Apartment Investment And Management Company · NYSE:AIV
Apartment Investment And Management — Investor Presentation (March 2001)
33 slides from Apartment Investment And Management's investor presentation, Mar 19, 2001
Slide 1: Apartment Investment and Management Company
AIMCO AIMCO Apartment Investment and Management Company March 2001
Slide 2: Forward-looking statements
This presentation contains information that is forward-looking, including statements regarding the Company's future financial performance. Actual results may differ materially from those described and could be affected by a variety of factors including economic conditions; changes in interest rates;
Slide 3: Ten Principles That Define Aimco
Ten Principles That Define Aimco + Own and operate apartments + Buy at a discount to replacement cost + Realize economies of scale + Operate locally + Diversify geographically + Measure profitability after capital replacements: “AFFO” + Retain cash cushion for flexibility + Avoid development risk +
Slide 4: Aimco Size and Safety: Diversified Business Segments
Aimco Size and Safety a, Diversified Business Segments Aimco’s Free Cash Flow, $694 million in 2000 and $207 million in the fourth quarter of 2000 stems from four business segments with the significant majority from rental activities. Contribution to Aimco Total Free Cash Flow Quarter ended 1231/00
Slide 5: Aimco Size and Safety: Geographic Diversification
Aimco Size and Safety Geographic Diversification Other Markets 18.6% Aimnco is one of the most geographically diversified Property companies. With over 1,720 properties located in 47 states, the District of Columbia : and Puerto Rica, aimeo is well insulated from the rrewowss effects of local market
Slide 6: Diversified Sources Of Free Cash Flow
Diversified Sources Of Free Cash Flow + The Company’s portfolio is also diversified among a wide range of apartment community types, including garden and high-rise apartments, corporate and student housing, as well as among a wide range of price points. Composition of Aimco Real Estate Free Cash Flo
Slide 7: "Pruning", Reinvestment and Controlling Obsolescence
“Pruning”, Reinvestment and Controlling Obsolescence + Aimco has consistently followed an aggressive strategy of pruning its portfolio of assets with less attractive outlooks. + The company assesses the long-term prospects for each asset and disposes of assets which are non strategic or rank as unde
Slide 8: Aimco Size and Safety: Withdrawing from Third Party Management
Aimco Size and Safety Aimco is withdrawing from the less profitable Third Party Management Business Units Managed For Third Parties Has Declined 200,000 160,000 120,000 80,000 40,000 i i ft ft f 1996 1997 1998 1999 2000
Slide 9: Aimco Size and Safety: Deepest Benches
Aimco Size and Safety AIMCO Aimco has built one of the “deepest benches” in the industry Aimco Senior Management
Slide 10: Aimco versus Multifamily Comparable Average
Aimco versus Multifamily Comparable Average Dividend Payout Ratio Aime ‘Muti-Family Comparable Aug
Slide 11: 2001 outlook and FFO guidance
2001 The decline in the stock market and apparent economic recession make Aimco cautious, as announced in the fourth quarter earnings conference call. If as a result of these economic conditions, Aimco’s transaction activities fall below what has happened historically then full year FFO results will
Slide 12: Slide 12
Slide 13: AIMCO is An Operating Business
AIMCO is An Operating Business + Aimco has undertaken to build a “business” as something more and different than a portfolio of properties. This makes property operations central to Aimco, as opposed to the traditional real estate company which features the developer and the financier. + Ron Monson
Slide 14: Aimco's property operations principles
+ Aimco’s property operations are built on the following principles: + Attracting and retaining high quality personnel. + Processes to run its business more efficiently. + Product that focuses on the customer.
Slide 15: Management makes a difference: relative performance
* Aimco assumes that management makes a difference, comparable properties are worth more with Aimco management. We can measure this: Axiometric Relative Performance Same Store NOI Income Growth Aimco Aimco. Compan Better Worse Even AYear test 1998 19992000 Average ASN 10 6 a Avalon Bay. 47 62% 49% 1
Slide 16: People
People * Acquisition of multiple companies has permitted Aimco to select the best employees. + Training and retention become more important...and Aimco attracts better people who value the training and career development. + Employee turnover declined from 65% in 1997 to 49% in 2000 + Human Resources
Slide 17: People
People * Aimco culture is one of measurement, recognition and pay for performance, monthly and quarterly, publicized and paid most often in equity. ® Significant “Switching Costs” for 53 middle managers. + $16 million = 26 months compensation * “Aimco pace” = “do it now”
Slide 18: Process
Process Balance between what is central and what is local in 25 Regional Operating Centers Electronic communication with employees today, and increasingly with residents - location of senior management across the country but involved as need be in any one property. Scale dictates automation and perm
Slide 19: Product
Product Price Points Average Monthly Rent > $800 Average Monthly Rent $700-$800 Average Monthly Rent $600-$700 Average Monthly Rent $500-$600 Average Monthly Rent less than $500 Affordable Student Communities Customer Interface + Internet + Monthly Resident Statement + Electronic Rent payment Custom
Slide 20: Stockholder Communications
AIMCO Stockholder Communications
Slide 21: New Developments
New Developments * REIT Modernization Act permits consolidation of entire Aimco service business. In the first quarter, unconsolidated subsidiaries will now be consolidated. + Aimco will include additional disclosures beginning in the first quarter: + Free Cash Flow from Business Components will be
Slide 22: Balance Sheet Summary
Balance Sheet Summary * Reduction of short term debt is an immediate goal + Inthe 4% quarter of 2000 the Oxford Term Loan was paid down frorn $279 million to $137 million. + Preferred Stock Series Q proceeds will be used to pay down short term debt + The Aimco Credit Facility maturity date is July,
Slide 23: Balance Sheet Summary: OTEF acquisition
Balance Sheet Summary + The OTEF acquisition functions as an Equity Financing. + Issuance of $106 million of Common Equity at $48.51 per share. + Aimco acquisition price is at 91% of OTEF NAV + Effective issuance price is $53.30 per share with no transaction costs + Issuance of $100 million of Conve
Slide 24: Balance Sheet Summary
Balance Sheet Summary + Aimco’s ratios have remained constant + 2000 Free Cash Flow coverage of Interest Expense was 2.62:1 (compared to 2.68:1 in 1999) + 2000 Free Cash Flow coverage of Interest Expense and Preferred Dividends was 2.04:1 (compared to 2.01:1 in 1999) Oxford Portfolio has opportuniti
Slide 25: Balance sheet discipline while increasing footings
In the past 12 months, Aimco has maintained balance sheet discipline while increasing footings by 33%. Mortgage Debt Normesourse Comperate Shert-Tarm Debt Total Debt Perpatual Prefarad Stock Comenttie Prefered Stock ‘Common Stock & OP Units (at market) Total Permanent Capital otal Market Capital Lin
Slide 26: Aimco Policies Regarding Financial Ratios and Balance Sheet Liquidity
Aimco Policies Regarding Financial Ratios and Balance Sheet Liquidity * Maintain Free Cash Flow coverage of interest and preferred dividends of greater than 2.0 Preferred equity not to exceed 15% of total market capitalization Line of credit balance outstanding of no more than two year's retained ca
Slide 27: Aimco Long-Term Property Debt Amortization
Aimco Long-Term Property Debt Amortization (in millions) $360 $300 $260 $200 $160 $100 $60 so 4 $308 $228 $160 S74 $74 2001 2002 2008 2004 m Amortization mCumulative 29
Slide 28: Aimco Issues Equity
Aimco Issues Equity: + To fund accretive uses, with an expected levered IRR > 20%. + Uses convertible preferred with short “call protection” to issue common shares at prices > current market. Date of Redemption Amount Conversion. {in Aimco's Conversion Security millions) Option Price TOPRS $35 12.99
Slide 29: Managing Financial Risk
- Hanaging, Financial Risk aimco EE REO IE LESTE Baseline Capital Structure Composition* Long-term propertydebt — |Shortterm debt [Perpetual Preferred CConvertible Preferred Common and OF unit equity $11,000 $10,000 33000 3000 2 Sro00 = $6,000 S ss000 G e000 m $3,000 32000 i000 30 12/00 2001(E) 2002
Slide 30: Superior Return on Assets and Return on Equity
Superior Return on Assets and Return on Equity + Aimco Generates Return on Assets and Return on Equity Higher Than Comparable REIT's + These measures underscore Aimco’s price discipline on acquisitions Based on AFFO Based on FFO Year Ended Year Ended December 31, December 31, 2000 1999 2000 1999 Ret
Slide 31: Aimco Net Asset Value at 12/31/00
Aimco Net Asset Value at 12/31/00 Total implied value of real estate 9,124,809 Totalimplied value of servicebusinesses 492,307 Total implied value of fee income 78,980 Book Value of Other Current Assets 15,71 Total Assets 10,611,267 Total Liabilities 75,792,495 WET ASSET VALUE “$4818,772_ Shares and
Slide 32: Leader at Building NAV
Leader at Building NAV AIMCO has proven itself to be a leader in growing net asset value, both for the multifamily sector and for REITs as a whole. Between the third quarter of 1996 and the fourth quarter of 2000, the Company achieved a compounded annual NAV growth rate of 20.8%, significantly outpe
Slide 33: Projected 2001 Cash Cushion of $135 million
Projected 2001 Cash Cushion of $135 million Cash Cushion 140000 470000 ‘00000 80,000 (thousands) 6 oop 40,000 mig 20,000 i000 2000 : iso 2001 SE SE OE oe” Fu pig “ 880 9730 12191 Year not Period 35
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