Apartment Investment And Management Company · NYSE:AIV
Apartment Investment And Management — Investor Day (February 2010)
70 slides from Apartment Investment And Management's investor day presentation, Feb 17, 2010
Slide 1: Aimco Investor Day 2010
1 Riverside Park - Alexandria, VA Park Towne Place - Philadelphia, PA Monterey Grove - San Jose, CA River Club - Edgewater, NJ Palazzo West at Park LaBrea - Los Angeles, CA 3400 Avenue of the Arts - Orange County, CA AIMCO Apartment Investment and Management Company Investor Day 2010
Slide 2: Forward-looking statements
2 This presentation contains forward-looking statements within the meaning of the federal securities laws, including statements regarding projected results and specifically forecasts of 2010 financial results. These forward-looking statements are based on management's judgment as of this date and in
Slide 3: Welcome
3 Welcome
Slide 4: Miles Cortez, EVP & Chief Administrative Officer
4 Miles Cortez, EVP & Chief Administrative Officer Areas of responsibility: Administration, Government Relations, Communications and Special Projects Years with Aimco: Nine - plus six years as outside counsel Previous positions within Aimco: EVP, General Counsel & Secretary Employment prior to Aimco
Slide 5: Today's Presentation
5 Today's Presentation Introduction Aimco Management Team Portfolio Strategy Property Operations, Redevelopment and Capital Recycling Break Balance Sheet and Liquidity Net Asset Value 2010 Guidance Q&A
Slide 6: Introduction
6 Introduction
Slide 7: Terry Considine, Chairman & CEO
7 Terry Considine, Chairman & CEO Years with Aimco: 35, took Aimco public in 1994 Years in real estate: 40 Other Experience: Colorado State Senator, 1987-1992 Chairman of the Board, The Lynde and Harry Bradley Foundation
Slide 8: It's a good time to invest in apartments and in Aimco
8 It's a good time to invest in apartments. It's a good time to invest in Aimco. Introduction
Slide 9: Aimco Has a Simple Business Strategy
9 Investing in Aimco Aimco Has a Simple Business Strategy Own and operate 100,000 B/B+ quality apartments Well located in 20 largest U.S. markets Opportunistic redevelopment Finance with property-level, non-recourse, long-dated, fixed-rate and amortizing debt
Slide 10: Aimco Key Valuation Factors
10 Aimco Key Valuation Factors Aimco holds high quality assets. Aimco is a reliable operator. Aimco has limited balance sheet risk. Aimco has high quality of earnings. Aimco trades at a discount to Net Asset Value. In a rising market, Aimco financial leverage will magnify upsides.
Slide 11: Aimco Management Team
11 Aimco Management Team
Slide 12: Lisa Cohn, EVP & General Counsel
12 Lisa Cohn, EVP & General Counsel Areas of responsibility: Legal, Risk/Insurance, Human Resources Years with Aimco: Eight Previous positions within Aimco: Senior Vice President, Assistant General Counsel and Assistant Secretary Vice President, Assistant General Counsel and Assistant Secretary Empl
Slide 13: Aimco Board of Directors
13 Aimco Board of Directors Terry Considine Chairman of the Board and Chief Executive Officer James N. Bailey Director since 2000, Chairman of the Nominating and Corporate Governance Committee Founder and Senior Managing Director, Cambridge Associates, LLC, a leading investment consulting firm to so
Slide 14: Corporate Governance
14 Corporate Governance Aimco's governance scores exceed 96% of the real estate sector and 72% of the S&P 500. Majority voting - Aimco is a leader among its peers. Aimco's directors are elected annually. Each independent member sits on every Board committee. Only one insider sits on the Board. Good
Slide 15: Aimco Management Team
15 Aimco Management Team Terry Considine Chairman & CEO Ernie Freedman EVP & CFO Tim Beaudin President & COO Lisa Cohn EVP & General Counsel Miles Cortez EVP & CAO Property Operations Asset Management Redevelopment Acquisitions/Dispositions Legal Human Resources Risk Finance Accounting Investor Rela
Slide 16: Today's Speakers
16 Ernie Freedman EVP & CFO Tim Beaudin President & COO Tony D'Alto EVP Operations John Bezzant SVP Transactions Patti Fielding EVP & Treasurer Today's Speakers
Slide 17: Experienced Leadership Team
17 Experienced Leadership Team Aimco Management Team Mr. Considine has led Aimco for 35 years and has more than 40 years of experience in the real estate industry. The senior management team has an average tenure with Aimco of seven years. Every member of the senior management team has been promoted
Slide 18: Talent Pipeline
18 Talent Pipeline Aimco systematically recruits and develops individuals with the skills, experience and expertise to contribute to Aimco. Aimco has a formal talent evaluation and succession planning process that involves management and, for officers, Aimco's Board of Directors. The officer success
Slide 19: Portfolio Strategy
19 Portfolio Strategy
Slide 20: Ernie Freedman, EVP & CFO
20 Ernie Freedman, EVP & CFO Areas of Responsibility: Finance, Accounting, IT, Investor Relations Years with Aimco: Three Years in Real Estate: 15 Previous positions within Aimco: Senior Vice President, Finance Senior Vice President, Financial Planning and Analysis Employment Prior to Aimco: Chief F
Slide 21: Portfolio Strategy
21 Portfolio Strategy Focus on B/B+ quality apartments Concentrate capital in 20 target markets (with a limited allocation to affordable apartments) Continually improve portfolio through capital recycling
Slide 22: Focus on B/B+ quality apartments
22 Asset Quality We define quality by comparing rents to local market averages: A-quality: rents greater than 125% of market average B-quality: rents 90% - 125% of market average C-quality: rents less than 90% of the market average We prefer B/B+ quality apartments because: Rents are less volatile t
Slide 23: Asset Quality in Aimco's Markets
23 Represent average 3Q 2009 rents for all conventional properties held at year-end, including same store properties, redevelopment properties and other conventional properties. 3Q 2009 REIS Asset Quality in Aimco's Markets Target B/B+ rents ~100 - 125% of market 63% of NOI in markets with rents 90
Slide 24: Aimco Asset Quality vs Peers
24 * 3Q 2009 Average Rents as % of Market in Aimco Target Markets for peer companies has been computed based on average rents by market as reported by peer companies, weighted by peer units in each of Aimco's Target Markets. Aimco Asset Quality vs Peers Aimco asset quality in its target markets, as
Slide 25: Target Market Characteristics
25 Target Market Characteristics High concentration of population, apartment units & apartment market capitalization. Geographic and employment diversification. Historically strong returns with reduced volatility as part of a market-cap weighted portfolio. Atlanta Boston Chicago Dallas-Fort Worth De
Slide 26: Market Allocation Strategy
26 Market Allocation Strategy Strategic Baseline Market Assessment Allocation Target Investment Recommendation On an annual basis, review long-term desired allocation. Based on apartment market capitalization. Quarterly assessment of current conditions, returns, risk and strategic attractiveness. Re
Slide 27: Capital Allocation as of 12/31/2009
27 Capital Allocation as of 12/31/2009 87% of total capital is invested in conventional real estate. 88% of conventional property capital is concentrated in Aimco's 20 target markets.
Slide 28: Property Operations, Redevelopment and Capital Recycling
28 Property Operations, Redevelopment and Capital Recycling
Slide 29: Tim Beaudin, President & COO
29 Tim Beaudin, President & COO Areas of Responsibility: Property Operations, Transactions, Asset Management, Redevelopment and Construction Services Years with Aimco: Five Years in Real Estate: 28 Previous positions within Aimco: Executive Vice President and Chief Property Operations Officer Execut
Slide 30: Diversified Portfolio
30 Diversified Portfolio During 2009, NOI was essentially flat across our diversified portfolio. Growth in affordable NOI provided offset to same store conventional NOI decline. Lease-up of short cycle redevelopment business also offset same store conventional NOI decline.
Slide 31: Competitive Same-Store Operating Results
31 Competitive Same-Store Operating Results * Represents the average of results reported by AVB, CPT, EQR, ESS, HME, and UDR. 2009 growth for HME represents the mid-point of company guidance as the company has not reported 2009 results as of the date of this presentation. Operating performance compa
Slide 32: Consistent Investment in Physical Assets
32 Consistent Investment in Physical Assets Sustained rate of reinvestment in asset quality, notwithstanding the economy. Invested approximately $2.2 billion in the portfolio since 2005. Continued investment in properties through: Planned Replacement Program Energy investments Redevelopment where ap
Slide 33: Property Operations
33 Property Operations
Slide 34: Tony D'Alto, EVP Operations
34 Tony D'Alto, EVP Operations Areas of Responsibility: Property Operations Years with Aimco: Seven Previous positions within Aimco: Division Vice President, Gulf Division Operations Regional Vice President, South Florida Operations Employment prior to Aimco: Senior Vice President of Operations, Ala
Slide 35: Property Management Organization
35 Property Management Organization Joe Borges VP Central Tony D'Alto EVP Operations Karl Griggs VP New York Regina Harris VP South Keith Kimmel VP West Karyn Marasco VP Northeast Regional Property Managers Community Managers
Slide 36: 2010 Property Operations Objectives
36 2010 Property Operations Objectives Maximize revenues while reducing costs ADO - Maintain ADO (Average Daily Occupancy) north of 95% with continued high resident quality standards. Rates - Take advantage of higher demand markets with higher occupancies to increase rates using revenue management t
Slide 37: Market Outlook
37 Market Outlook Positive Momentum Going into 2010 Continued Weakness Mostly in Rate Boston Seattle Washington DC Atlanta Miami Houston Chicago Denver Jacksonville West Los Angeles Orange County Orlando Ft Lauderdale Phoenix Current demand continues to outpace prior year in most markets. Occupancy
Slide 38: Capital Recycling
38 Capital Recycling
Slide 39: John Bezzant, SVP Transactions
39 John Bezzant, SVP Transactions Areas of Responsibility: Transactions Years with Aimco: Four Years in Real Estate 24 Previous positions within Aimco: Senior Vice President, Redevelopment Employment Prior to Aimco: First Vice President, Asset Services, and First Vice President, Fund Management for
Slide 40: Capital Recycling Strategy
40 Capital Recycling Strategy Continuously increase portfolio quality Dispositions: Reduce investment in over-allocated conventional markets by selling 5 - 10% of lowest-rated assets annually ($350 - $700 million). Reduce owned affordable portfolio to 10% of NAV. Exit third party property management
Slide 41: 2010 Capital Recycling Plan
41 2010 Capital Recycling Plan Increase investment in conventional assets located in priority markets Priority market characteristics Target markets with highest 10-year projected returns Prioritize investments in under- allocated markets Improve current portfolio quality where rents are below local
Slide 42: Capital Recycling Case Study: Boston
42 Capital Recycling Case Study: Boston Portfolio: 12 properties, 4,250 units 4Q 2009 GAV: $512 million, 7% of year-end conventional property NAV 4Q 2009 average rents: $1,172, 27% below local market Strategy: Reduce investment in suburban assets and reinvest in Boston CBD, Cambridge, Back Bay
Slide 43: Capital Recycling Case Study: Phoenix
43 Capital Recycling Case Study: Phoenix Portfolio: 17 properties, 4,418 units 4Q 2009 GAV: $218 million, 4% of year-end conventional NAV 4Q 2009 average rents: $614, 9% below local market Strategy: Reduce overall investment to target allocation by selling lower- rated assets Conventional same store
Slide 44: Break
44 Break
Slide 45: Balance Sheet & Liquidity
45 Balance Sheet & Liquidity
Slide 46: Patti Fielding, EVP & Treasurer
46 Patti Fielding, EVP & Treasurer Areas of Responsibility: Debt Financing, Treasury Years with Aimco: 13 Years in Real Estate: 25 Previous positions within Aimco: Senior Vice President, Securities & Debt Vice President, Asset Management Employment Prior to Aimco: Vice President, Hanover Capital Par
Slide 47: Financing Strategy
47 Financing Strategy Property debt and perpetual preferred securities provide balance sheet safety Non-recourse debt ? limited entity risk. Single-property loans with 60% initial LTV. Discipline of amortization to 50% LTV at maturity. Long-dated, laddered maturities. Primarily fixed interest rates.
Slide 48: Aimco Debt Structure
48 Aimco Debt Structure Weighted-average maturity of enterprise-wide debt of approximately 8.5 years, 30% longer than Aimco's apartment peer average(2). Represents balances as of December 31, 2009 adjusted for 2010 repayments of $45 million of term debt. For purposes of this analysis, peer group is
Slide 49: Apartment Peer Leverage
49 * Aimco leverage as of 12/31/2009 based on real estate value as estimated by Aimco. Peer leverage as of 9/30/2009 computed as: total debt as reported by SNL Financial divided by real estate value as estimated by Green Street Advisors. Apartment peer leverage ranges from 50% to 60%, compared to Ai
Slide 50: Longer-Dated Maturities Reduce Risk
50 Longer-Dated Maturities Reduce Risk Aimco has an enterprise-wide weighted average maturity (WAM) of 8.5 years, 30% longer than our apartment peer average. Peer WAM ranges from 5.8 to 7.2 years with a weighted-average WAM of 6.5 years. * Aimco WAM as of 12/31/2009, peer data as of 9/30/2009 as rep
Slide 51: Longer WAM Mitigates Risk of Higher Leverage
1 Longer WAM Mitigates Risk of Higher Leverage Aimco's leverage carries less refunding and refinancing risk than peer weighted-average leverage due to Aimco's longer WAM. Peer AIV Wt Avg Weighted-average maturity 8.5 6.5 Debt-to-assets 64% 57% % Total capital subject to refunding annually 7.5% 8.8%
Slide 52: $180 Million Credit Facility
52 $180 Million Credit Facility Our bank partners: Joint Lead Arrangers: Bank of America and KeyBanc Capital Markets. Significant Participation from Wells Fargo. Current capacity: $136 million, net of $44 million of letters of credit. Revolver matures on May 1, 2011, with a one-year extension option
Slide 53: Credit Facility Covenants
53 Credit Facility Covenants On February 3, 2010, Aimco and its lenders agreed to reduce the minimum threshold for Debt Service Coverage and Fixed Charge Coverage ratios and to increase the maximum for the Secured Indebtedness ratio.
Slide 54: Reducing Leverage to Target
54 Reducing Leverage to Target Target leverage: EBITDA coverage of interest: 2.25x EBITDA coverage of interest and preferred dividends: 2.0x Current leverage: EBITDA coverage of interest: 1.96x EBITDA coverage of interest and preferred dividends: 1.64x Reduce leverage through cyclical NOI recovery a
Slide 55: 2010 Balance Sheet & Liquidity
55 2010 Balance Sheet & Liquidity Uses largely balanced with internal sources of cash. No debt maturities in 2010. Limited 2011 maturities. 2010 property debt activity will focus on loans maturing in 2012 to 2014 to lock in low current interest rates. Use of line of credit limited to short-term borr
Slide 56: Net Asset Value
56 Net Asset Value Ernie Freedman, EVP & CFO
Slide 57: Aimco Net Asset Value as of 12/31/2009
57 Aimco Net Asset Value as of 12/31/2009 97% of Aimco NAV is related to owning and operating apartments
Slide 58: Aimco Net Asset Value as of 12/31/2009
58 Aimco Net Asset Value as of 12/31/2009
Slide 59: Market-Level Conventional Cap Rate Analysis
59 Market-Level Conventional Cap Rate Analysis * Excludes conventional redevelopment properties
Slide 60: Conventional Redevelopment Properties
60 Conventional Redevelopment Properties * 4Q 2009 occupancy was 93.7%. Additional revenue represents occupancy at 95.0%.
Slide 61: 2010 Guidance
61 2010 Guidance Ernie Freedman, EVP & CFO
Slide 62: Guidance
Guidance 2010 FO $125 - $1.35 Total Portfolio NOI -1.0% to -3.0% sss NOI growth YOY -2.0% to -5.0% Revenue growth YOY 20.5% to -2.0% Expense growth YOY 1.5% to 2.5% ‘Occupancy 94.5% to 95.5% Recurring Investment Management Revenue $34M Expense $10M Taxes $13M Net $11M Non-Recurring Investment Manage
Slide 63: 2010 Same Store Conventional Portfolio
63 2010 Same Store Conventional Portfolio Same store properties are those that have reached a stabilized level of occupancy of at least 90% for twelve consecutive months. Full year 2010 same store results will include results associated with two stabilized redevelopment properties.
Slide 64: Schedule of 2010 Property Tours
64 Schedule of 2010 Property Tours Aimco is pleased to invite investors and analysts to attend any of the following property tours to be hosted by Miles Cortez, Aimco's Chief Administrative Officer, and Elizabeth Coalson, Vice President Investor Relations May 11 Los Angeles/Orange County May 12 San
Slide 65: Conclusion
65 Conclusion Terry Considine, Chairman & CEO
Slide 66: Aimco Key Valuation Factors
66 Aimco Key Valuation Factors Aimco holds high quality assets. Aimco is a reliable operator. Aimco has limited balance sheet risk. Aimco has high quality of earnings. Aimco trades at a discount to Net Asset Value. In a rising market, Aimco financial leverage will magnify upsides.
Slide 67: Net Asset Value Reconciliations
67 Net Asset Value Reconciliations
Slide 68: Aimco Net Asset Value as of 12/31/2009
Reconciliation of property debt, preferred shares, and other assets and liabilities, net may be found on page 70. 68 Aimco Net Asset Value as of 12/31/2009 1 Reconciliation of property NOI to Aimco's financial reports may be found on page 69. 2 Represents 12/31/2009 book value of Lincoln Place ($139
Slide 69: NOI Reconciliations
69 NOI Reconciliations Aimco's NAV model assumes a 3.5% management fee, which is consistent with Aimco's actual expenses as well as assumptions used by third-parties. Revenue and operating expenses for the trailing twelve months are based on Aimco's ownership during the period. NOI adjustments for c
Slide 70: Balance Sheet Reconciliations
70 Balance Sheet Reconciliations Aimco's proportionate share of liabilities on assets held for sale (AHFS) and deferred income are included in other liabilities ($471,879) and have not been separately disclosed at 12/31/2009. Deferred income is excluded from liabilities for NAV purposes as the oblig
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