Apartment Investment And Management Company · NYSE:AIV
Apartment Investment And Management — Bank of America Merrill Lynch Global Real Estate Conference 2013
21 slides from Apartment Investment And Management's conference presentation, Sep 11, 2013
Slide 1: Bank of America Merrill Lynch Global Real Estate Conference September 2013
1 BANK OF AMERICA MERRILL LYNCH GLOBAL REAL ESTATE CONFERENCE SEPTEMBER 2013
Slide 2: Strategic Areas of Focus
2 STRATEGIC AREAS OF FOCUS • Higher income, therefore older, customer • Peer-leading operating cost control • Lower turnover • Above-average property operating results over cycle • Diversified across markets and price points to reduce volatility • Disciplined capital recycling to upgrade portfolio •
Slide 3: Competitive revenue growth
3 Competitive revenue growth At the midpoint of guidance, Aimco’s revenue growth is expected to be slightly higher than 2012, while peers expect revenue growth to slow. • Aimco’s first half 2013 revenue growth is 50 basis points ahead of 2012, compared to the peer average of 90 basis points behind
Slide 4: Lower-turnover business model
4 Lower-turnover business model Greater NOI contribution: Renewal lease rate increases are generally higher than new lease rate increases; lower costs associated with vacancy, turnover and marketing. More predictable operating results: Renewal lease rate increases are less volatile; operating co
Slide 5: Designing portfolio around target customers while maintaining adequate diversification
5 Designing portfolio around target customers while maintaining adequate diversification PORTFOLIO MANAGEMENT Over time, Aimco intends to exit Houston, Jacksonville and Orlando, primarily due to lower market average rents driven by limited constraints on supply growth. Also over time, Aimco intends
Slide 6: Sell Lowest Rated Properties; Reinvest in Higher-Rent Properties
6 Sell Lowest Rated Properties 2012 & YTD 6/30/2013 Dispositions Conventional properties 24 Affordable properties 50 Gross proceeds (Aimco share) $607M Net proceeds (Aimco share) $272M Avg revenue per apartment home $861 Avg FCF IRR 6% - 7% Reinvest in Higher-Rent Properties 2012 & YTD 6/30/2013 Pro
Slide 7: Capital recycling contributes to high rate of Free Cash Flow/AFFO growth
7 Capital recycling contributes to high rate of Free Cash Flow/AFFO growth PORTFOLIO MANAGEMENT Sell Affordable properties and lowest rated Conventional properties: Lower average revenues per apartment home; lower NOI margins; located in submarkets with lower projected revenue growth. Invest in
Slide 8: Pipeline of opportunities within existing portfolio
8 Pipeline of opportunities within existing portfolio Redevelopment Phi losophy Land in quality locations appreciates over time. Older assets in quality locations provide opportunity for redevelopment. Redevelopment is a short-cycle business making it lower-risk than ground-up development. W
Slide 9: Elm Creek Townhomes, Elmhurst, Illinois
9 Rental rates on units leased to date 6% above rents projected at start of construction Project Summary: − Construction of five new buildings containing 28 townhome-style apartment homes, ad jacent to existing 372 apartment community owned and operated by Aimco. − Interiors include high-end finishe
Slide 10: Lincoln Place Apartments, Venice, California
10 Rental rates on units leased to date 17% above rents projected at start of construction LINCOLN PLACE APARTMENTS VENICE, CALIFORNIA Project Summary: − Total of 795 apartment homes (696 existing and 99 to be built). − Comprehensive exterior and interior redevelopment in three phases: − Phase I – 6
Slide 11: Pacific Bay Vistas, San Bruno, California
11 Rental rates on units leased to date 6% above rents projected at start of construction PACIFIC BAY VISTAS SAN BRUNO, CALIFORNIA Project Summary: − Complete interior and exterior redevelopment of al l 14 exist ing three-story bui ldings. − Apartment homes feature high-end interior f inishes includ
Slide 12: High demand for luxury apartments in West Los Angeles
12 High demand for luxury apartments in West Los Angeles THE PALAZZO AT PARK LA BREA LOS ANGELES, CALIFORNIA Project Summary: − Upgrading 115 penthouse units, areas common to the penthouse units, spa and fitness center. − New rooftop deck for exclusive use by penthouse residents completed in 3Q 2012
Slide 13: The Preserve at Marin, Corte Madera, California
13 Construction progressing, expect initial occupancy in 4Q 2013 THE PRESERVE AT MARIN CORTE MADERA, CALIFORNIA Project Summary: − Comprehensive interior and exterior redevelopment of all seven three-story buildings − Redesign of all apartment homes to feature large bay windows, modern kitchens, and
Slide 14: 2012 Starts create ~$2 of NAV per share
14 Seattle 2900 on First (2) San Francisco Preserve at Marin ($40M) Pacific Bay Vistas ($80M) Los Angeles The Palazzo West ($16M) Lincoln Place ($140M) Philadelphia Park Towne Place (2) The Sterling (2) Chicago Elm Creek ($11M) 2012 Starts create ~$2 of NAV per share (1) REDEVELOPMENT (1 ) Based on
Slide 15: Safest balance sheet in the sector
15 Safest balance sheet in the sector BALANCE SHEET (1 ) Peer group cons i s t s of Ava lonBay , BRE, Camden, Colon ia l Proper t ies , Equ i ty Res ident ia l , Essex , Home Proper t ies , MAA, Post Propert ies and UDR. Data as of 6/30/2013 . Source : SNL F inanc ia l , company reports . (2 ) Weigh
Slide 16: Balance sheet strategy adds value, even in a rising interest rate environment
16 Balance sheet strategy adds value, even in a rising interest rate environment BALANCE SHEET Serves as a partial hedge against inflation and cap rate expansion. Aimco’s property debt has a weighted average interest rate of 5.41%, which is approximately 0.50% higher than current rates. Refinancing
Slide 17: Leverage in-line with peers and on track to lower targets
17 Leverage in-line with peers and on track to lower targets * S o u r c e s : S N L F i n a n c i a l , c o m p a n y f i l i n g s . R e f l e c t s 6 / 3 0 / 2 0 1 3 d e b t b a l a n c e a n d p r e f e r r e d b a l a n c e , l e s s c a s h , c a s h e q u i v a l e n t s a n d r e s t r i c t
Slide 18: Strategy allows for flexibility and low costs
18 Strategy allows for flexibility and low costs Using multiple sources of non-recourse property debt, including insurance companies, savings banks, pension funds, other balance sheet lenders, as well as GSEs. $500M revolving credit facility, $187M drawn at 6/30/2013, $268M of available capacity
Slide 19: Increasing earnings, higher dividend
19 Increasing earnings, higher dividend EARNINGS & DIVIDEND Above Average FFO Growth Lower Capital Replacements as a % of NOI Outsized AFFO Growth Above Average Dividend Growth Steady revenue growth Peer-leading cost control Offsite cost savings Earn-in of redevelopment investments Interes
Slide 20: Five core values are the foundation of Aimco
20 Integrity Respect CollaborationCustomer Focus Performance Five core values are the foundation of Aimco AIMCO CORE VALUES Our Vision To be the best owner and operator of apartment communities, inspired by a talented team committed to exceptional customer service, strong financial performance, and
Slide 21: Forward-looking statements
21 This presentation contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected results and specifically: forecasts of 2013 financial and operating results; Aimco's development and redevelopment project investm