Aimco Reports Fourth Quarter and Full Year 2024 Results and Establishes 2025 Guidance

PRNewswire 24-Feb-2025 4:45 PM

DENVER, Feb. 24, 2025 /PRNewswire/ -- Apartment Investment and Management Company ("Aimco") (NYSE:AIV) announced today fourth quarter and full year 2024 results and established 2025 guidance.

Financial Results

• Aimco's net loss attributable to common stockholders per share, on a fully dilutive basis, was $(0.08) for the quarter, and $(0.75) for the year ended December 31, 2024.
• Net Operating Income ("NOI") from Aimco's Stabilized Operating Properties was $25.9 million in the fourth quarter 2024, up 4.5% year-over-year, and full year 2024 NOI was $99.0 million, also up 4.5% year-over-year.

Stockholder Letter

Dear fellow and prospective stockholders,

I am pleased to report on Aimco's 2024 results and outline our plans and goals for the year ahead.

During 2024, Aimco delivered strong operational results across our apartment portfolio, remained disciplined in the allocation of capital and made significant progress toward our broader strategic goals by executing and advancing key transactions. 

Aimco's Stabilized Operating portfolio continued to benefit from its geographic composition, consisting of primarily established suburban submarkets, which experienced limited competitive new supply and steady renter demand. The portfolio produced $99 million of net operating income ("NOI") in 2024, an increase of 4.5% over 2023, with revenues increasing 4.5% and expenses up 4.4%. During the fourth quarter, average daily occupancy increased to 97.9%, revenue per home was up 2.9% year-over-year, and rents were up 3.6% on all transacted leases.

Our regional development teams continued to add value as construction was completed on three multifamily assets, including 933 residential units and more than 100K sf of commercial space. Total direct costs for these projects are now expected to be approximately $10 million lower than our original projection. In addition, nearly 400 newly delivered homes were leased at rental rates that put these projects on track to deliver an average yield on cost of approximately 7% when fully stabilized. During the fourth quarter, Aimco increased its ownership in its Upton Place property as our development partner exercised the option to sell their 10% interest in the asset.

As announced in September 2024, we commenced construction on one new development project located in Miami's Edgewater neighborhood. Financing for the $240 million waterfront project is fully committed with Aimco having contributed the land and an incremental $5 million of equity to a newly formed, project-level, venture. At year end 2024, Aimco's exposure to active construction was reduced by $340 million, or nearly 60%, as compared to year end 2023.

Aimco made significant progress in our efforts to realize value through accretive dispositions during 2024. In December, Aimco sold The Hamilton, our recently completed redevelopment in Miami, and our partial ownership interest in the 3333 Biscayne Boulevard development site for a combined $204 million. These transactions generated approximately $90 million of net proceeds, after retiring the associated asset level debt. Also, during the fourth quarter, we entered into a binding agreement to sell the Aimco properties located at 1001 & 1111 Brickell Bay Drive (together known as the "Brickell Assemblage") for $520 million.

The Aimco balance sheet remains solid, with no maturities prior to June 2027 (after consideration for contractual extension options and announced transactions) and with our assumable, fixed-rate property loans having an average duration of 6.8 years at favorable interest rates. During 2024, we retired $110 million of property debt associated with the asset sales described above and, during the fourth quarter, refinanced our Upton Place asset with a new $215 million bridge loan. The new loan carries a 6.39% fixed interest rate, approximately 280 bps lower than the weighted average cost of the construction loan and preferred equity which it replaced. 

In keeping with our previously stated capital allocation priorities, we directed nearly $40 million of capital to the repurchase of 4.9 million Aimco shares, representing an average price per share of $8.01, during 2024. Further, Aimco returned the net proceeds from the 2024 asset sales, approximately $90 million, to stockholders in the form of a special dividend during the first quarter of 2025.

Last year's good results were the product of a high-performing and dedicated team, committed to adding value across all aspects of our business and who are eager to 'do it again' in 2025. 

As we look to the year ahead, the fundamentals of the apartment business, and the Aimco portfolio in particular, are expected to remain strong as renter demand continues to exceed supply. Real estate capital markets are fully functioning, with credit spreads having narrowed over the past year and U.S. multifamily housing remaining a favored investment class for many institutional investors.

At Aimco we plan to drive continued growth from our Stabilized Operating portfolio which consists of more than 5,200 apartment homes, predominantly located in the Northeast and Midwest markets. These properties are projected to realize revenue growth of 3%, at the mid-point of our guidance range for 2025. We expect expenses to be up 5.5% at the mid-point of our guidance range, primarily driven by non-annual real estate tax reassessments. This results in projected full year NOI growth of between 1% to 3%.

Within our development business we expect to complete the lease-up of three multifamily projects. These projects are on track to stabilize occupancy by year end 2025 and NOI approximately one year later. We will advance construction at our one active development project, 34^th Street in Miami, Florida, with those efforts funded entirely through draws from its committed construction loan and preferred equity partner. We will selectively invest in our existing development pipeline, by advancing plans for future projects, but do not anticipate any new construction starts during 2025.

We expect to close on the sale of the Brickell Assemblage during the year and estimate the transaction to deliver approximately $300 million of net proceeds, after retiring associated property-level debt and accounting for tax liabilities. Upon receipt, we intend to return the majority of the net proceeds to stockholders.

Finally, and as announced earlier this year, Aimco's executive management and Board of Directors has decided to explore additional strategic alternatives in an effort to further unlock and maximize stockholder value. While the strategic process unfolds, the Aimco team remains committed to delivering strong operational results, creating value through select development investment, prudent capital allocation, efficient cost management, and fostering a culture of integrity, respect, and collaboration.

Take care, and thank you for your interest in Aimco!

Wes Powell
President and Chief Executive Officer

2024 Highlights

• Aimco's Stabilized Operating revenue, expenses, and NOI increased 3.5%, 0.8%, and 4.5%, respectively, year-over-year in the fourth quarter, with average monthly revenue per apartment home increasing by 2.9% to $2,307 and average daily occupancy increasing by 50 basis points to 97.9%. Full year 2024 revenue, expenses, and NOI increased 4.5%, 4.4%, and 4.5%, respectively, year-over-year.
• During the fourth quarter, Aimco substantially completed construction at its Oak Shore project located in Corte Madera, California.
• In December, Aimco sold, for a total price at Aimco's share of $203.8 million, its interests in two investments in Miami, Florida, The Hamilton, a recently completed redevelopment of a 276-unit apartment building, and a 2.8-acre development site at 3333 Biscayne Boulevard.
• In late December, Aimco reached an agreement to sell the Brickell Assemblage for $520 million. At that time the buyer's deposit of $38 million became non-refundable. Closing is subject to terms described later in this document.
• Aimco increased its ownership in its Upton Place property as its development partner exercised the option to sell their 10% interest in the asset. Also, Aimco secured a bridge loan to replace the higher cost construction loan, and partially paydown a project-level preferred equity investor.
• In December, Aimco's Board of Directors declared a special cash dividend of $0.60 per share to distribute the net proceeds produced from 2024 asset sales to stockholders, which was paid on January 31, 2025.
• In 2024, Aimco acquired 4.9 million shares of its common stock, at an average cost of $8.01 per share.

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.

Results at Aimco's Stabilized Operating Properties were as follows:

• Revenue in the fourth quarter 2024 was $35.5 million, up 3.5% year-over-year, resulting from a 2.9% increase in average monthly revenue per apartment home to $2,307 and a 50-basis point increase in Average Daily Occupancy to 97.9%.
• Effective rents on all leases during the fourth quarter 2024 were 3.6% higher, on average, than the previous lease and 71.7% of residents whose leases were expiring signed renewals.
• The median annual household income of new residents was $130,000 in the fourth quarter 2024, representing a rent-to-income ratio of 20.9%.
• Expenses in the fourth quarter 2024 were up 0.8% year-over-year but down 8.8% compared to the third quarter 2024, primarily due to typical seasonal reductions and tax bills coming in lower than estimated.
• NOI in the fourth quarter 2024 was $25.9 million, up 4.5% year-over-year and 5.1% over the third quarter 2024. Full year 2024, NOI was $99.0 million, an increase of 4.5% over 2023.

Value Add and Opportunistic 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, 2024, Aimco had one multifamily development project under construction and three multifamily communities that have been substantially completed and are now in lease-up. In addition to Aimco's core multifamily developments, The Benson Hotel and Faculty Club was completed in 2023 and remains in the stabilization process.

Aimco also has a pipeline of future value add opportunities in Southeast Florida, the Washington D.C. Metro, and Colorado's Front Range.

During the fourth quarter, $23.9 million of capital was invested in Aimco's development and redevelopment activities, primarily funded through construction loan draws. Updates on active development projects and Aimco's pipeline include:

• In Upper Northwest Washington D.C., all 689 apartment homes at Upton Place have been delivered and construction is substantially complete. Total direct costs are now expected to be $334.8 million, $3.0 million less than originally projected. As of February 13, 2025, Aimco had leased or pre-leased 333 units and 312 homes were occupied, at rates ahead of our initial projections. Additionally, as of February 13, 2025, approximately 90% of the project's 105K square feet of retail space had been leased with our two large anchor tenants fully open.
• In Bethesda, Maryland, all 220 of the highly tailored apartment homes at the first phase of Strathmore Square have been delivered and construction is substantially complete. Total direct project costs are now expected to be $181.4 million, $7.5 million less than originally projected. As of February 13, 2025, Aimco had leased 102 units at rates in line with our initial projections, and 86 homes were occupied.
• In Corte Madera, California, construction is substantially complete at Oak Shore with all 16 ultra-luxury single-family rental homes and eight accessory dwelling units delivered. As of February 13, 2025, Aimco had leased and welcomed residents into 20 of the homes at rates ahead of our initial projections.
• In Miami's Edgewater neighborhood, construction continued on 34^th Street, an ultra-luxury waterfront residential tower that will include 7,000 square feet of retail and rental homes averaging more than 2,500 square feet, with oversized private terraces, top-of-the-line finishes, and unobstructed views of Biscayne Bay. Aimco expects to welcome the first residents at this $240 million project in 3Q 2027 and stabilize occupancy in 4Q 2028.
• In the fourth quarter 2024, Aimco invested $0.8 million into programming, design, documentation, and entitlement efforts primarily at its 901 North project in Fort Lauderdale, Florida. Consistent with Aimco's capital allocation strategy, it may choose to monetize certain of its pipeline assets prior to vertical construction in an effort to maximize value add and risk-adjusted returns.

Investment & Disposition Activity

Aimco is focused on prudently allocating capital and delivering strong investment returns. Consistent with Aimco's capital allocation philosophy, it aims to monetize the value within its assets when accretive uses of the proceeds are identified and invest when the risk-adjusted returns are superior to other uses of capital.

• In the fourth quarter, Aimco sold, for $203.8 million, its interests in two real estate investments in the Edgewater neighborhood of Miami, Florida, retired $110.1 million of associated liabilities, and, in January 2025, returned approximately $90 million of capital to stockholders.
  • The Hamilton, Aimco's recently completed major redevelopment sold for $190.0 million.
  • Aimco's interest in 3333 Biscayne Boulevard, a 2.8-acre development site, was sold to Aimco's joint venture partner at a gross valuation of $66.5 million or $13.8 million at Aimco's share of the venture.
• In the fourth quarter, Aimco entered into an agreement to sell the Brickell Assemblage for a gross price of $520 million.
  • The buyer's initial deposit of $38 million is now non-refundable, and due diligence has been completed.
  • The buyer can exercise an option to finance up to $115 million of the purchase price with a transferable seller financing note from Aimco for a period of 18 months at a rate of 12%. If exercised the purchase price increases by $20 million, to $540 million.
  • The sale, which is subject to certain closing conditions and extension options, is scheduled to occur as early as March 2025 but may be extended at the buyer's option to the fourth quarter of 2025, with such extensions requiring the buyer to increase its non-refundable deposit.
  • Net proceeds from the transaction, accounting for the associated property-level debt and deferred tax liability, are estimated to range from $300 to $320 million depending on the buyer's election regarding seller financing. Upon receipt, Aimco intends to return the majority of the net proceeds from the transaction to shareholders.
• In the fourth quarter, Aimco increased its ownership interest in its Upton Place property by $19.1 million, as its development partner exercised the option to sell the entirety of their 10% interest in the asset.

Balance Sheet and Financing Activity

Aimco is highly focused on maintaining a strong balance sheet, including ample liquidity. As of December 31, 2024, Aimco had access to $321.0 million, including $141.1 million of cash on hand, $31.4 million of restricted cash, and the capacity to borrow up to $148.5 million on its 150.0 million revolving credit facility.

Aimco's net leverage as of December 31, 2024, was as follows:

• In the fourth quarter, Aimco refinanced its Upton Place asset with a $215 million bridge loan. The three year loan, which has a fixed interest rate of 6.39% and is prepayable at par after 18 months, replaced the construction loan and funded the partial paydown of a project-level preferred equity investor, which together had a weighted average interest rate of 9.22% at the time of payoff.

As of December 31, 2024, 100% of Aimco's total debt was either fixed rate or hedged with interest rate cap protection. Considering investments under contract to sell and including contractual extensions, Aimco has no debt maturing prior to June 2027.

Public Market Equity

Common Stock Repurchases

• In the fourth quarter, Aimco repurchased 0.6 million shares of its common stock at a weighted average price of $8.51 per share. Full year 2024, Aimco repurchased 4.9 million shares at an average cost of $8.01 per share and since the start of 2022, Aimco has repurchased 14.5 million shares at an average cost of $7.53 per share.
• In the fourth quarter, Aimco Operating Partnership redeemed 34,001 units of its equity securities for cash at a weighted average price of $8.75 per unit. Full year 2024, Aimco Operating Partnership redeemed approximately 119,000 units for cash at a weighted average price of $8.28 per unit.

Dividend

• On December 19, 2024, Aimco's Board of Directors declared a $0.60 per share special cash dividend to distribute the net proceeds from 2024 asset sales to stockholders. The dividend was paid on January 31, 2025, to holders of record as of January 14, 2025.

2025 Outlook

Operating Properties

Aimco's Stabilized Operating Portfolio includes properties with rents, on average, in line with local market rents, generally considered class B apartment communities. These properties are primarily located in suburban residential areas of Boston and Chicago with other select assets in Manhattan and single assets in Southeast Florida, Denver, Nashville, Atlanta, and San Francisco.

In 2025, Aimco forecasts revenues to grow between 2.5% and 3.5%, which, at the midpoint, assumes residential occupancy is flat year-over-year, a -40 bps impact from downtime associated with the turnover of commercial space, and blended residential lease rates of +5%. Operating expenses are expected to increase between 5.0% and 6.0%, primarily due to the expected impact from tri-annual assessments for real estate taxes at certain of our properties in Illinois. The result is anticipated NOI growth between 1.0% and 3.0%.

Developments and Redevelopments

In 2025, Aimco plans to stabilize occupancy at its three recently completed residential developments and continue construction activities at its 34th Street ground up development in Miami, Florida. Aimco does not anticipate any new development starts in 2025.

Aimco expects to invest, at its one active development project, between $50 and $60 million to advance construction, down from a total of $94 million in 2024 and $197 million in 2023. Aimco does not expect any substantial incremental equity investment at this project with funding for planned activity through third party debt and equity.

Aimco is prudently advancing planning efforts at its pipeline projects such that incremental time and cost add value independent of a decision to commence construction. During 2025, Aimco expects to invest between $7 and $10 million to advance planning and entitlement of certain of its potential development projects currently within the pipeline.

Real Estate Transactions

As previously announced, Aimco is under contract to close the sale of its Brickell Assemblage in 2025. Proceeds generated from this transaction are expected to eliminate associated liabilities with the majority of the remainder returned to stockholders.

General and Administrative

Aimco expects G&A expense, measured in accordance with GAAP, in 2025 to be $33 to $34 million, with inflationary increases offset with efficiencies gained by targeted workforce reductions implemented at the onset of 2025.

Leverage

Aimco uses leverage to capitalize its real estate portfolio and construction activities so that Aimco preserves liquidity and so that Aimco equity is invested in diverse projects and markets, mitigating concentration risk. Aimco prefers non-recourse property-level financing with fixed, or rate-capped floating interest rates. In addition, Aimco has a secured revolving credit facility providing additional liquidity.

In 2025, assuming that Aimco closes its announced disposition, Aimco expects total debt balances to be lower than ending balances for 2024 with no loans maturing in 2025. Aimco plans to fund costs related to its active development project with draws from a fully committed construction loan and its preferred equity partner. In accordance with GAAP, interest expense, net of capitalization, is expected to be $63 to $65 million, an increase from $57 million in 2024.

Commitment to Enhance Stockholder Value 

On January 9, 2025, Aimco and its Board of Directors announced that, while pleased with the transformation and simplification of the Aimco portfolio and the objective results delivered over the past four years, shares of AIV continue to trade at a meaningful discount to Aimco's estimate of the private market value of its assets and investment platform. This disconnect has limited Aimco's ability to fund new investment opportunities and accelerate growth.

Therefore, Aimco's Board of Directors has decided to explore additional alternatives in an effort to further unlock and maximize shareholder value. The exploration will expand upon Aimco's ongoing efforts such as reducing exposure to development activity and monetizing certain assets, and include, but not be limited to, exploration of a sale or merger of Aimco as a whole, potential sales of the major components of the business (in one or a series of transactions), and an acceleration of individual asset sales. The Board of Director's guiding principle will be to produce an outcome that delivers maximum value to Aimco shareholders. The strategic process is being overseen by Aimco's Investment Committee, comprised of four independent Aimco Board Members. Morgan Stanley & Co. LLC is serving as financial advisor to Aimco.

There can be no assurance that this expanded strategic process will result in any transaction or transactions or other strategic changes or outcomes, and the timing or outcome of any such event is similarly uncertain. Aimco does not intend to disclose or comment on developments related to the foregoing unless or until it determines that further disclosure is appropriate or required.

Supplemental Information

The full text of this Earnings Release and the Supplemental Information referenced in this release are available on Aimco's website at investors.aimco.com.

Glossary & Reconciliations of Non-GAAP Financial and Operating Measures

Financial and operating measures found in this Earnings Release and the Supplemental Information include certain financial measures used by Aimco management that are measures not defined under accounting principles generally accepted in the United States, or GAAP. Certain Aimco terms and Non-GAAP measures are defined in the Glossary in the Supplemental Information and Non-GAAP measures reconciled to the most comparable GAAP measures.

About Aimco

Aimco is a diversified real estate company primarily focused on value add and opportunistic investments, targeting the U.S. multifamily sector. Aimco's mission is to make real estate investments where outcomes are enhanced through our human capital so that substantial value is created for investors, teammates, and the communities in which we operate. Aimco is traded on the New York Stock Exchange as AIV. For more information about Aimco, please visit our website www.aimco.com.

Team and Culture

Aimco has a national presence with corporate headquarters in Denver, Colorado and Washington, D.C. Our investment platform is managed by experienced regional professionals, with a pipeline supporting new investment activity in Southeast Florida, the Washington D.C. Metro Area, and Colorado's Front Range. By regionalizing this platform, Aimco can leverage the in-depth local market knowledge of each regional leader, creating a comparative advantage when sourcing, evaluating, and executing investment opportunities.

Above all else, Aimco is committed to a culture of integrity, respect, and collaboration.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. The forward-looking statements in this document include, without limitation, statements regarding our future plans and goals, including the timing and amount of capital expected to be returned to stockholders, our pipeline investments and projects, our plans to eliminate certain near term debt maturities, our estimated value creation and potential, our timing, scheduling and budgeting, projections regarding revenue and expense growth, our plans to form joint ventures, our plans for new acquisitions or dispositions, our strategic partnerships and value added therefrom, the potential for adverse economic and geopolitical conditions, which negatively impact our operations, including on our ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, developments, and redevelopments; our ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to our development and redevelopment investments; expectations regarding sales of our apartment communities and the use of proceeds thereof; the availability and cost of corporate debt; and our ability to comply with debt covenants, including financial coverage ratios. We caution investors not to place undue reliance on any such forward-looking statements.

These forward-looking statements are based on management's judgment as of this date, which is subject to risks and uncertainties that could cause actual results to differ materially from our expectations, including, but not limited to: the risk that the 2025 plans and goals may not be completed, as expected, in a timely manner or at all; geopolitical events which may adversely affect the markets in which our securities trade, and other macro-economic conditions, including, among other things, rising interest rates and inflation, which heightens the impact of the other risks and factors described herein; real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate 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 and effects of acquisitions, dispositions, developments and redevelopments; expectations regarding sales of apartment communities and the use of proceeds thereof; insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; supply chain disruptions, particularly with respect to raw materials such as lumber, steel, and concrete; financing risks, including the availability and cost of financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; the risk that earnings may not be sufficient to maintain compliance with debt covenants, including financial coverage ratios; legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of laws and governmental regulations that affect us and interpretations of those laws and regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently owned by us.

In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the "Code") and depends on our ability to meet the various requirements imposed by the 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, 2024, and subsequent Quarterly Reports on Form 10-Q and other documents Aimco files from time to time with the SEC. These filings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.

These forward-looking statements reflect management's judgment and expectations as of this date, and Aimco undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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SOURCE Apartment Investment and Management Company (Aimco)