Financial Data and Key Metrics Changes - Aimco's third quarter pro forma FFO was $0.61 per share, down $0.03 or 5% year-over-year, primarily due to lower occupancy and COVID-related impacts [25][26] - The leverage-to-EBITDA ratio on a trailing 12-month basis was reduced to 7.0x following a $1 billion leverage reduction [24] Business Line Data and Key Metrics Changes - Residential net rental income decreased by 2.5% in the third quarter, with average daily occupancy at 93.9%, down 280 basis points from the previous year [15] - Same-store revenues declined by 4.9% in the third quarter, while expenses decreased by 1.3%, leading to a 6.3% decrease in same-store net operating income year-over-year [15][16] Market Data and Key Metrics Changes - In suburban markets, occupancy was at 95.7% with residential net rental income up 60 basis points, while urban markets saw occupancy drop to 89.5% and a 7.1% decline in residential net rental income [16] - The leasing pace in urban areas improved, with a 44% year-over-year increase in leasing activity in the third quarter [17] Company Strategy and Development Direction - Aimco plans to simplify its business structure and reduce execution risk by separating into two entities, with 90% of capital focused on stabilized apartment communities and 10% on development and redevelopment [12] - The company aims to reduce leverage by $2 billion, enhancing financial flexibility and increasing FFO and dividends per share [12][24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about recovery, noting improvements in forward-looking metrics since midsummer, including increased leasing activity and declining delinquencies [9][14] - The management team highlighted the importance of maintaining high standards for resident selection to ensure long-term stability and revenue growth [10][74] Other Important Information - Aimco announced a special dividend of $8.20 per share, consisting of 10% cash and 90% common stock, to distribute taxable gains from asset sales [27] - The company acquired Hamilton on the Bay in Miami for $90 million, which includes plans for substantial redevelopment and additional residential units [20][21] Q&A Session Summary Question: What has changed to prompt a complete shift in strategy? - Management noted that public markets increasingly value FFO, leading to a separation that allows for clearer visibility of each business's benefits [30] Question: How will the separation impact development opportunities? - Management believes there will be long-term demand for stable cash dividends, and the separation will allow for focused growth in both entities [33] Question: How are urban properties performing? - Urban properties have been impacted by local conditions, but management expects recovery as universities and offices reopen [16][17] Question: What is the rationale behind the investment in the life sciences development company? - The investment is seen as a commitment to future growth, allowing shareholders to choose their preferred business model post-separation [41] Question: How is the acquisition in Miami expected to perform? - The acquisition is anticipated to be a strong long-term investment due to its location and potential for redevelopment [43][45] Question: What is the expected timeline for the separation? - Management indicated that details regarding the separation will be publicly available soon, with discussions ongoing [52][54] Question: How does management view the current market conditions? - Management acknowledged that transaction volumes are down, but they remain optimistic about future opportunities in faster-growing markets [63][64]
Apartment Investment and Management pany(AIV) - 2020 Q3 - Earnings Call Transcript