$
306

 
 
 
 
 
 
 
Preferred Equity
 
 
 
 
 
Preferred noncontrolling interests in Aimco Operating Partnership
$
101

$

$

$
101

 
Perpetual preferred stock
125



125

(8)
Fair Value of Preferred Equity
$
226

$

$

$
226

 
 
 
 
 
 
 
Debt
 
 
 
 
 
Non-recourse property debt
$
3,879

$
(10
)
$
12

$
3,881

 
Term loan, net




 
Revolving credit facility borrowings
70



70

 
Fair Value of Debt
$
3,949

$
(10
)
$
12

$
3,951

(9)
 
 
 
 
 
 
Fair Value of Leverage
$
4,175

$
(10
)
$
12

$
4,177

 






*Refer to Footnotes beginning on page 14.
12



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Net Asset Value as of March 31, 2019 ($M, except per share amounts)
 
 
 
 
 
 
Fair Value of Real Estate
$
12,615

 
 
 
 
Fair Value of Other Tangible Assets and Liabilities, Net
$
306

 
 
 
 
Fair Value of Leverage
$
(4,177
)
 
 
 
 
Net Asset Value
$
8,744

 
 
 
 
Total Shares, Units and Dilutive Share Equivalents Outstanding
157

(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 2H 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 ~$650M which equates to $4.00 per share.







*Refer to Footnotes beginning on page 14.
13



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Footnotes
1.
Represents Stabilized Portfolio Proportionate Property NOI for the three months ended March 31, 2019, annualized, and adjusted for an assumed property management fee. Market property management fees range between 2.0% 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, 1Q 2019 Property NOI is multiplied by four to arrive at annualized Property NOI.
 
Three Months Ended March 31, 2019
Stabilized Portfolio NOI ($000s)
Consolidated Amount
 
Ownership Adjustments
 
Adjustments
 
Adjusted Amounts
 
 
 
 
 
 
 
 
Revenues, before utility reimbursements
 
 
 
 
 
 
 
Same Store
$
176,405

 
$
(686
)
 
$

 
$
175,719

Acquisitions, Redevelopment and Development
30,407

 
(64
)
 
(23,203
)
a
7,140

Other Real Estate
9,508

 
553

 

b
10,061

Total Revenues, before utility reimbursements
$
216,320

 
$
(197
)
 
$
(23,203
)
 
$
192,920

 
 
 
 
 
 
 
 
Expenses, net of utility reimbursements
 
 
 
 
 
 
 
Same Store
$
(47,316
)
 
$
174

 
$

 
$
(47,142
)
Acquisitions, Redevelopment and Development
(10,163
)
 
23

 
8,226

a
(1,914
)
Other Real Estate
(3,919
)
 
(76
)
 
4

b
(3,991
)
Total Expenses, net of utility reimbursements
$
(61,398
)
 
$
121

 
$
8,230

 
$
(53,047
)
 
 
 
 
 
 
 
 
Property Net Operating Income
$
154,922

 
$
(76
)
 
$
(14,973
)
 
$
139,873

 
 
 
 
 
 
 
 
Less: Assumed property management fee of 2% of revenue
(4,326
)
 
4

 
464

 
(3,858
)
 
 
 
 
 
 
 
 
Property Net Operating Income after 2% management fee
$
150,596

 
$
(72
)
 
$
(14,509
)
 
$
136,015

 
 
 
 
 
 
 
 
Annualized Property Net Operating Income
$
602,384

 
$
(288
)
 
$
(58,036
)
 
$
544,060

        
Refer to the following pages for explanation of adjustments for purposes of computing Stabilized Portfolio Property NOI.

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Footnotes (continued)
1.(continued)
    
a.
Represents revenues and expenses related to one development and three redevelopment communities currently under construction: Parc Mosaic, located in Boulder, Colorado; Flamingo South Beach, located in Miami Beach, Florida; Bay Parc, located in Miami, Florida; and Park Towne Place, located in Center City Philadelphia, Pennsylvania. Also included in these adjustments are the revenue and expense items related to the four communities located in Center City and University City, Philadelphia, Pennsylvania and purchased in May 2018; and Avery Row Apartments, located in Arlington, Virginia and purchased in December 2018. Aimco's redevelopment and development 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, Parc Mosaic, Flamingo South Beach, Bay Parc, and Park Towne Place are included in Aimco's Redevelopment and Development Portfolio value. For the purpose of this Net Asset Value calculation, the Philadelphia portfolio and Avery Row are included in Other Real Estate Portfolio, valued at the acquisition price plus initial capital expenditures.

After excluding the results related to the communities described above, stabilized NOI related to acquisition, redevelopment, and development communities represents the results of operations from the following communities: the Villas at Park La Brea, located in Los Angeles, California; Bent Tree Apartments, located in Centreville, Virginia; 707 Leahy, located in Redwood City, California; and 236 & 238 East 88th Street, located in New York, New York.

b.
Represents revenue and expenses related primarily to Aimco’s investment in land and two ground-up development communities. 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 2H 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.

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Footnotes (continued)
2.(continued)
1Q 2019 Stabilized Portfolio
 
 
 
 
 
 
 
Range of CBRE Cap Rates for Aimco's Portfolio
 
 
 
Communities
Apartment Homes
Average Revenue per Apartment Home
Average Rent as a Percentage of Market Average
Average Quality Grade
Low
High
Aimco Selected Cap Rate
 
Atlanta
5

817


$1,648

142
%
A
5.1%
5.8%
5.1%
 
Bay Area
12

2,632

3,053

104
%
B
4.2%
4.7%
4.4%
 
Boston
15

4,689

1,992

84
%
C+
5.3%
6.1%
5.5%
 
Chicago
8

2,070

1,794

123
%
B
5.2%
5.6%
5.6%
 
Denver
7

1,925

1,630

113
%
B
5.2%
5.8%
5.4%
 
Greater New York
18

1,040

3,389

106
%
B
4.6%
5.4%
4.4%
a
Greater Washington, DC
12

5,693

1,599

87
%
C+
5.6%
6.2%
5.8%
 
Los Angeles
13

4,347

3,032

151
%
A
4.2%
4.8%
4.3%
 
Miami
3

873

2,239

142
%
A
4.2%
4.7%
4.4%
 
Philadelphia
3

1,033

2,229

161
%
A
4.8%
5.3%
4.8%
 
San Diego
12

2,423

1,927

104
%
B
4.8%
5.3%
5.4%
b
Seattle
2

239

2,316

123
%
B
4.8%
5.1%
4.9%
 
Other Markets
9

2,866

1,869

118
%
B
4.9%
5.6%
5.4%
 
 
 
 
 
 
 
 
 
 
 
Total/Weighted Average
119

30,647


$2,164

112
%
B
4.7%
5.4%
4.9%
 
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.

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Footnotes (continued)

3.
Represents the value of one community under development and three communities under redevelopment: Parc Mosaic, located in Boulder, Colorado; Flamingo South Beach & Bay Parc Plaza, located in Miami, Florida; and Park Towne Place, 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 1Q 2019 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 March 31, 2019, to property stabilization.

e.
Sales cost: 0.50% - 0.70% of terminal value.

f.
Discount rate: 5.60% - 7.00% depending on construction and lease-up progress at March 31, 2019.





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Footnotes (continued)

4.
Represents the recent acquisition of Avery Row and the four Philadelphia communities valued at their acquisition price plus initial capital expenditures, certain land investments, and two ground-up development communities valued at cost.

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 right of use assets, goodwill or other intangible assets.

7.
Deferred income and right of use related lease liabilities are excluded from the NAV calculation. 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.

8.
Aimco’s publicly traded preferred equity is valued at par. On April 15, 2019, Aimco called its Class A Perpetual Preferred Stock for redemption on May 16, 2019.

9.
Represents the carrying amount of Aimco’s debt. At March 31, 2019, Aimco’s debt had a mark-to-market liability of $12 million. The fair value of Aimco’s debt takes into account the duration of the property debt as well as the quality of property pledged as its security, 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 1Q 2019 Earnings Release.



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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 94% 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.



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