Apartment Investment and Management : Fourth Quarter 2024 Earnings Release & Supplemental Information
AIV
Table of Contents
Page
9Outlook
2
February 24, 2025
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.
3
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, 34th 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
4
Aimco Reports Fourth Quarter and Full Year 2024 Results and
Establishes 2025 Guidance
- Apartment Investment and Management Company ("Aimco") (NYSE:
AIV)Denver,announcedColoradtoday, Febrfourtharyquarter24, 2025and full year 2024 results and established 2025 guidance.
• Aimco's net loss attributable to common stockholders per share, on a fully dilutive basis, was $(0.08)
Financial Results
•
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.
• Aimco's Stabilized Operating revenue, expenses, and NOI increased 3.5%, 0.8%, and 4.5%,
Highlights
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 $8.01 per share.
AimcoOperatiownsgaPropertydiversifiedResultsportfolio of operating apartment communities located in eight major U.S. markets with average rents in line with local market averages.
Fourth Quarter 2024 Earnings Release and Supplemental Schedules | 5
Results at Aimco's Stabilized Operating Properties were as follows:
Fourth Quarter
FULL YEAR
Stabilized Operating Properties
Year-over-Year
Sequential
Year-over-Year
($ in millions)
2024
2023
Variance
3Q 2024 Variance
20 4
2023
Variance
Average Daily Occupancy
97.9%
97.4%
0.5%
96.8%
1.1%
97.2%
96.6%
0.6%
Revenue, before utility reimbursements
$35.5
$34.3
3.5%
$35.2
0.9%
$140.1
$134.1
4.5%
Expenses, net of utility reimbursements
9.6
9.5
0.8%
10.5
(8.8)%
41.1
39.4
4.4%
•
Revenue in the fourth quarter 2024 was $
35.5 million, up 3.5% year-over-year,
resulting from a 2.9%
Net operating income (NOI)
25.9 24.8 4.5%
24.7
5.1%
99.0
94.7
4.5%
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
AimcoDevelopmentgenerallyandseeksRedevelopmententand 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.
Fourth Quarter 2024 Earnings Release and Supplemental Schedules | 6
• 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 Street, an ultra-luxury waterfront
th
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.
Aimco is focused on prudently allocating capital and delivering strong investment returns. Consistent with
Investment & Disposition Activity
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.
ο
The Hamilton, Aimco's recently completed major redevelopment sold for $190.0 million.
ο
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.
ο
The buyer's initial deposit of $38 million is now non-refundable, and due diligence has been
completed.
ο
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
ο
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
ο
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
Fourth Quarter 2024 Earnings Release and Supplemental Schedules | 7
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.
AimcoBalanceis highlyS eetfocusedand Financingon maintainingActivitya 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:
as of December 31, 2024
Aimco Sha , $ in thousands
Amount
Weighted Avg.
Maturity (Yrs.) [1]
Total non-recourse fixed rate debt
$
693,993
6.8
Total non-recourse construction loan debt
385,959
2.6
Total property debt secured by assets held for sale
159,769
1.1
Net Leverage
$
1,067,664
Cash and restricted cash
(172,057)
[1] Weighted average maturities presented exclude contractual extension rights.
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
• In the fourth quarter, Aimco repurchased 0.6 million shares of its common stock at a weighted average
Common Stock Repurchases
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.
DividendOn 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.
Fourth Quarter 2024 Earnings Release and Supplemental Schedules | 8
2025 Outlook
2024
2025
$ in millions (except per share amounts)
Results
Forecast
Forecast is full year unless otherwise noted
$(0.75)
$1.50
- $1.60
Net income (loss) per share - diluted [1]
Operating Properties
Revenue Growth, before utility reimbursements
4.5%
2.5%
- 3.5%
Operating Expense Growth, net of utility reimbursements
4.4%
5.0%
- 6.0%
Net Operating Income Growth
4.5%
1.0%
- 3.0%
Recurring Capital Expenditures
$14
$11
- $13
Developments and Redevelopments
Total Direct Costs of Projects in Occupancy Stabilization at Period End [2]
$638
$68
Total Direct Costs of Projects Under Construction at Period End [2]
$240
$240
Direct Project Costs on Active Developments [3]
$94
$50
- $60
Direct Planning Costs [4]
$4
$7 - $10
Real Estate Transactions
Acquisitions
None
None
Dispositions [5]
$204
$520
- $540
General and Administrative
$33
$33
- $34
Leverage
Aimco'sOperatingStabilizedPropertiesOperating 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%.
Fourth Quarter 2024 Earnings Release and Supplemental Schedules | 9
InDevelopments2025, Aimco andplansRedevelopmentsto 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.
AsRealpreviouslyEstate Traannounced,sactionsAimco 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.
AimcoGeneralexpectsand AdministrativeG&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.
AimcoLeverageuses 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.
OnCommitmentJanuary 9, 2025,to EnhanAimcoe Stockholderand its BoardValueof 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.
Fourth Quarter 2024 Earnings Release and Supplemental Schedules | 10
Disclaimer
AIMCO - Apartment Investment & Management Company published this content on February 24, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 24, 2025 at 22:03:16.689.