Apartment Investment and Management pany(AIV) - 2019 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited condensed consolidated financial statements for Aimco and its operating partnership for the quarterly period ended June 30, 2019 Apartment Investment and Management Company (Aimco) Financial Statements Aimco's total assets grew to $6.24 billion, with H1 net income rising to $330.8 million due to gains on real estate dispositions Aimco Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $6,240,804 | $6,190,004 | | Total Liabilities | $4,296,760 | $4,325,072 | | Total Aimco Equity | $1,763,218 | $1,699,419 | Aimco Condensed Consolidated Statement of Operations Data (in thousands, except per share data) | Income Statement Item | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Total Revenues | $454,435 | $497,907 | | Gain on dispositions of real estate | $355,783 | $53,505 | | Net Income Attributable to Aimco | $338,592 | $88,829 | | Net Income per Common Share - Diluted | $2.25 | $0.55 | - Net cash from operating activities was $170.0 million for H1 2019, while net cash from investing activities was $197.5 million[19] AIMCO Properties, L.P. Financial Statements The operating partnership's financials mirror Aimco's, with H1 net income reaching $361.1 million driven by disposition gains AIMCO Properties, L.P. Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $6,240,804 | $6,190,004 | | Total Liabilities | $4,296,760 | $4,325,072 | | Total Partners' Capital | $1,842,866 | $1,763,641 | AIMCO Properties, L.P. Condensed Consolidated Statement of Operations Data (in thousands) | Income Statement Item | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Total Revenues | $454,435 | $497,907 | | Gain on dispositions of real estate | $355,783 | $53,505 | | Net Income Attributable to the Aimco Operating Partnership | $361,130 | $96,595 | Notes to the Condensed Consolidated Financial Statements Notes detail accounting policies, segment reporting, and significant H1 2019 transactions including acquisitions and dispositions - As of June 30, 2019, Aimco owned an equity interest in 128 apartment communities with 33,820 apartment homes[27][29] - The company has four reportable segments: Same Store (95 communities), Redevelopment and Development (7 communities), Acquisition (7 communities), and Other Real Estate (15 communities)[73][74][76] - As of June 30, 2019, the company had commitments of approximately $235.9 million related to redevelopment and development activities[53] Significant Transactions - H1 2019 (dollars in thousands) | Transaction Type | Details | | :--- | :--- | | Acquisition | Acquired 1 apartment community (110 homes) in Ardmore, PA for a purchase price of $66,725 | | Disposition | Sold 8 apartment communities (2,605 homes) for a total gain of $355,783 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 2019 performance, including a 4.6% Same Store NOI increase and strategic capital recycling initiatives Executive Overview Q2 2019 Same Store NOI grew 4.6% amid ongoing capital recycling, with leverage slightly above the target of 7.0x - The company invested $51.7 million in redevelopment and development during Q2 2019, with ongoing projects in multiple cities[108] - Average revenue per apartment home increased 6% YoY to $2,218 in Q2 2019, driven by Same Store growth and portfolio recycling[114][116] Q2 2019 Same Store Portfolio Performance | Metric | Q2 2019 | Change vs. Q2 2018 | | :--- | :--- | :--- | | Average Daily Occupancy | 96.9% | +60 bps | | Net Operating Income (NOI) | - | +4.6% | | NOI Margin | 73.3% | +60 bps | | Weighted Avg. Rent Increase | 3.6% | - | Leverage Ratios as of Q2 2019 | Ratio | Value | Target | | :--- | :--- | :--- | | Proportionate Debt and Preferred Equity to Adjusted EBITDAre | 7.4x | < 7.0x | | Adjusted EBITDAre to Adjusted Interest Expense and Preferred Dividends | 3.3x | > 2.5x | Results of Operations Q2 2019 net income rose due to disposition gains, while Pro forma FFO per share slightly decreased by $0.01 - Pro forma FFO per share decreased $0.01 in Q2 2019 vs Q2 2018, as Same Store NOI growth was offset by prior-year asset sales[139] - General and administrative expenses decreased 12.7% in Q2 2019 and 10.9% in H1 2019 compared to prior year periods[166] Proportionate Property NOI by Segment - Q2 2019 vs Q2 2018 (in thousands) | Segment | Q2 2019 NOI | Q2 2018 NOI | % Change | | :--- | :--- | :--- | :--- | | Same Store | $129,206 | $123,550 | 4.6% | | Redevelopment & Development | $12,136 | $11,546 | 5.1% | | Acquisition | $7,263 | $4,483 | 62.0% | | Other Real Estate | $5,371 | $5,699 | (5.8%) | Proportionate Property NOI by Segment - H1 2019 vs H1 2018 (in thousands) | Segment | H1 2019 NOI | H1 2018 NOI | % Change | | :--- | :--- | :--- | :--- | | Same Store | $256,590 | $244,272 | 5.0% | | Redevelopment & Development | $25,199 | $23,124 | 9.0% | | Acquisition | $14,403 | $5,539 | 160.0% | | Other Real Estate | $10,951 | $11,164 | (1.9%) | Non-GAAP Measures This section defines and reconciles key non-GAAP metrics like FFO, AFFO, and Adjusted EBITDAre to GAAP Net Income FFO and AFFO Reconciliation per Share (Diluted) | Per Share Data | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Aimco | $0.40 | $0.02 | $2.25 | $0.55 | | Nareit FFO | $0.56 | $0.61 | $1.17 | $1.23 | | Pro forma FFO | $0.60 | $0.61 | $1.21 | $1.20 | | AFFO | $0.51 | $0.54 | $1.06 | $1.07 | Reconciliation to Proportionate Debt and Preferred Equity (in thousands) | Item | June 30, 2019 | | :--- | :--- | | Total Indebtedness | $3,997,447 | | Adjustments | ($144,909) | | Proportionate Debt | $3,852,538 | | Preferred Equity | $101,178 | | Proportionate Debt and Preferred Equity | $3,953,716 | Reconciliation to Annualized Adjusted EBITDAre (in thousands) | Item | Q2 2019 (Annualized) | | :--- | :--- | | Net Income | $69,996 | | Adjustments to EBITDAre | $65,538 | | EBITDAre | $135,534 | | Adjustments to Adjusted EBITDAre | ($1,899) | | Adjusted EBITDAre | $133,635 | | Annualized Adjusted EBITDAre | $534,540 | Liquidity and Capital Resources The company maintains ample liquidity through cash, a credit facility, and unencumbered assets to fund capital commitments - As of June 30, 2019, primary liquidity sources included $34.0 million in cash and $498.1 million of borrowing capacity on the revolving credit facility[213] - Subsequent to quarter-end, the company rate-locked $587.0 million of new non-recourse property debt at a weighted average rate of 3.37%[126][218] - The total estimated net investment in ongoing redevelopment and development projects is $573.3 million, with $206.1 million funded to date[240] Capital Additions - H1 2019 vs H1 2018 (in thousands) | Category | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Capital replacements | $19,777 | $13,526 | | Capital enhancements | $41,487 | $44,064 | | Redevelopment additions | $41,267 | $70,778 | | Development additions | $55,611 | $17,416 | | Total Capital Additions | $179,143 | $156,053 | Quantitative and Qualitative Disclosures About Market Risk No material changes were reported from the market risk disclosures in the 2018 Annual Report on Form 10-K - There have been no material changes from the market risk disclosures in the 2018 Form 10-K[249] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Management concluded that the disclosure controls and procedures for both Aimco and the Aimco Operating Partnership were effective as of June 30, 2019[249][251] - No material changes to internal control over financial reporting occurred during the second quarter of 2019[250][252] PART II. OTHER INFORMATION Risk Factors No material changes were reported from the risk factors disclosed in the 2018 Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the 2018 Form 10-K[254] Unregistered Sales of Equity Securities and Use of Proceeds The company details Q2 2019 equity issuances for acquisitions and redemptions, with no common stock repurchases - Aimco issued approximately 70,000 shares of Common Stock in exchange for common OP Units tendered for redemption during Q2 2019[255] - The Aimco Operating Partnership issued 59,761 common OP Units as partial consideration for the acquisition of the One Ardmore apartment community[257] - Aimco made no repurchases of its common stock in Q2 2019, with authorization remaining to repurchase approximately 10.6 million shares[256] - The Aimco Operating Partnership repurchased 31,552 units for cash at an average price of $49.94 per unit during Q2 2019[259] Exhibits This section lists all exhibits filed with the report, including governance documents and Sarbanes-Oxley certifications - The report includes standard exhibits such as the company charter, bylaws, and CEO/CFO certifications under Sarbanes-Oxley[263] Signatures The report is duly signed and authorized by the Executive Vice President and Chief Financial Officer on August 9, 2019 - The report was signed on August 9, 2019, by Paul Beldin, EVP and CFO[266][267]