Apartment Investment And Management Company · NYSE:AIV
Apartment Investment And Management — Proxy Contest (November 2022)
45 slides from Apartment Investment And Management's proxy contest presentation, Nov 18, 2022
Slide 1: Aim High AIV
www.AimHighAIV.com Confidential
Slide 2: Disclaimer
Yeon DISCLOSURE Aimco DISCLAIMER The materials contained herein (the “Materials”) represent the opinions of Land & Buildings Investment Management, LLC and the other participants named in the proxy solicitation collectively, the “Land & Buildings”) and are based on publicly available information wit
Slide 3: Table of Contents
/ TABLE OF CONTENTS Aimco 1. Land & Buildings Overview 4 2. Overview of Apartment Investment and Management Company 6 (“Aimco”, “AlV” or the “Company”) 33 Executive Summary — Why We Are Here 8 4. Pre-Spin Aimco Board and Management Failed Shareholders In Our View 18 5. Apparent Deep Disregard For Sh
Slide 4: Land & Buildings Overview
LAND & BUILDINGS OVERVIEW LANDandBUILDINGS www.AimHighAlV.com
Slide 5: www.AimHighAIV.com
• • • • • • • • • • • www.AimHighAIV.com
Slide 6: Overview of Apartment Investment and Management Company
OVERVIEW OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY C"AIMCO”, “AIV” OR THE “COMPANY”) LANDandBUILDINGS www.AimHighAlV.com
Slide 7: L&B Estimated Net Asset Value $12.20/share
L&B Estimated Net Asset Value $12.20/share Share Price (as of 11/14/22) $7.63 Equity Market Cap $1.2B Estimated Implied Cap Rate 9% Upside to Net Asset Value (NAV) 60% Yacht Club (Miami, FL) Hyde Park Tower (Chicago, IL) www.AimHighAIV.com
Slide 8: Executive Summary — Why We Are Here
EXECUTIVE SUMMARY — WHY WE ARE HERE LANDandBUILDINGS www.AimHighAlV.com
Slide 9: L&B believes our nominees are the right individuals to maximize shareholder value
• • • • • • • • • • • • • L&B believes our independent and exceptionally qualified and experienced nominees, Michelle Applebaum and Jim Sullivan, are the right individuals to help maximize shareholder value and realize AIV’s true potential www.AimHighAIV.com
Slide 10: www.AimHighAIV.com
• We have known Aimco and Terry Considine since the Company’s IPO in 1994 We have covered the Company and its peers for decades – both as research analysts and investors – and held countless discussions with pre- and post-Spin management over the years regarding the serious concerns discussed in thi
Slide 11: Aimco Has Underperformed
Arco HAS UNDERPERFORMED Aimco POOR PERFORMANCE VS. REITS, PROXY PEERS AND APARTMENT REITS * Aimco’s TSR substantially underperformed the REIT Index, Proxy Peers and Apartment REIT peers post-Spin until L&B and Westdale Investments (together with its affiliates (“Westdale”) began accumulating large s
Slide 12: Aimco Has Underperformed (Cont.)
A rnco HAS UNDERPERFORMED (CONT.) Aimco RECENT PERFORMANCE IS DRIVEN BY HOPE NOT FAITH IN OUR VIEW ¢ Why use April 30, 2022, cut-off date to assess performance? * We believe it is the most appropriate date both from the perspective of good corporate governance (given that most NYSE-listed companies
Slide 13: www.AimHighAIV.com
9 9 9 9 9 9 9 9 www.AimHighAIV.com
Slide 14: Change Is Needed
CHANGE IS NEEDED Michael Stein _ Mr. Stein has been a director of the Company since 2004 (18 years), overseeing substantial underperformance of shares and a material, persistent discount to net asset value ~ Member of pre-Spin Board and Nominating, Environmental, Social, and Governance Committee (th
Slide 15: Board classification and declassification pledge
Aimco elects by resolution of the Board to be subject to the provisions of MUTA, and consistent with such election, the Board is initially classified into three classes, Declassify the Board in 2023: Given the success of Aimco’s strategic plan, denominated as Class I, Class II, and Class III, with s
Slide 16: Inadequate governance changes and vague pronouncements lack credibility
• • • • • • • We believe these inadequate governance changes and vague pronouncements about maximizing shareholder value lack credibility and only serve to underscore the urgency to elect L&B’s nominees www.AimHighAIV.com
Slide 17: Changes L&B seeks at Aimco
• Refresh Board with independent, experienced and shareholder-friendly directors Michelle Applebaum and Jim Sullivan Immediately declassify the Board which Aimco classified under MUTA Immediately opt out of MUTA Move the Annual Meeting back to the typical April timeline in 2023 Remove Terry Considin
Slide 18: Pre-Spin Aimco Board and Management Failed Shareholders In Our View
PRE-SPIN AIMCO BOARD AND MANAGEMENT FAILED SHAREHOLDERS IN OUR VIEW LANDandBUILDINGS www.AimHighAlV.com
Slide 19: www.AimHighAIV.com
• • • • • • • • • • www.AimHighAIV.com
Slide 20: Board Appears to Have Designed Spin to Avoid Shareholder Vote
Aimco A, rusnen DECISION BOARD APPEARS TO HAVE DESIGNED SPIN TO DELIBERATELY AVOID SHAREHOLDER VOTE 09/14/20 09/22/20 09/25/20 09/29/20 11/12/20 11/19/20 12/15/2020 Aimco announces the L&B demands AIV L&B receives L&B files preliminary L&B delivers written Aimco informs L&B that = A/V goes forward w
Slide 21: Investment Community Raised Doubts About Spin
YZ swestwent COMMUNITY RAISED DOUBTS ABOUT SPIN Aimco INVESTORS AND SELL-SIDE ANALYSTS QUESTIONED THE MERITS OF THE PROPOSED TRANSACTION Investors Were Highly Skeptical of Spin in Citi Survey Will AlV create additional value through the announced spin? Should AIV have a shareholder vote to approve t
Slide 22: Aimco: A Historical Underperformer
Zrri-s0n AIMCO: A HISTORICAL UNDERPERFORMER Aimco PRE-SPIN AIMCO TSR BADLY UNDERPERFORMED RELEVANT PEERS SINCE ITS INITIAL PUBLIC OFFERING (“IPO”) * Pre-Spin Aimco’s TSR since its 1994 IPO as well as the prior 1, 3, and 5-years pre- Spin consistently underperformed Proxy Peers and REITs overall — de
Slide 23: Persistent Discount to NAV Since Before Spin
Z ocrsisten DISCOUNT TO NAV SINCE BEFORE SPIN Aimco UNDER THE LEADERSHIP OF THE BOARD, PRE-SPIN AlV TRADED AT A DISCOUNT TO NAV * Pre-Spin Aimco traded at a persistent discount to NAV while Apartment Peers often traded near or above NAV for much of this time Pre-Spin Aimco Persistently and Consisten
Slide 24: Apparent Deep Disregard For Shareholders Necessitates Change
APPARENT DEEP DISREGARD FOR SHAREHOLDERS NECESSITATES CHANGE LANDandBUILDINGS www.AimHighAlV.com
Slide 25: Aimco Depriving Shareholders' Rights; Governance Worst in Class
• Aimco Depriving Shareholders’ Rights Aimco Governance Worst in Class Used Maryland Unsolicited Takeover Act Only 4% of REITs have staggered boards and only 1 other REIT has (“MUTA”) to classify the Board used MUTA to stagger board without shareholder approval (MAC) Have not yet opted out of MUTA M
Slide 26: Aimco's apparent disregard reinforced by disappointing engagement
• • • • • • Aimco’s apparent utter disregard for shareholders has only been reinforced by Land & Buildings’ disappointing engagement with management and the Board www.AimHighAIV.com
Slide 27: Trailing 10-year TSR comparison
• +220% trailing 10-year TSR +88% trailing 10-year TSR www.AimHighAIV.com
Slide 28: Persistently deep discount to AIV's own internal NAV estimate
• • Persistently deep discount to AIV’s own internal NAV estimate www.AimHighAIV.com
Slide 29: Was the timing and result of these transactions in shareholders' interest?
• • • • • • • • • • • • • • Was the timing and result of these transactions truly in the best interest of Aimco and its shareholders or did AIRC, Mr. Considine, and a seemingly conflicted Board and management team taint these negotiations? www.AimHighAIV.com
Slide 30: Questions on payments to Mr. Considine
• 8 8 • • 8 8 8 We question how Mr. Stein and Mr. Stone, both members of the Compensation and Human Resources Committee, could approve such payments for Mr. Considine when he is not even our CEO www.AimHighAIV.com
Slide 31: Questions on director independence and related-party payments
• 8 8 • 8 8 We question whether Mr. Stein and Mr. Stone were acting independently and in the best interest of shareholders when approving such payments to Mr. Powell’s father and Mr. Considine’s daughter www.AimHighAIV.com
Slide 32: No analyst coverage, earnings calls or guidance
• • • • No concerted investor outreach program Zero sell-side Wall Does not host quarterly Provides no earnings including attending Street analyst coverage earnings calls guidance major REIT investor conferences www.AimHighAIV.com
Slide 33: New independent voices needed on the Board
• • • It is clear to us that new independent voice are desperately needed on the Board now as Aimco embarks on this ambitious >$2.5B development pipeline and considers other strategic options – decisions being made today will have long-lasting, material impacts on shareholder value www.AimHighAIV.co
Slide 34: Capital Allocation Drove Historical Underperformance
Zevon ALLOCATION DROVE HISTORICAL UNDERPERFORMANCE §=Aimco CAPITAL ALLOCATION DECISION-MAKING APPEARS BROKEN TO L&B * Failures of the past continue to haunt Aimco — AIRC spun off to leave poor development and investment track record behind, hoping to allow AIRC to close the valuation gap to peers *
Slide 35: Michael Stein's responsibility for poor capital allocation
• • • • • • • • • • Michael Stein, as Chairman of the Investment Committee, bears responsibility in our view for the poor capital allocation, lack of a long-term plan, and failure to articulate a clear value-maximizing strategy to shareholders www.AimHighAIV.com
Slide 36: Future HQ
• • • • FUTURE HQ www.AimHighAIV.com
Slide 37: Exceptionally Qualified and Experienced Nominees
EXCEPTIONALLY QUALIFIED AND EXPERIENCED NOMINEES LANDandBUILDINGS www.AimHighAlV.com
Slide 38: Path Forward: Land & Buildings' Director Nominees
Dr PATH FORWARD Aimco LAND & BUILDINGS’ DIRECTOR NOMINEES ¢ We believe our independent and exceptionally qualified and experienced nominees, Michelle Applebaum and James “Jim” Sullivan, are the right individuals in our view to help maximize shareholder value and realize AlV’s true potential Michelle
Slide 39: Michelle Applebaum
Arvereue APPLEBAUM Aimco PROVEN ANALYTICAL ABILITY AND ADVOCATE FOR SHAREHOLDERS & GOOD GOVERNANCE Salomon Brothers © | Northwest Pipe —=J Company * Former equity analyst and Managing Director with Salomon Brothers (later Citigroup) and became ranked number one in steel equity analysis by Institutio
Slide 40: www.AimHighAIV.com
• • • • • • • • www.AimHighAIV.com
Slide 41: Michelle Applebaum quote
“Institutions like mutual funds, hedge funds, pension funds, and banks who actually own the stocks pay me to analyze the companies, to see through the veil, to acid-test the selling thesis and forecast and to provide judgment on value. They pay me to trust no one; they pay me to be a skeptic...we ne
Slide 42: James "Jim" P. Sullivan
YZ ies “JIM” P. SULLIVAN Aimco UNIVERSALLY RESPECTED REIT ANALYST AND SENIOR LEADER AT TOP-RATED INDEPENDENT RESEARCH FIRM * Most recently spent over twenty-five years at Green Street, a top-rated investment he : research firm that focuses on commercial real estate, as Senior Advisor of Research and
Slide 43: Green Street: An Industry Leader
GREEN STREET: AN INDUSTRY LEADER Aimco ONE OF THE MOST RECOGNIZED NAMES IN THE REIT INDUSTRY * Jim Sullivan joined Green Street as the 68 employee in 1994 and helped build Green Street into a leader as a third-party provider of objective and unbiased real estate research and advisory services for ov
Slide 44: Michael Stein committee roles
8 8 8 8 8 • Chair of Investment Committee • Member of Audit Committee 8 • Member of Compensation and Human Resources Committee • Member of Nominating and Corporate Governance Committee 8 8 www.AimHighAIV.com
Slide 45: R. Dary Stone committee roles
8 8 8 8 • Chair of Nominating and Corporate Governance Committee 8 • Member of Audit Committee • Member of Compensation and Human Resources Committee • Member of Investment Committee 8 www.AimHighAIV.com
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