Aimco Announces Expansion of Process to Maximize Shareholder Value Following Agreement to Sell Brickell Properties

Rhea-AI Summary

Aimco (NYSE: AIV) has announced the expansion of its strategic process to maximize shareholder value, following a $520 million agreement to sell its Brickell Assemblage properties in Miami. The buyer has made a non-refundable deposit of $38 million, and Aimco plans to return the majority of net proceeds to shareholders.

Post-sale, Aimco's portfolio will consist of over 5,200 apartment homes, nearly 1,000 newly constructed units approaching stabilization, one Miami waterfront development, and a pipeline with 7.7 million square feet of development potential. Since 2020, the company has achieved annual same store NOI growth exceeding 7.6%, completed $1.3 billion in development projects, and will have closed over $1.7 billion in asset sales.

Due to shares trading at a significant discount to estimated private market value, the Board is exploring additional alternatives, including potential sales of business components, accelerated asset sales, or a company sale/merger. Morgan Stanley is serving as financial advisor.

Positive

• Agreement to sell Brickell properties for $520M with $38M non-refundable deposit
• Strong operational performance with >7.6% annual same store NOI growth
• Successful completion of $1.3B in development projects
• Pro forma asset sales totaling $1.7B post-Brickell transaction
• Extensive development pipeline of 7.7M square feet

Negative

• Shares trading at significant discount to estimated private market value
• ability to fund new investment opportunities and growth

Insights

Real Estate Investment Analyst

The announced sale of Aimco's Brickell Assemblage for $520 million and broader strategic review represents a pivotal shift in the company's trajectory. The $38 million non-refundable deposit signals strong buyer commitment and reduces transaction risk. The deal's pricing implies a significant premium to book value, validating management's asset value thesis.

Post-transaction, Aimco's streamlined portfolio of 5,200 apartments plus 1,000 stabilizing units presents a more focused investment thesis. The 7.6% same-store NOI growth demonstrates strong operational execution, while $1.3 billion in completed developments showcases value-creation capabilities. The strategic review could unlock additional value through various scenarios including portfolio sales or a full company sale.

The persistent trading discount to private market value creates an attractive arbitrage opportunity. With $1.7 billion in asset sales post-Brickell transaction, Aimco has demonstrated execution ability in value realization. The Morgan Stanley-led process suggests serious consideration of transformative options beyond incremental asset sales.

Corporate Finance Strategist

This strategic initiative marks a watershed moment for Aimco's capital allocation strategy. The board's decision to explore comprehensive alternatives, including potential sale scenarios, reflects mounting pressure to address the public-private market valuation gap. The commitment to return the majority of Brickell sale proceeds to shareholders demonstrates strong capital discipline and alignment with shareholder interests.

The formation of a dedicated Investment Committee comprising four independent directors ensures proper oversight and governance of the strategic review process. Morgan Stanley's engagement adds credibility and suggests a thorough evaluation of strategic alternatives. The company's track record of executing $1.7 billion in asset sales positions it well for larger-scale transactions.

The timing aligns with broader real estate market dynamics where private capital continues to seek quality multifamily assets. The strategic optionality created by the simplified portfolio structure post-Brickell sale enhances the probability of value-maximizing outcomes, whether through individual asset sales, portfolio transactions, or a full company sale.

DENVER, Jan. 9, 2025 /PRNewswire/ -- As previously announced on December 30, 2024, Apartment Investment and Management Company ("Aimco" or the "Company") (NYSE: AIV) entered into an agreement to sell the properties located at 1001 Brickell Bay Drive and 1111 Brickell Bay Drive in Miami, Florida (together referred to as the "Brickell Assemblage") for a gross price of $520 million. The buyer has completed due diligence and has made a non-refundable deposit of $38 million.  Aimco intends to return the majority of the net proceeds from the transaction, after accounting for the associated property-level debt and deferred tax liability, to shareholders.

The pending sale of the Brickell Assemblage marks an important step in Aimco's efforts to simplify its holdings and to unlock value for shareholders.  Upon closing of the Brickell Assemblage transaction, which is subject to certain closing conditions and extension options, Aimco will primarily consist of a portfolio of more than 5,200 well-located apartment homes that we believe is well-positioned to experience strong revenue growth, nearly 1,000 newly constructed apartment homes that are expected to be occupancy stabilized within the next 12 months, one active development project located on Miami's waterfront, and a deep pipeline for future growth that includes more than 7.7 million square feet of development potential.

Since the spin-off of Apartment Income REIT Corp. in December of 2020, Aimco has delivered consistently strong operational performance with average annual same store NOI growth of greater than 7.6%, successfully completed more than $1.3 billion of development projects, secured attractively priced long-dated financing, significantly improved corporate governance, and pro forma for the Brickell sale, will have closed more than $1.7 billion of asset sales and returned substantial capital to shareholders, including the special dividend slated for January 31, 2025, as previously announced.

These results were achieved by a dedicated and experienced team that is active in its approach to investment and portfolio management and prudent in the allocation of shareholder capital. We are pleased with the transformation of the Aimco portfolio and the objective results delivered over the past four years.  However, our shares continue to trade at a meaningful discount to our estimate of the private market value of our assets and investment platform, which we believe has limited our ability to fund new investment opportunities and accelerate growth.

Therefore, the Aimco Board of Directors has decided to explore additional alternatives in an effort to further unlock and maximize shareholder value. The exploration will expand upon Aimco's ongoing efforts such as reducing exposure to development activity and monetizing certain assets, and include, but not be limited to, exploration of potential sales of the major components of the business (in one or a series of transactions), an acceleration of individual asset sales, or a sale or merger of the Company as a whole.  Our guiding principle will be to produce an outcome that delivers maximum value to Aimco shareholders.  The strategic process is being overseen by Aimco's Investment Committee, comprised of four independent Aimco Board Members. Morgan Stanley & Co. LLC is serving as financial advisor to Aimco.

There can be no assurance that this expanded strategic process will result in any transaction or transactions or other strategic changes or outcomes, and the timing or outcome of any such event is similarly uncertain. Aimco does not intend to disclose or comment on developments related to the foregoing unless or until it determines that further disclosure is appropriate or required.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief, or expectations. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)," "forecast(s)," and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements, including those regarding revenue growth, development potential, potential strategic transactions, the timing of asset sales, and the timing and amount of capital expected to be returned to shareholders, are not guarantees of future performance, condition or results, and involve a number of known and unknown risks, uncertainties, and assumptions that may affect actual results or outcomes, including changes in market conditions, fluctuations in our stock price, our financial performance, regulatory changes, and general economic conditions. Readers should carefully review Aimco's financial statements and the notes thereto, as well as the section entitled "Risk Factors" in Item 1A of Aimco's Annual Report on Form 10-K for the year ended December 31, 2023, as these filings identify and address important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. These forward-looking statements reflect management's judgment as of this date, and Aimco assumes no (and disclaims any) obligation to revise or update them to reflect future events or circumstances.

About Aimco

Aimco is a diversified real estate company primarily focused on value add and opportunistic investments, targeting the U.S. multifamily sector. Aimco's mission is to make real estate investments where outcomes are enhanced through its human capital so that substantial value is created for investors, teammates, and the communities in which we operate. Aimco is traded on the New York Stock Exchange as AIV. For more information about Aimco, please visit its website www.aimco.com.

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SOURCE Apartment Investment and Management Company (Aimco)

FAQ

What is the value of Aimco's Brickell properties sale agreement?

Aimco has agreed to sell the Brickell Assemblage properties in Miami for $520 million, with the buyer making a non-refundable deposit of $38 million.

How will AIV use the proceeds from the Brickell properties sale?

Aimco intends to return the majority of the net proceeds to shareholders after accounting for property-level debt and deferred tax liability.

What is Aimco's portfolio composition after the Brickell sale?

Post-sale, Aimco will have over 5,200 apartment homes, nearly 1,000 newly constructed units, one Miami waterfront development project, and 7.7 million square feet of development potential.

What strategic alternatives is AIV exploring to maximize shareholder value?

Aimco is exploring potential sales of business components, acceleration of individual asset sales, and a possible sale or merger of the company as a whole.

What has been AIV's same store NOI growth since December 2020?

Aimco has delivered average annual same store NOI growth of greater than 7.6% since December 2020.