DENVER--(EON: Enhanced Online News)--Apartment Investment and Management Company ("Aimco") (NYSE: AIV, AIVPrT, AIVPrV, AIVPrY) today provided an update on its financial and dividend guidance for 2012, based on its recently announced public offering of 11,000,000 shares of common stock. Aimco intends to use the net proceeds from the offering and available cash to redeem all of its outstanding shares of Class T Cumulative Preferred Stock, Class V Cumulative Preferred Stock and Class Y Cumulative Preferred Stock.
Chairman and Chief Executive Officer, Terry Considine, comments: “We are pleased to have taken a significant step that reduces our cost of capital, increases AFFO, and strengthens our balance sheet. This marks no change in our plans to make steady progress in upgrading our portfolio through sale of lower-rated properties; adding value through redevelopment; strengthening our balance sheet; and simplifying our business. The Aimco Board decided that this was an opportune time to issue equity and accelerate the rate of progress. Based on the expected increase in AFFO, the Aimco Board also intends to increase the company’s quarterly dividend 11%, from $0.18 to $0.20 per share, at its next meeting in July.”
Chief Financial Officer, Ernie Freedman, adds: “Through this series of transactions, Aimco expects to increase annual cash flow by approximately $16 million. Aimco estimates that the dilutive impact to Net Asset Value of approximately $0.40 per share will be recovered within five years. While we expect modest dilution to FFO and AFFO until the preferred stocks are redeemed later this quarter, we expect that FFO will increase by $0.01 per share during the second half of this year compared to our original guidance. On an annualized basis, we expect Pro forma FFO to increase by $0.02 and AFFO to increase by $0.07 from these transactions.”
In connection with this announcement, Aimco is adjusting its guidance as follows:
|May 4, 2012||Change||Revised Guidance|
|Full Year 2012|
|Net loss per share||-$0.70 to -$0.62||+ $0.06||-$0.64 to -$0.56|
|Pro forma Funds From Operations (Pro forma FFO)||$1.76 to $1.84||Unchanged||$1.76 to $1.84|
|Adjusted Funds From Operations (AFFO)||$1.21 to $1.31||+ $0.03||$1.24 to $1.34|
|Second quarter 2012 Pro forma FFO||$0.40 to $0.44||
|$0.39 to $0.43|
|Projected Annualized 4th Qtr 2012 Debt Ratios|
|Debt to EBITDA||7.5x||Unchanged||7.5x|
|Debt and Preferred Equity to EBITDA||8.7x||-0.5x||8.2x|
|EBITDA Coverage of Interest||2.5x||Unchanged||2.5x|
|EBITDA Coverage of Interest and Preferred Dividends||2.0x||+0.15x||2.15x|
In connection with the redemption of the preferred securities described in this release, Aimco expects to recognize preferred stock redemption charges of approximately $10.5 million, or $0.08 per share, which are excluded from the above estimates for Pro forma FFO and AFFO, but are reflected in the above estimate of Net loss per share.
Aimco is a real estate investment trust that is focused on the ownership and management of quality apartment communities located in the largest markets in the United States. Aimco is one of the country’s largest owners and operators of apartments, with 361 communities serving approximately 250,000 residents in 30 states, the District of Columbia and Puerto Rico. Aimco common shares are traded on the New York Stock Exchange under the ticker symbol AIV and are included in the S&P 500. For more information about Aimco, please visit our website at www.aimco.com.
FFO, Pro forma FFO and AFFO are financial measures used by Aimco management that are not calculated in accordance with accounting principles generally accepted in the United States, or GAAP. Aimco’s definition and calculation of these non-GAAP financial measures may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial measures should not be considered an alternative to GAAP net income or any other GAAP measurement of performance and should not be considered an alternative measure of liquidity. Aimco's 1st Quarter 2012 Earnings Release defines each of these terms and includes a reconciliation of the historical measures to Net income (loss) attributable to Aimco common stockholders. The full text of the Earnings Release and supplemental schedules are available through Aimco’s website at www.aimco.com/investors/financial-reports/quarterly-earning-reports.
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected net proceeds from the offering of common stock and the use of proceeds therefrom. These forward-looking statements are based on management’s judgment as of this date and include certain risks and uncertainties. Risks and uncertainties include, but are not limited to, Aimco’s ability to maintain current or meet projected occupancy, rental rates and property operating results. Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond the control of Aimco, including, without limitation: financing risks, including the availability and cost of capital markets financing and the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; earnings may not be sufficient to maintain compliance with debt covenants; real estate 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 terms of governmental regulations that affect Aimco and interpretations of those regulations; the competitive environment in which Aimco operates; the timing of acquisitions and dispositions; insurance risk, including the cost of insurance; natural disasters and severe weather such as hurricanes; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; energy costs; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by Aimco. 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 and depends on our ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. Readers should carefully review Aimco’s financial statements and notes thereto, as well as the risk factors described in Aimco’s Annual Report on Form 10-K for the year ended December 31, 2011, and the other documents Aimco files from time to time with the Securities and Exchange Commission. Future quarterly dividend payments are subject to determinations by Aimco's board of directors based on the circumstances at the time of authorization, and the actual dividends paid may vary from the currently expected amounts. These forward-looking statements reflect management’s judgment as of this date, and Aimco assumes no obligation to revise or update them to reflect future events or circumstances.