Aimco Update 02/23/24

Aimco Reports Fourth Quarter Results, Establishes 2024 Guidance, and Provides Highlights on Recent and Planned Activities

Apartment Investment and Management Company has announced fourth-quarter results for 2023, established 2024 guidance, and provided highlights on recent and planned activities.

Fourth Quarter and Full Year 2023 Results

  • Net loss attributable to common stockholders per share, on a fully dilutive basis, was $(1.07) and $(1.16) for the quarter and year ended December 31, 2023, respectively, due primarily to a non-cash impairment charge related to the Parkmerced mezzanine investment. This compares to net loss per share of $(1.35) and net income per share of $0.49, for the same periods in 2022.
  • Fourth Quarter 2023 revenue, expenses, and NOI from Aimco’s Stabilized Operating Properties increased 6.8%, 5.6%, and 7.2%, respectively, year-over-year, with average monthly revenue per apartment home increasing by 6.7% to $2,343. Full year 2023 NOI from the same portfolio was $105.7 million, up 9.3% year-over-year.
  • During 2023, Aimco delivered 350 apartment homes at The Hamilton in Miami, Florida and Upton Place in Washington, D.C., opened the 106-key Benson Hotel and Faculty Club in Aurora, Colorado, and completed five luxury rental homes at Oak Shore in Corte Madera, California. At these projects Aimco signed leases at rates, on average, 17% above underwritten levels.
  • In 2023, Aimco monetized $122.7 million of assets including the sale of a development land parcel in Fort Lauderdale, Florida, the sale of a 20% stake of Aimco's Parkmerced mezzanine investment, and the associated swaption. In the fourth quarter of 2023, the purchaser of that position forfeited their option to acquire the remaining 80% of the Parkmerced mezzanine investment when they failed to make a required interest payment, resulting in the subordination of their earlier investment.
  • Aimco acquired 1.4 million shares of its common stock during the fourth quarter 2023 at an average cost of $6.75 per share. For the full year 2023, Aimco acquired 6.2 million shares at an average price of $7.33 per share.

2024 Outlook Highlights

  • Aimco expects revenue growth in 2024 to be driven primarily from leases transacted in 2023 and expenses to be elevated due to increases in real estate taxes, including favorable appeals received in 2023 for prior periods. Full year 2024 guidance for Stabilized Property Operations is as follows:

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  • Aimco expects to invest $70 - $100 million to complete all development projects currently underway and potentially start one new project. Additionally, Aimco expects to invest $12 - $17 million to advance select projects in its pipeline. In total, between $12 and $22 million of incremental Aimco equity is expected to be allocated to development activities. By year end, the size of Aimco's portfolio of development projects under construction is forecast to be lower by more than 50% as compared to year end 2023.
  • Aimco plans to market for sale its Yacht Club Apartments and the adjacent 1001 Brickell Bay Drive office building, a 4.25-acre waterfront site in Miami also known as the "Brickell Assemblage" and certain other assets in 2024. While Aimco expects the sales to occur by the end of 2024, a transaction will occur only if pricing and terms are favorable. Aimco expects that the proceeds from any completed dispositions will be prudently allocated with a preference for returning capital to stockholders and retiring associated liabilities.

Operating Property Results

Aimco owns a diversified portfolio of operating apartment communities located in eight major U.S. markets with average rents in line with local market averages.

Aimco’s Stabilized Operating Properties produced solid results for the quarter ended December 31, 2023.

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  • Revenue in the fourth quarter 2023 was $38.4 million, up 6.8% year-over-year, resulting from a 6.7% increase in average monthly revenue per apartment home to $2,343 and a 10-basis point increase in Average Daily Occupancy to 97.5%.
  • Given our fourth quarter focus on increasing average daily occupancy, up 230 bps over the prior quarter, effective rents on all leases during the fourth quarter were 0.6% lower, on average, than the previous lease and 59.2% of residents whose leases were expiring signed renewals. Effective rents on all transacted leases in 2023 were 7.3% higher, on average, than the previous lease.
  • The median annual household income of new residents was $115,000 in the fourth quarter 2023, representing a rent-to-income ratio of 20.8%, up 160 bps from the same period last year.
  • Expenses in the fourth quarter 2023 were up 5.6% year-over-year, primarily from higher insurance costs.
  • NOI in the fourth quarter 2023 was $27.7 million, up 7.2% year-over-year. Aimco's full year 2023 NOI was $105.7 million, up 9.3% year-over-year.
  • Year to date, as of February 20, 2024, effective rents on all transacted leases were 3.0% higher, on average, than the previous lease.

Value Add, Opportunistic & Alternative Investments

Development and Redevelopment

Aimco generally seeks development and redevelopment opportunities where barriers to entry are high, target customers can be clearly defined, and Aimco has a comparative advantage over others in the market. Aimco’s value add and opportunistic investments may also target portfolio acquisitions, operational turnarounds, and re-entitlements.

As of December 31, 2023, Aimco had four active development and redevelopment projects located in three U.S. markets, in varying phases of construction and lease-up. These projects remain on track, as measured by construction budget and lease-up metrics. Additionally, Aimco has a pipeline of future value add opportunities totaling approximately 13 million gross square feet of development in Aimco's target markets of Southeast Florida, the Washington D.C. Metro, and Colorado's Front Range. During the fourth quarter, Aimco invested $54.5 million in development and redevelopment activities. Updates on active development and redevelopment projects include:

  • In Bethesda, Maryland, construction is progressing on plan at the first phase of Strathmore Square, which will contain 220 highly tailored apartment homes with initial delivery on track for the second half of 2024. This suburban infill project is located adjacent to the Grosvenor-Strathmore Metro station and the Strathmore Performing Arts Campus, and is 1.5 miles from The National Institutes of Health main campus. Funding for the project is fully secured with Aimco having already funded 100% of its equity commitment.
  • In Upper Northwest Washington D.C., construction at Upton Place is nearing completion and remains on schedule and on budget. As of February 20, 2024, Aimco has delivered 450 apartment homes, with the first residents at Upton Place having moved into their new homes during the fourth quarter of 2023. Seventy units are now leased or pre-leased with 28 homes occupied, at rates ahead of our initial projections. Additionally, 80% of the project's 105K square feet of retail space has been leased, and Aimco is in final lease negotiations with retailers on an incremental 7%.
  • In Corte Madera, California, construction is ongoing at Oak Shore where 16 luxury single-family rental homes and eight accessory dwelling units are being developed. Construction has been completed on five homes with two now occupied. As of February 20, 2024, Aimco had pre-leased another seven of the homes at rates ahead of our initial projections.
  • In Aurora, Colorado, The Benson Hotel and Faculty Club, a 106-key boutique hotel and event center with 18K square feet of event space, is complete and open to guests. In January 2024, average daily rate achieved by the hotel was up more than 12% from December 2023.
  • In the fourth quarter 2023, Aimco invested $3 million into programming, design, documentation, and entitlement efforts related to select pipeline projects located in Southeast Florida, the Washington D.C. Metro, and Colorado’s Front Range. Consistent with Aimco's capital allocation strategy, it may choose to monetize certain pipeline assets prior to vertical construction in an effort to maximize value add and risk-adjusted returns.

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