Apartment Investment and Management pany(AIV) - 2020 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Aimco reported a 5% growth in same-store net operating income (NOI) for Q1 2020, with funds from operations (FFO) increasing by 10% and adjusted funds from operations (AFFO) growing by 9% year-over-year [26][32]. - The company maintained a strong balance sheet with $1 billion in liquidity, including cash on hand and availability under its revolving credit facility [26][27]. Business Line Data and Key Metrics Changes - Customer satisfaction remained high at 4.3 out of 5 stars, contributing to a record low turnover rate of 42%, a 160 basis point improvement year-over-year [17]. - Average daily occupancy reached a record of 97.6%, with new lease rates up 1.7% and renewal rates up 5.8% [18]. Market Data and Key Metrics Changes - In April, average daily occupancy was 96.6%, slightly lower than the previous year but higher than April 2018 [19]. - Bad debt expense rose to approximately 100 basis points in April, with 96% of residential billings collected [20]. Company Strategy and Development Direction - Aimco emphasized flexibility and initiative in its operations, focusing on customer selection and satisfaction while controlling property expenses [8]. - The company plans to complete five long-cycle redevelopment projects, expecting to increase annual NOI by approximately $30 million once stabilized [14][25]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant challenges due to the economic impact of COVID-19, with millions newly unemployed and a substantial portion of the economy shut down [13]. - Despite the challenges, management expressed optimism about the company's ability to adapt and maintain operations, citing strong customer satisfaction and effective communication with residents [12][16]. Other Important Information - Aimco reduced its expected 2020 capital spending by 45%, amounting to $150 million, in response to the pandemic [23]. - The company has implemented enhanced cleaning protocols and support for residents during the pandemic, including financial advice and assistance with errands [10]. Q&A Session Summary Question: What is the expected bottom for occupancy rates? - Management indicated uncertainty about the future but expressed hope that occupancy rates would improve, noting recent increases in leasing activity [34][35]. Question: Is the company still committed to selling $900 million to $1 billion in properties? - Management revised the target to approximately $750 million due to reduced capital spending and emphasized that there is no urgency for distressed sales [38][39]. Question: What is the status of the Parkmerced transaction? - Management clarified that the cash interest income from Parkmerced is based on available cash flow, and they remain confident in the borrower's ability to meet obligations [41][42]. Question: How are operating expenses expected to change? - Management noted that while there may be increases in certain costs due to COVID-19, they remain committed to controlling operating expenses [63][65]. Question: How does the company view delinquencies in California and other markets? - Management acknowledged higher delinquencies in California, particularly in Los Angeles, but expressed confidence in the creditworthiness of their resident base [70][72].