Apartment Investment and Management Company AIV – better known as Aimco – reported first-quarter 2017 pro forma funds from operations (“FFO”) of 58 cents per share, in line with the Zacks Consensus Estimate. The figure also came 2% higher than the year-ago tally of 57 cents.

Results display growth in same-store property net operating income (NOI) and increased contribution from development, redevelopment and acquisition communities. However, the positive was partly offset by the loss of income from apartment sales in 2016.

Total revenue of $246.5 million exceeded the Zacks Consensus Estimate of $244.7 million. The reported figure also came higher than the prior-year quarter tally of $246.2 million.

Quarter in Detail

Same-store revenues increased 3.4% year over year to $161.2 million, while expenses rose 2.7% year over year to $48.4 million. Consequently, same-store net operating income (NOI) climbed 3.7% to $112.8 million on a year-over-year basis.

However, same-store average daily occupancy contracted 30 basis points (bps) year over year to 95.8%. Rental rates on new leases were down 1%, but on renewals were up 5.1% from the expiring lease rates.

As of Mar 31, 2017, Aimco held cash and restricted cash on hand of $88 million. Moreover, the estimated fair market value of the company’s unencumbered apartment communities came in at $1.6 billion.

Further, at the end of the quarter, Aimco’s outstanding borrowings on its revolving credit facility were $70 million and available capacity was $519 million, after considering $11 million of letters of credit backed by the facility.

Portfolio Activity

During the quarter, Aimco invested $41 million in redevelopment and development.

Moreover, as intended, Aimco continues to sell up to 10% of its lowest-rated portfolio each year, and uses the proceeds for acquisition and redevelopment of higher-quality apartments.

Through these measures, the company increased its revenue per apartment home by 7% to $1,996. The company has enhanced the quality and expected growth rate of its portfolio. Specifically, the percentage of A, B and C+ home was 51%, 35% and 14% in first-quarter 2017 compared with 48%, 35% and 17% , respectively in the year-ago quarter.     

Guidance

For second-quarter 2017, Aimco provided pro forma FFO per share guidance in a band of 56–60 cents. The Zacks Consensus Estimate for the same is currently pegged at 60 cents.

Dividend

On Apr 25, 2017, Aimco declared a quarterly cash dividend of 36 cents per share of Class A Common Stock for first-quarter 2017. This represented an increase of 9% from a year ago. The dividend will be paid on May 31, 2017 to stockholders of record on May 19.

In Conclusion

Aimco has solid portfolio, which is diversified in terms of geography and price point. Also, the company is revamping its portfolio through property sales and reinvesting the proceeds in select apartment homes with higher rents, superior margins and greater-than-expected growth. This augurs well for long-term growth.

However, there is a slowdown of rent growth of Aimco in certain locations because of competition from new supply. Moreover, even if the divestitures pay off in the long run, near-term adverse effects on earnings cannot be ignored.

Aimco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

Apartment Investment and Management Company Price, Consensus and EPS Surprise
 

Apartment Investment and Management Company Price, Consensus and EPS Surprise | Apartment Investment and Management Company Quote

Among other residential REITs, UDR Inc. UDR reported FFO as adjusted per share of 45 cents for first-quarter 2017, matching the Zacks Consensus Estimate. The figure also came higher than the prior-year quarter tally of 43 cents. The year-over-year increase was driven by growth in revenue from same-store and stabilized, non-mature communities. (Read more: UDR Inc. Meets Q1 FFO Estimates, Beats on Revenues)

Equity Residential EQR reported first-quarter 2017 normalized FFO per share of 74 cents, in line with the Zacks Consensus Estimate. However, the figure was lower than 76 cents reported in the year-ago quarter. Results reflected enhanced same-store NOI and lease-up NOI. In addition, the company experienced lower corporate overhead. However, the positive was offset by adverse impact on NOI, primarily stemming from the company’s 2016 huge disposition activity. (Read more: Equity Residential's Q1 FFO in Line, Revenues Miss)

Further, AvalonBay Communities, Inc.’s AVB first-quarter 2017 core FFO per share of $2.09 missed the Zacks Consensus Estimate of $2.11. However, the figure grew 6.1% from the year-ago number of $1.97. Growth in NOI from existing, acquired and newly developed operating communities attributed to this year-over-year increase. However, the benefit was partly offset by a rise in interest expense. (Read more: AvalonBay Q1 FFO Misses Estimates, Revenues Up Y/Y)

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.


Zacks' Hidden Trades

While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?                                                                                          

Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.                                                                                     

Click here for Zacks' secret trade>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Apartment Investment and Management Company (AIV): Free Stock Analysis Report
 
AvalonBay Communities, Inc. (AVB): Free Stock Analysis Report
 
Equity Residential (EQR): Free Stock Analysis Report
 
United Dominion Realty Trust, Inc. (UDR): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research