Apartment Investment And Management Company · NYSE:AIV
Apartment Investment And Management — NAREIT June 2007
34 slides from Apartment Investment And Management's conference presentation, Jun 6, 2007
Slide 1: June 2007
June 2007
Slide 2: Forward-looking Statements and Other Information
This presentation contains forward-looking statements, including statements regarding future results. These statements are subject to certain risks and uncertainties, including but not limited to Aimco's ability to maintain occupancy, maintain and increase rental rates, lease-up redevelopment and ac
Slide 3: History of Aimco
History of Aimco Initial Public Offering in 1994 with $315M GAV, generating 17% TSR through 1Q 2007 Rapid growth followed by integration period Doubled in size every 18 months from 1994-2002 through several large portfolio acquisitions Rationalized portfolio and operations, selling 356 properties wo
Slide 4: We Are Organized for Growth
Aimco Capital Redevelopment Property Operations We Are Organized for Growth Our primary focus is to increase the Net Asset Value ("NAV") of the company through superior operations, redevelopment and value added transactions and our business is organized around these three core activities Property Op
Slide 5: How We Create Value
How We Create Value Aimco Value Drivers Property Operations Redevelopment Entitlement Tax Credit Transactions Finance Strategy Joint Ventures Joint Ventures Joint Ventures Joint Ventures Joint Ventures Joint Ventures Joint Ventures Joint Ventures
Slide 6: Aimco Portfolio
Aimco Portfolio We own a well diversified asset base Portfolio is of high quality, supporting strong NOI growth, redevelopment and tax credit activities Conventional portfolio: 467 communities with 134,490 units Affordable portfolio: 329 communities with 38,087 units Property and asset managed: 441
Slide 7: Geographic Diversification
Geographic Diversification More than 76% of estimated GAV is in 15 markets, none greater than 12.5%
Slide 8: Investment Philosophy
Investment Philosophy We target at least mid-teen levered IRRs for our acquisitions. Achieving this IRR target in a competitive investment environment requires: A value add component such as redevelopment A strategy to take advantage of below market rents due to governmental regulation, such as Manh
Slide 9: Property Operations
Property Operations
Slide 10: Track Record of NOI Growth
Track Record of NOI Growth Outperformed peer average for previous eight quarters 1Q 2007 NOI growth of 6.0% compared to peer average of 6.1% 2Q 2007 guidance unchanged based on quarter-to-date leasing activity and NOI
Slide 11: Aimco Conventional Strategy Roadmap
Aimco Conventional Strategy Roadmap Revenue 2004/5 Resident Quality Marketing & Media Customer Response (phone & email) Sales (New & Renewal) Revenue Management Expense, Capital & Service Mgt 2006/7 Turn Production Vendor Management Customer Service Measurement Product Lines (student) Customer Exper
Slide 12: Operational Excellence
Operational Excellence Continuing to Build the Platform Process and Standards Data-driven people and culture, with the tools to match Management of turn cycle times - each day is worth an estimated $1 million per year Newly established Operating Standards (developed in 2006) Process first, then auto
Slide 13: Customer Experience Measurement
Customer Experience Measurement Touch Points Measured Site Visits Move Ins Maintenance Requests Relationship Checkpoints An email based survey system, (55% of customers have email)
Slide 14: Redevelopment
Redevelopment
Slide 15: Driving Value Creation from Owned Assets
Driving Value Creation from Owned Assets Conventional Redevelopment Aimco portfolio has job and population growth far exceeding US average Housing values near Aimco properties are nearly 1.5 times the national average1 Well located properties with average rent levels in growth markets provide opport
Slide 16: A Growing Redevelopment Program
A Growing Redevelopment Program Strong Redevelopment Management team positions Aimco for growth Deep pipeline of lower price point properties with high land values support redevelopment activities 45 Conventional redevelopment projects underway at 1Q 2007 with budgets totaling $520 million
Slide 17: 2007 Redevelopment
7.5-8.5% expected yield with significantly lower risk than ground- up development Spending that provides an 8% return on investment, in a market where properties are valued at 5.5% cap rates creates $45M of NAV for each $100M of redevelopment spending Financed 90% or more with non-recourse property
Slide 18: Aimco Capital
Aimco Capital
Slide 19: Aimco Capital
Aimco Capital Focused on generating NAV through asset management and transactions including: Capital allocation Tax credit transactions Partnership transactions Generates fees for managing investment capital for limited partnerships and joint ventures Third-party asset management Entitlements Joint
Slide 20: Asset Management and Transaction Income
Asset Management and Transaction Income Activity fees and asset management revenues are generated by the financial management of partnerships and activities such as dispositions, refinancings and tax credit syndications
Slide 21: Tax Credit Redevelopment
Tax Credit Redevelopment Increasing NAV and Providing a Stable Source of Fee Income Aimco's affordable property portfolio provides a captive pipeline of opportunities for raising tax credit equity Aimco Capital is awarded Federal tax credits that are transferred to investors at the present value of
Slide 22: Projected Tax Credit Income
Projected Tax Credit Income Amortization of deferred income represents the periodic recognition of deferred revenue and costs relating to Aimco's existing tax credit arrangements Deferred revenue reflects cash received but not yet recognized as revenue as well as cash expected to be received from in
Slide 23: Increasing Land Values Through Entitlements
Increasing Land Values Through Entitlements Aimco has many opportunities to increase the permitted density at our owned properties We have more than 30 entitlement projects currently in process Aimco has received approvals on nine projects for nearly 5,400 additional units since re-entitlement effor
Slide 24: Capitalization Strategy
Capitalization Strategy
Slide 25: Financial Strategy
Financial Strategy Aimco's Financial Strategy Supports our Growth Non-Recourse Property Debt Allows Higher Leverage & Superior Risk-Adjusted IRR DSC & LTV tailored to the asset or pool Non-recourse is safer Laddered debt maturities and matched duration to our asset strategies Use of Floating Rate De
Slide 26: Aimco's Capitalization Structure
Aimco’s Capitalization Structure In the last year Aimco has improved the strength of our balance sheet by redeeming high-cost preferred equity and increasing our non-recourse property debt:
Slide 27: Redevelopment Funding Methodology
Redevelopment Funding Methodology We expect to fund the majority of our Redevelopment spending through Non-Recourse Property Debt: Re-leverage & recast the debt (recaptures prior amortization & increase in GAV) Construction financing "Top-Off" Loan upon stabilization Redevelopment cost is substantia
Slide 28: Net Asset Value
Net Asset Value
Slide 29: Aimco's Capitalization Structure
Aimco's Capitalization Structure (3) $0 $3,000 $6,000 $9,000 $12,000 $15,000 $5.2 Billion Property Debt $0.6 Billion Corporate Debt $1.1 Billion Preferred Equity $4.0 Billion Common Equity at $37.87 per Share $5.6 Billion Property Debt $0.5 Billion Corporate Debt $0.9 Billion Preferred Equity $6.2 B
Slide 30: NAV Contributions
NAV Contributions NAV per share for each contributor identified in the chart above is calculated by deducting allocated debt and preferred shares from GAV. The debt is allocated to each contributor based on the GAV percentage share of the line in relation to total GAV.
Slide 31: Summary of Aimco Growth Engines
Summary of Aimco Growth Engines Aimco is Well Positioned for Growth
Slide 32: Appendix NAV Calculation Methodology
Appendix NAV Calculation Methodology
Slide 33: NAV Calculation Methodology: 12/31/2006
NAV Calculation Methodology: 12/31/2006 Footnotes on following page (in millions)
Slide 34: NAV Calculation Methodology (continued)
NAV Calculation Methodology (continued) Property NOI from Supplemental Schedule 2b (trailing 12 months), or $783.8M, less a management fee assumed to equal to $350 per unit (AIV effective units from Supplemental Schedule 11), or $47.1M. This result is divided by the weighted average property cap rat