Aimco Reports Fourth Quarter Results

DENVER--()--Apartment Investment and Management Company (“Aimco”) (NYSE: AIV) announced today fourth quarter results for 2017.

Chairman and Chief Executive Officer Terry Considine comments: “2017 was a solid year for Aimco. Revenues were up, expenses were almost flat, and Aimco achieved NOI growth greater than 4% for the 7th year in a row. The quality of the Aimco portfolio improved through value created by our redevelopment and transaction activities, contributing to average revenue per apartment home of $2,123, up 7%.

“In 2018, we expect consumer demand for apartments to be strong, supported by favorable demographics and an accelerating economy. The diversification of the Aimco portfolio provides a hedge against elevated supply in some markets. We expect Aimco’s investment in redevelopment and development activities to increase Net Asset Value and to contribute to future earnings growth.”

Chief Financial Officer Paul Beldin adds: “2017 AFFO of $2.12 per share met the midpoint of our guidance range, Pro forma FFO of $2.45 per share was $0.01 ahead of the midpoint of guidance, and Same Store NOI growth was comfortably within our guidance range. The Aimco balance sheet is safe and strong with abundant liquidity and with minimal borrowings on our $600 million revolving credit facility.

“In 2018, Aimco expects earnings from our Same Store, Redevelopment and Other Real Estate portfolios to add $0.10 per share to AFFO. This earnings growth will be offset somewhat by lower earnings from the planned and continuing wind down of our Asset Management business and lower income tax benefits due to the recent tax law change. We anticipate Pro forma FFO per share in a range of $2.42 to $2.52 and AFFO per share in a range of $2.11 to $2.21.”

Financial Results: Full Year Pro forma FFO Up 6%; AFFO Up 8%

         
    FOURTH QUARTER   FULL YEAR
(all items per common share - diluted)   2017   2016   Variance   2017   2016   Variance
Net income   $ 1.67     $ 1.03     62 %   $ 1.96     $ 2.67     (27 %)
Funds From Operations (FFO)   $ 0.63     $ 0.60     5 %   $ 2.45     $ 2.31     6 %
Add back Aimco share of preferred equity redemption related amounts   $     $     %   $     $ 0.01     (100 %)
Pro forma Funds From Operations (Pro forma FFO)   $ 0.63     $ 0.60     5 %   $ 2.45     $ 2.32     6 %
Deduct Aimco share of Capital Replacements   $ (0.07 )   $ (0.10 )   (30 %)   $ (0.33 )   $ (0.35 )   (6 %)
Adjusted Funds From Operations (AFFO)   $ 0.56     $ 0.50     12 %   $ 2.12     $ 1.97     8 %
           

Net Income (per diluted common share) - Year-over-year, fourth quarter net income increased primarily due to higher gains on the sale of apartment communities.

Pro forma FFO (per diluted common share) - Aimco’s fourth quarter Pro forma FFO increased by $0.03 per share, or 5%, on a year-over-year basis. Property results contributed the following to Pro forma FFO:

  • $0.02 from Same Store Property Net Operating Income growth of 3.1%, driven by a 2.8% increase in revenue, offset by a 2.1% increase in expenses; and
  • $0.01 from the lease-up over the last 12 months of more than 800 renovated homes at Redevelopment communities and completion of the lease-up of One Canal in Boston, Massachusetts and Indigo in Redwood City, California; offset by
  • ($0.03) lower Property Net Operating Income from apartment communities sold in 2016.

As compared to 2016, lower interest rates, higher transactional income, and other factors contributed an additional $0.03 to Pro forma FFO.

The results above exclude Property Net Operating Income from the second quarter reacquisition of the 47% interest in the Palazzo communities, which was largely offset by higher interest expense related to temporary borrowings used to fund the purchase.

Adjusted Funds from Operations (per diluted common share) - The $0.03 increase year-over-year in Pro forma FFO per share plus $0.03 in lower capital replacement spending due to fewer apartment homes increased AFFO per share by $0.06, or 12%.

Operating Results: Fourth Quarter Same Store NOI Up 3.1%; Full Year Up 4.2%

         
  FOURTH QUARTER   FULL YEAR
    Year-over-Year   Sequential   Year-over-Year
    2017   2016   Variance   3rd Qtr.   Variance   2017   2016   Variance
Average Rent Per Apartment Home   $ 1,784     $ 1,739     2.6 %   $ 1,773     0.6 %   $ 1,765     $ 1,709     3.3 %
Other Income Per Apartment Home     175       170     2.9 %     189     (7.4 %)     178       175     1.7 %
Average Revenue Per Apartment Home   $ 1,959     $ 1,909     2.6 %   $ 1,962     (0.2 %)   $ 1,943     $ 1,884     3.1 %
Average Daily Occupancy     96.3 %     96.1 %   0.2 %     96.0 %   0.3 %     96.0 %     96.0 %   %
                                 
$ in Millions                                
Revenue   $ 148.4     $ 144.4     2.8 %   $ 148.2     0.2 %   $ 587.6     $ 569.5     3.2 %
Expenses     40.4       39.6     2.1 %     42.3     (4.4 %)     167.4       166.1     0.7 %
NOI   $ 108.0     $ 104.8     3.1 %   $ 105.9     2.0 %   $ 420.2     $ 403.4     4.2 %
           

Same Store Rental Rates - Aimco measures changes in rental rates by comparing, on a lease-by-lease basis, the rate on a newly executed lease to the rate on the expiring lease for that same apartment. Newly executed leases are classified either as a new lease, where a vacant apartment is leased to a new customer, or as a renewal. The table below details changes in new and renewal lease rates.

                                 
2017   1st Qtr.   2nd Qtr.   3rd Qtr.   Oct   Nov   Dec   4th Qtr.   Full Year
Renewal rent increases   5.1 %   4.6 %   4.5 %   4.6 %   4.4 %   4.4 %   4.5 %   4.6 %
New lease rent increases   (1.0 %)   1.0 %   1.4 %   (1.1 %)   (1.4 %)   0.2 %   (0.8 %)   0.6 %
Weighted average rent increases   1.9 %   2.7 %   3.0 %   1.8 %   1.2 %   1.9 %   1.6 %   2.5 %
Average Daily Occupancy   95.9 %   95.9 %   96.0 %   96.2 %   96.3 %   96.4 %   96.3 %   96.0 %
               

During fourth quarter, Aimco focused on increasing occupancy, resulting in a 30 basis point increase in Average Daily Occupancy as compared to the third quarter.

Redevelopment/Development

Aimco’s second line of business is the redevelopment and development of apartment communities. Aimco invests in this line of business when it believes the investment will yield risk-adjusted returns in excess of those expected from the apartment communities sold in paired trades to fund these construction projects. Aimco favors redevelopment because it permits adjustment of the scope and timing of spending to align with changing market conditions. Aimco also undertakes ground-up development of apartment communities when warranted by risk-adjusted investment returns.

During the fourth quarter, Aimco invested $51 million in redevelopment and development. In Center City, Philadelphia, Aimco completed de-leasing of and commenced construction on the fourth and final tower of Park Towne Place. Lease-up of this tower is scheduled to commence in the spring of 2018. At December 31, 2017, the first three towers combined were 89% leased with approximately 40 homes remaining to lease at the third tower in order to reach stabilized occupancy.

As previously announced, Aimco is developing Parc Mosaic, a $117 million, 226 apartment home community located in Boulder, Colorado on the site of its former Eastpointe apartment community. During the fourth quarter, Aimco completed de-leasing of Eastpointe and commenced demolition and construction.

During the fourth quarter, Aimco leased 103 apartment homes at its redevelopment communities. At December 31, 2017, Aimco’s lease-up exposure at active redevelopment and development projects included approximately 611 apartment homes, 232 of which were in the fourth tower of Park Towne Place and 215 were in Parc Mosaic.

Portfolio Management: Revenue Per Apartment Home Up 7% to $2,123

Aimco portfolio strategy seeks predictable rent growth from a portfolio of apartment communities that is diversified across “A,” “B” and “C+” price points, averaging “B/B+” in quality, and that is also diversified across the largest markets in the U.S. Please refer to the Glossary for a description of Aimco Portfolio Quality Ratings.

As part of its portfolio strategy, Aimco seeks to sell each year up to 10% of the apartment communities in its portfolio and to reinvest the proceeds from such sales in uses such as property upgrades, redevelopment of communities in its current portfolio, occasional development of new communities, and selective acquisitions of apartment communities with projected free cash flow returns higher than expected from the communities sold to fund the activity. Through this disciplined approach to capital recycling, Aimco has significantly increased the quality and expected growth rate of its portfolio.

     
    FOURTH QUARTER
    2017   2016   Variance
Apartment Communities     136       141     (5 )
Apartment Homes     36,904       39,161     (2,257 )
Revenue per Apartment Home   $ 2,123     $ 1,981     7 %
Portfolio Average Rents as a Percentage of Local Market Average Rents     113 %     112 %   1 %
Percentage A (4Q 2017 Revenue per Apartment Home $2,707)     53 %     51 %   2 %
Percentage B (4Q 2017 Revenue per Apartment Home $1,848)     32 %     36 %   (4 %)
Percentage C+ (4Q 2017 Revenue per Apartment Home $1,721)     15 %     13 %   2 %
NOI Margin     70 %     69 %   1 %
Free Cash Flow Margin     65 %     64 %   1 %
     

Fourth Quarter Real Estate Portfolio - For its entire portfolio, Aimco’s average monthly revenue per apartment home was $2,123 for fourth quarter 2017, a 7% increase compared to fourth quarter 2016. This increase is due to year-over-year growth in Same Store revenue as well as Aimco’s second quarter reacquisition of the 47% interest in the Palazzo communities, lease-up of redevelopment and acquisition properties, and the sale of apartment communities with average monthly revenues per apartment home lower than those of the retained portfolio.

Dispositions - In the fourth quarter, Aimco sold five lower-rated apartment communities with 2,291 apartment homes for a gain of $298 million and gross proceeds of $397 million resulting in $381 million in net proceeds to Aimco. Two of these properties are affordable communities located in Washington, DC and Philadelphia, and three are located in southern New Jersey and southern Virginia.

In January 2018, Aimco agreed to sell its interests in the entities owning the La Jolla Cove property in settlement of legal actions filed in 2014 by a group of disappointed buyers who had hoped to acquire the property. As a result of the settlement, Aimco recognized in its 2017 results a gross impairment loss of $35.8 million, $25.6 million of which relates to the establishment of a deferred tax liability assumed at acquisition. Upon closing of the transaction, the tax liability will be assumed by the buyer, resulting in no economic loss to Aimco. The remaining $10.2 million accounting loss is offset by cash distributions paid to Aimco during its ownership and avoided legal costs for continued litigation.

On an economic basis, Aimco agreed to sell the entity at roughly its purchase price, adjusted for retained cash distributions and avoided legal costs.

Also in January 2018, Aimco sold three additional apartment communities with 513 apartment homes for a gain of approximately $50 million, net of tax, and gross proceeds of $72 million resulting in $65 million in net proceeds to Aimco. Two of these communities are located in southern Virginia and one is located in suburban Maryland.

Proceeds from the 2017 and 2018 sales were used to repay outstanding borrowings on Aimco’s revolving credit facility, effectively funding the equity portion of the Palazzo reacquisition as well as Aimco’s 2017 redevelopment and development activities.

Balance Sheet and Liquidity

Aimco Leverage

Aimco targets net leverage of $3.8 billion. As of the end of the year, Aimco’s leverage was above this target due to the timing of three apartment community sales discussed above, which closed in January 2018.

Non-recourse Property Debt - During the fourth quarter, Aimco closed or rate-locked two non-recourse, fixed-rate property loans totaling $189 million. On a weighted average basis, these loans have a 7.7 year term and an interest rate of 3.48%, 117 basis points above the corresponding treasury rates at the time of pricing.

The net effect of 2017 property debt refinancing activities has been to lower Aimco’s weighted average fixed interest rates by about 20 basis points to 4.64%.

Aimco leverage includes Aimco’s share of long-term, non-recourse, property debt secured by apartment communities, a term loan, outstanding borrowings under its revolving credit facility, and outstanding preferred equity. Aimco leverage excludes non-recourse property debt obligations of consolidated partnerships served by its Asset Management business (described further in the Glossary). Please refer to Supplemental Schedule 5(a) for the presentation of Aimco leverage and a reconciliation of Aimco proportionate leverage to Aimco’s consolidated leverage.

       
      AS OF DECEMBER 31, 2017
$ in Millions     Amount     % of Total    

Weighted Avg.
Maturity (Yrs.)

Aimco share of long-term, non-recourse property debt     $ 3,553       87%     7.2
Term loan       250       6%     0.5
Outstanding borrowings on revolving credit facility       67       2%     4.1
Preferred Equity*       227       5%     40.0
Total leverage     $ 4,097       100%     8.5
Cash, restricted cash and investments in securitization trust assets       (176 )            
Net Leverage     $ 3,921              
* Aimco’s Preferred Equity is perpetual in nature; however, for illustrative purposes, Aimco has computed the weighted average maturity of its total leverage assuming a 40-year maturity for its Preferred Equity.
 

Leverage Ratios

Aimco target leverage ratios are Proportionate Debt and Preferred Equity to Adjusted EBITDA below 7.0x and Adjusted EBITDA to Interest Expense and Preferred Dividends greater than 2.5x. Aimco also focuses on the ratios of Proportionate Debt to Adjusted EBITDA and Adjusted EBITDA to Adjusted Interest Expense. Please see the Glossary for definitions of these non-GAAP measures and, where appropriate, reconciliations to the nearest GAAP measure.

Aimco calculates Adjusted EBITDA and Adjusted Interest Expense used in its leverage ratios based on current quarter amounts, annualized.

         
       

FOURTH
QUARTER 2017

Proportionate Debt to Adjusted EBITDA       6.5x
Proportionate Debt and Preferred Equity to Adjusted EBITDA       6.9x
Adjusted EBITDA to Adjusted Interest Expense       3.3x
Adjusted EBITDA to Adjusted Interest Expense and Preferred Dividends       3.1x
     

Aimco’s leverage ratios have been adjusted on a pro forma basis to reflect the disposition of five apartment communities during the period as if the sales had closed on October 1, 2017. The effect of this pro forma adjustment may be found in the Adjusted EBITDA reconciliation in the Glossary.

Liquidity

At December 31, 2017, Aimco held cash and restricted cash of $95 million and had available capacity to borrow $521 million under its revolving credit facility, after consideration of outstanding borrowings of $67 million and $12 million of letters of credit backed by the facility. Aimco uses its credit facility primarily for working capital and other short-term purposes and to secure letters of credit.

Aimco also held unencumbered apartment communities with an estimated fair market value of approximately $1.8 billion at December 31, 2017.

Dividend - As previously announced, the Aimco Board of Directors declared a quarterly cash dividend of $0.38 per share of Class A Common Stock for the quarter ended December 31, 2017. On an annualized basis, this represents an increase of 6% compared to the dividends paid during 2017. This dividend is payable on February 28, 2018, to stockholders of record on February 16, 2018.

2018 Outlook

The Aimco strategy remains unchanged: focusing on excellence in property operations; value creation through redevelopment and occasional development; portfolio management based on a disciplined approach to capital recycling; a safe, flexible balance sheet with abundant liquidity; and a simple business model executed by a performance-oriented and collaborative team. Aimco executes this consistent strategy with an eye on sustainable long-term growth.

Components of 2017 to 2018 AFFO Growth

(At the midpoint of guidance range)

   
2017 AFFO per Share   $ 2.12  
Same Store & Other Real Estate   0.09
Redevelopment & Development 0.05
Sales to Fund Capital Investments (0.04 )
Tax Benefits (0.04 )
Contribution from Asset Management (0.03 )
Offsite Costs & Other     0.01  
2018 AFFO per Share   $ 2.16  
 

Aimco expects 2018 Pro forma FFO per share in the range of $2.42 to $2.52 with AFFO per share of $2.11 to $2.21. At the guidance range midpoint, Aimco’s projected 2018 AFFO growth of 2% reflects:

  • $0.14 per share growth from its core business of market-rate apartment ownership and Redevelopment and Development;
  • $0.01 per share of growth from lower offsite costs and lower casualties; and
  • income lost from apartment communities sold to fund redevelopment and development activity ($0.04 per share), lower tax benefits primarily from the effect of the recent tax law change ($0.04 per share), and planned lower income from the wind down of Aimco’s Asset Management business ($0.03 per share).

Aimco is engaged in litigation with Airbnb to protect Aimco’s property right to select its residents and their neighbors. Due the unpredictable nature of these cases and associated legal costs, Aimco will exclude such costs from 2018 Pro forma FFO and AFFO.

Aimco projects its Same Store portfolio to provide NOI growth in the range of 1.70% to 3.10%, resulting from revenue growth in the range of 2.10% to 3.10% and expense growth between 2.60% and 3.60%. At the midpoint, Aimco expects revenue growth of 2.60%, comprised of average daily occupancy 10 basis points higher than 2017 and lease rate growth of 2.50%, based on blended lease rates similar to 2017. At the midpoint, Aimco expects expenses to increase by 3.10%, of which 110 basis points is due to the increase in real estate taxes compared to 2017 taxes that were lowered by successful appeals, and higher property hazard insurance costs resulting from worldwide casualty events in 2017.

         

($ Amounts represent Aimco Share)

  FULL YEAR 2018   FULL YEAR 2017
         
Net Income per share   $0.36 to $0.46   $1.96
Pro forma FFO per share   $2.42 to $2.52   $2.45
AFFO per share   $2.11 to $2.21   $2.12
         
Select Components of FFO        
Same Store Operating Measures        
Revenue change compared to prior year   2.10% to 3.10%   3.20%
Expense change compared to prior year   2.60% to 3.60%   0.70%
NOI change compared to prior year   1.70% to 3.10%   4.20%
         
Asset Management and Other Earnings        
Asset Management Contribution   $36M  

$41M

Tax Benefits [1]   $16M to $18M   $23M
         
Offsite Costs        
Property management expenses   $20M   $21M
General and administrative expenses   $44M   $44M
Total Offsite Costs   $64M   $65M
         
Capital Investments        
Redevelopment/Development   $120M to $200M   $172M
Property upgrades   $80M to $100M   $101M
         
Transactions        
Property dispositions - Real Estate [2]   $180M to $220M   $381M
Property acquisitions   $0M   $452M
         
Portfolio Quality        
Average revenue per apartment home   ~$2,175   $2,123
         
Balance Sheet        
Proportionate Debt to Adjusted EBITDA   ~6.5x   6.5x
Proportionate Debt and Preferred Equity to Adjusted EBITDA   ~6.9x   6.9x
[1]   2017 tax benefits as shown above exclude a $0.5 million deferred tax revaluation adjustment recognized as a result of the recent tax reform legislation, which is excluded from Aimco’s calculation of Pro forma FFO and AFFO.
 
[2] In January 2018, Aimco sold two apartment communities located in southern Virginia and one apartment community located in suburban Maryland, for net proceeds of $65 million.
         
($ Amounts represent Aimco Share)      

FIRST
QUARTER 2018

         
Net income per share       $0.29 to $0.33
Pro forma FFO per share       $0.57 to $0.61
AFFO per share       $0.50 to $0.54
     

Earnings Conference Call Information

Live Conference Call:

     

Conference Call Replay:

Friday, February 2, 2018 at 1:00 p.m. ET Replay available until April 2, 2018
Domestic Dial-In Number: 1-888-317-6003 Domestic Dial-In Number: 1-877-344-7529
International Dial-In Number: 1-412-317-6061 International Dial-In Number: 1-412-317-0088
Passcode: 8442076 Passcode: 10115141

Live webcast and replay: www.aimco.com/investors

 

Supplemental Information

The full text of this Earnings Release and the Supplemental Information referenced in this release are available on Aimco’s website at www.aimco.com/investors.

Glossary & Reconciliations of Non-GAAP Financial and Operating Measures

Financial and operating measures found in this Earnings Release and the Supplemental Information include certain financial measures used by Aimco management that are measures not defined under accounting principles generally accepted in the United States (“GAAP”). These measures are defined in the Glossary in the Supplemental Information and reconciled to the most comparable GAAP measures.

About Aimco

Aimco is a real estate investment trust focused on the ownership and management of quality apartment communities located in select markets in the United States. Aimco is one of the country’s largest owners and operators of apartments, with ownership interests in 182 communities in 22 states and the District of Columbia. 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.

Forward-looking Statements

This Earnings Release and Supplemental Information contain forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected results and specifically forecasts of first quarter and full year 2018 results, including but not limited to: FFO, Pro forma FFO and selected components thereof; AFFO; Aimco redevelopment/development investments and projected yield on such investments, timelines and Net Operating Income contribution; expectations regarding sales of Aimco apartment communities and the use of proceeds thereof; and Aimco liquidity and leverage metrics.

These forward-looking statements are based on management’s judgment as of this date, which is subject to risks and uncertainties. Risks and uncertainties include, but are not limited to: Aimco’s ability to maintain current or meet projected occupancy, rental rate and property operating results; the effect of acquisitions, dispositions, redevelopments and developments; Aimco’s ability to meet budgeted costs and timelines, and achieve budgeted rental rates related to Aimco redevelopments and developments; and Aimco’s ability to comply with debt covenants, including financial coverage ratios.

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 Aimco’s control, including, without limitation:

  • Real estate and operating risks, including fluctuations in real estate values and the general economic climate in the markets in which Aimco operates and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the amount, location and quality of competitive new housing supply; the timing of acquisitions, dispositions, redevelopments and developments; and changes in operating costs, including energy costs;
  • Financing risks, including the availability and cost of capital markets’ financing; the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; and the risk that earnings may not be sufficient to maintain compliance with debt covenants;
  • Insurance risks, including the cost of insurance, and natural disasters and severe weather such as hurricanes; and
  • Legal and regulatory risks, including costs associated with prosecuting or defending claims and any adverse outcomes; the terms of governmental regulations that affect Aimco and interpretations of those regulations; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of apartment communities presently or previously owned by Aimco.

In addition, Aimco’s 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 Aimco’s 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 the notes thereto, as well as the section entitled “Risk Factors” in Item 1A of Aimco’s Annual Report on Form 10-K for the year ended December 31, 2016, and the other documents Aimco files from time to time with the Securities and Exchange Commission.

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. This press release does not constitute an offer of securities for sale.

       
Consolidated Statements of Operations                
(in thousands, except per share data) (unaudited)
 
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
REVENUES
Rental and other property revenues attributable to Real Estate $ 231,509 $ 227,658 $ 918,148 $ 899,891
Rental and other property revenues of partnerships served by Asset Management business 18,719 18,406 74,046 74,640
Tax credit and transaction revenues 5,001   3,429   13,243   21,323  
Total revenues 255,229   249,493   1,005,437   995,854  
 
OPERATING EXPENSES
Property operating expenses attributable to Real Estate 79,120 76,021 318,939 317,957
Property operating expenses of partnerships served by Asset Management business 8,995 8,757 35,440 36,956
Depreciation and amortization 97,348 87,710 366,184 333,066
General and administrative expenses 12,058 11,255 43,657 46,784
Other expenses, net 4,544 5,656 11,353 14,295
Provision for real estate impairment loss [1] 35,881     35,881    
Total operating expenses 237,946   189,399   811,454   749,058  
Operating income 17,283 60,094 193,983 246,796
Interest income 2,081 1,956 8,332 7,797
Interest expense (49,193 ) (50,484 ) (194,615 ) (196,389 )
Other, net 92   530   7,694   6,071  
(Loss) income before income taxes and gain on dispositions (29,737 ) 12,096 15,394 64,275
Income tax benefit 17,248   8,739   32,126   25,208  
(Loss) income before gain on dispositions (12,489 ) 20,835 47,520 89,483
Gain on dispositions of real estate, net of tax 298,678   156,564   299,559   393,790  
Net income 286,189 177,399 347,079 483,273
Noncontrolling interests:
Net income attributable to noncontrolling interests in consolidated real estate partnerships (7,569 ) (3,160 ) (9,084 ) (25,256 )
Net income attributable to preferred noncontrolling interests in Aimco OP (1,938 ) (1,963 ) (7,764 ) (7,239 )
Net income attributable to common noncontrolling interests in Aimco OP (12,293 ) (7,869 ) (14,457 ) (20,368 )
Net income attributable to noncontrolling interests (21,800 ) (12,992 ) (31,305 ) (52,863 )
Net income attributable to Aimco 264,389 164,407 315,774 430,410
Net income attributable to Aimco preferred stockholders (2,149 ) (2,156 ) (8,594 ) (11,994 )
Net income attributable to participating securities (143 ) (251 ) (319 ) (635 )
Net income attributable to Aimco common stockholders $ 262,097   $ 162,000   $ 306,861   $ 417,781  
 
Net income attributable to Aimco per common share – basic $ 1.68   $ 1.04   $ 1.96   $ 2.68  
 
Net income attributable to Aimco per common share – diluted $ 1.67   $ 1.03   $ 1.96   $ 2.67  
 
Weighted average common shares outstanding – basic 156,423   156,171   156,323   156,001  
 
Weighted average common shares outstanding – diluted 156,878   156,540   156,796   156,391  
[1]  

In January 2018, Aimco agreed to sell its interests in the entities owning the La Jolla Cove property in settlement of legal actions filed in 2014 by a group of disappointed buyers who had hoped to acquire the property. As a result of the settlement, Aimco recognized in its 2017 results a gross impairment loss of $35.8 million, $25.6 million of which relates to the establishment of a deferred tax liability assumed at acquisition. Upon closing of the transaction, the tax liability will be assumed by the buyer, resulting in no economic loss to Aimco. The remaining $10.2 million accounting loss is offset by cash distributions paid to Aimco during its ownership and avoided legal costs for continued litigation. On an economic basis, Aimco agreed to sell the entity at roughly its purchase price, adjusted for retained cash distributions and avoided legal costs.

 
Consolidated Balance Sheets
(in thousands) (unaudited)
   

December 31,
2017

December 31,
2016

Assets
Real estate $ 7,927,753 $ 7,931,117
Accumulated depreciation (2,522,358 ) (2,421,357 )
Net real estate 5,405,395 5,509,760
Cash and cash equivalents 60,498 45,821
Restricted cash 34,827 36,405
Goodwill 37,808 37,808
Other assets 234,931 255,960
Assets held for sale 17,959
Assets of partnerships served by Asset Management business:
Real estate, net 224,873 245,648
Cash and cash equivalents 16,288 15,423
Restricted cash 30,928 33,501
Other assets 15,533   52,492  
Total Assets $ 6,079,040   $ 6,232,818  
 
Liabilities and Equity
Non-recourse property debt secured by Aimco Real Estate communities $ 3,563,041 $ 3,648,623
Debt issue costs (17,932 ) (18,347 )
Non-recourse property debt, net 3,545,109 3,630,276
Term loan, net 249,501
Revolving credit facility borrowings 67,160 17,930
Accrued liabilities and other 200,540 218,937
 
Liabilities of partnerships served by Asset Management business:
Non-recourse property debt, net 227,141 236,426
Accrued liabilities and other 19,812 62,630
Deferred income [1] 12,487   18,452  
Total Liabilities 4,321,750   4,184,651  
 
Preferred noncontrolling interests in Aimco OP 101,537 103,201
Equity:
Perpetual preferred stock 125,000 125,000
Class A Common Stock 1,572 1,569
Additional paid-in capital 3,900,042 4,051,722
Accumulated other comprehensive income 3,603 1,011
Distributions in excess of earnings (2,367,073 ) (2,385,399 )
Total Aimco equity 1,663,144   1,793,903  
Noncontrolling interests in consolidated real estate partnerships (1,716 ) 151,121
Common noncontrolling interests in Aimco OP (5,675 ) (58 )
Total equity 1,655,753   1,944,966  
Total liabilities and equity $ 6,079,040   $ 6,232,818  
[1]   Deferred income primarily represents cash received by Aimco and other amounts required by GAAP to be recognized in earnings in future periods as Aimco performs certain responsibilities under tax credit agreements or as other events occur. Please refer to the Glossary for information about the Asset Management business and a projection of the timing of income recognition related to the tax credit arrangements.
 

Contacts

Aimco
Investor Relations
Lynn Stanfield, 303-793-4661
Senior Vice President, Finance
investor@aimco.com

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