Correcting and replacing aimco reports fourth quarter 2012 results
Denver--(business wire)--in the january 2013 table under "rental rates," the new lease rent increases should read 2.1% (sted 3.1%). renewal rent increases and weighted average rent increases as initially reported are not impacted by this correction. the correction has also been made to the earnings release and supplemental schedules available on aimco’s website at http://www.aimco.com/investors/financial-reports/quarterly-earning-reports. the corrected release reads: aimco reports fourth quarter 2012 results apartment investment and management company (“aimco”) (nyse: aiv) announced today its fourth quarter 2012 results. chairman and chief executive officer terry considine comments: “aimco had a solid 2012. profitability is up with conventional same store noi growth of 6.5%, the highest rate of annual growth in six years. portfolio quality is also up with average revenue per unit in our conventional portfolio increasing nearly 8% to $1,362. redevelopment investment tripled to $100 million. but, leverage is down: the ratio of debt plus preferred equity to annualized fourth quarter ebitda declined by about two times from 9.6 times to 7.7 times.” considine adds: “we look for 2013 to be another good year with increasing profitability in operations, disciplined upgrading of our portfolio, increased investment in redevelopment, lower leverage, and further simplification leading to lower offsite costs.” financial results full year pro forma ffo up 12%, affo up 31%* full year * full year 2011 financial results include a deduction of $0.15 per share related to debt prepayment penalties and the write-off of deferred loan costs incurred in connection with a refinancing and securitization transaction during second quarter 2011. excluding these charges, comparable full year 2011 pro forma ffo and affo per share were $1.64 and $1.02, respectively. on this comparable basis, full year 2012 pro forma ffo and affo increased 12% and 31%, respectively, compared to 2011. pro forma ffo - pro forma ffo increased 24% when compared to fourth quarter 2011 as a result of: improved property operating results; additional income from increased ownership in our consolidated properties; lower preferred stock dividends due to $600.9 million of redemptions during 2012; and lower interest expense. these positive results were somewhat offset by lower income from discontinued operations. pro forma ffo was $0.02 per share above the midpoint of aimco's guidance range of $0.47 to $0.53 per share. adjusted funds from operations - affo increased 90% when compared to fourth quarter 2011 as a result of pro forma ffo growth, the timing of capital replacements spending during 2012, and lower capital replacements spending due to the sale of nearly 11,000 apartment units during 2012. as aimco's portfolio is concentrated in fewer properties with higher margins, affo is expected to grow at a faster rate than pro forma ffo growth. property operations aimco's property operations consist primarily of conventional real estate operations, which relate to aimco's diversified portfolio of market-rate apartment communities. aimco also operates a portfolio of affordable properties, which consists of properties with rents that are generally paid, in whole or in part, by a government agency. over the next four to five years, aimco expects to dispose of these affordable properties and reinvest capital in its conventional portfolio. 2012 total same store noi up 6.2% conventional same store results rental rates 2.1% affordable same store results - for fourth quarter 2012, average daily occupancy for the affordable portfolio was 98.9%, an increase of 1.2% from fourth quarter 2011, while average revenue per unit increased 1.1% from $970 to $981 per unit. portfolio management aimco's portfolio strategy seeks predictable rent growth from a portfolio of a, b and c-quality conventional properties, averaging b/b+ in quality, and diversified among the largest coastal and job growth markets in the u.s., as measured by total apartment value. aimco measures conventional property asset quality based on rents compared to local market average rents as reported by reis, a third-party provider of commercial real estate performance information and analysis. aimco defines asset quality as follows: a-quality assets are those with rents greater than 125% of local market average; b-quality assets are those with rents 90% to 125% of local market average; and c-quality assets are those with rents less than 90% of local market average. for third quarter 2012, the most recent period for which reis information is available, aimco's conventional property rents averaged 102% of local market average rents. aimco's target markets are primarily coastal markets, and also include several sun belt cities and chicago, illinois. in executing its portfolio strategy, aimco expects to sell each year the lowest-rated 5% to 10% of its portfolio and to invest the proceeds from such sales in redevelopment and acquisition of higher-quality properties. through this disciplined approach to capital recycling, from 2007 through 2012, aimco increased its year-end conventional portfolio average revenue per unit at a compound annual growth rate of 6.1%, about three times that of market rent growth during the same period. aimco's outsized growth reflects the impact of portfolio improvements through dispositions, redevelopment and acquisitions. conventional property revenue per unit up 7.9% to $1,362 fourth quarter 2012 conventional portfolio average revenue per unit was $1,362, an 7.9% increase compared to fourth quarter 2011, as a result of year-over-year revenue growth of 5.1% and the sale of conventional properties during 2011 and 2012 with average revenues per unit substantially lower than those of the retained portfolio. dispositions - in fourth quarter 2012, aimco sold eight conventional properties and 16 affordable properties with 1,865 and 1,417 units, respectively, for $271.1 million in gross proceeds. average revenue per unit for the conventional properties sold during the quarter was $1,087, compared to the retained portfolio average of $1,362 per unit. aimco's share of net sales proceeds after distributions to limited partners, repayment of existing property debt and transaction costs was $123.7 million. sale of asset-management business - during the fourth quarter, aimco closed on the sale of the napico portfolio, its legacy asset management business. the transaction was primarily seller financed, and the associated notes will be repaid over the next six years. aimco anticipates recognizing between $6 and $8 million in funds from operations over the expected term of the notes. redevelopment during the fourth quarter, aimco began multi-phase capital projects at park towne place and the sterling, both located in center-city philadelphia. the initial phases of these projects consist of capital replacement and capital improvement investments, with redevelopment to follow. balance sheet and liquidity components of aimco leverage weighted avg.maturity (yrs.) weighted avgrate leverage ratios aimco's leverage targets are: debt and preferred equity to ebitda of less than 7.0x; and ebitda coverage of interest and preferred dividends of greater than 2.5x. aimco also focuses on debt to ebitda and ebitda coverage of interest ratios. see the glossary for definitions of these metrics. trailing- twelve-month ebitda coverage of interest and preferred dividends ratios are provided on a pro forma basis to exclude dividends on preferred stock redeemed during 2012. future leverage reduction is expected from earnings growth generated by the current portfolio and by regularly scheduled property debt amortization funded from retained earnings. liquidity aimco's recourse debt at december 31, 2012, was limited to its revolving credit facility, which aimco uses for working capital purposes and to secure letters of credit. borrowings bear interest at a rate set forth on a pricing grid which rate varies based on aimco's leverage. the revolving credit facility matures in december 2014, and may be extended for two additional one-year periods, subject to certain conditions. at the end of fourth quarter, aimco had no outstanding borrowings on its revolving credit facility and available capacity was $454.6 million, net of $45.4 million of letters of credit backed by the facility. also at the end of the quarter, aimco had on hand $84.4 million of cash. equity activity dividend - as announced on january 31, 2013, aimco's board of directors declared a quarterly cash dividend of $0.24 per share of class a common stock for the quarter ended december 31, 2012, which, on an annualized basis, is a 26% increase compared to the dividends paid during 2012. the fourth quarter 2012 dividend is payable on february 28, 2013, to stockholders of record on february 15, 2013. earnings conference call live webcast and replay: http://www.aimco.com/investors/events-presentations/webcasts supplemental information the full text of this earnings release and the supplemental information referenced in this release are available on aimco's website http://www.aimco.com/investors/financial-reports/quarterly-earning-reports. 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 not calculated in accordance with accounting principles generally accepted in the united states, or gaap. these measures are defined in the glossary in the supplemental information and, where appropriate, reconciled to the most comparable gaap measures. about aimco 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 265 communities in 24 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. 2013 outlook year please refer to notes below. 2013 pro forma ffo reconciliation $ per share(at the mid-point) 2013 affo reconciliation $ per share(at the mid-point) first quarter 2013 outlook first quarter notes to 2013 outlook and 2013 pro forma ffo reconciliation 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 2013 results, including but not limited to pro forma ffo and selected components thereof, capital replacements spending, and affo; redevelopment project investments, timelines and stabilized rents; and timing of other investment activity. 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; the effect of acquisitions, dispositions and redevelopments; and our 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 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, dispositions and redevelopments; 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 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, 2011, 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. three months endeddecember 31, year endeddecember 31, gain (loss) on dispositions of interests in unconsolidated real estate and other, net net (income) loss attributable to noncontrolling interests in consolidated real estate partnerships net income attributable to preferred noncontrolling interests in aimco operating partnership loss from continuing operations attributable to aimco common stockholders income from discontinued operations attributable to aimco common stockholders three monthsended december 31, year endeddecember 31,
