Aimco Reports First Quarter Results

DENVER–(BUSINESS WIRE)–Apartment Investment and Management Company (“Aimco”) (NYSE: AIV)
announced today first quarter results for 2019.

Chairman and Chief Executive Officer Terry Considine comments: “Aimco
has started 2019 with solid results, the product of an intentional
strategy to create Net Asset Value per share. In our Same Store
portfolio, we maintained 97.0% occupancy for the entire quarter,
increased net operating income by 5.5%, and posted peer-leading net
operating income margins of 73.2%. In Redevelopment, we started the
renovation of 707 Leahy, located in Redwood City, California; adding
another start to this highly accretive business. In Portfolio
Management, we sold seven apartment communities at prices above our
internal estimated gross asset values for proceeds sufficient to
complete the paired trade funding for the value-creating share
repurchases in last year’s fourth quarter. And last month, we acquired
One Ardmore, the fifth and final community in the Philadelphia portfolio
acquisition announced one year ago.”

Chief Financial Officer Paul Beldin adds: “First quarter 2019 AFFO of
$0.55 per share and Pro forma FFO of $0.61 per share were $0.02 and
$0.01 ahead of the midpoint of our respective guidance ranges due to
better than expected operating results at our Same Store, Redevelopment
and Acquisition communities and the timing of general and administrative
expenses. First quarter Same Store revenue growth of 4.2% was ahead of
the assumptions underpinning the midpoint of our full-year 2019 revenue
growth guidance of 3.3%, leaving us well positioned as we enter the
important summer leasing season.”

“Aimco’s balance sheet is safe and liquid, which creates opportunity and
flexibility. Aimco used proceeds from first quarter sales to pay down
borrowings on our revolving credit facility, ending the quarter with
cash on hand of $198 million and the capacity to borrow $723 million
under our revolving credit facility. On April 1, we prepaid, at par,
$168 million of property-level debt maturing during the third quarter of
2019. This repayment of debt added $740 million of property value to
Aimco’s pool of unencumbered properties, now estimated at $3.3 billion.”

Financial Results: First Quarter Pro forma FFO
Up 3%; AFFO Up 2%

Net Income (per diluted common share) – Year-over-year, first
quarter net income increased primarily due to higher gains on the sale
of apartment communities.

Pro forma FFO (per pro forma diluted common share) – Aimco’s
first quarter Pro forma FFO per share increased $0.02 year-over-year due
to the following items:

• $0.04 from Same Store Property Net Operating Income growth of 5.5%,
  driven by a 4.2% increase in revenue, offset by a 0.8% increase in
  expenses;
• $0.05 from Net Operating Income contributions from redevelopment
  communities and 2018 property acquisitions; and
• $0.01 lower interest expense; offset by
• ($0.08) contribution eliminated following the 2018 sale of the Asset
  Management business and sales in 2018 and 2019 of apartment
  communities to fund Aimco’s investment activities.

Adjusted Funds from Operations (per pro forma diluted common share)
– AFFO per share increased $0.01 year-over-year due to the $0.02
increase in Pro forma FFO, offset $0.01 by an acceleration of capital
replacement spending as compared to the previous year. For the full
year, Aimco expects total capital replacement spending to decline
year-over-year as the Aimco portfolio continues to be upgraded with
Aimco capital invested in fewer, but more valuable, properties.

Operating Results: First Quarter Same Store NOI
Up 5.5%

Same Store Rental Rates – Aimco measures changes in rental rates
by comparing, on a lease-by-lease basis, the rate on a newly executed
lease to the rate on the expiring lease for that same apartment. Newly
executed leases are classified as either a new lease, where a vacant
apartment is leased to a new customer, or as a renewal. The table below
details changes in new and renewal lease rates.

Redevelopment and Development

Redevelopment is Aimco’s second line of business where Aimco creates
value by repositioning communities within the Aimco portfolio. Aimco
also undertakes limited ground-up development when warranted by
risk-adjusted investment returns, either directly or in connection with
the redevelopment of an existing apartment community. Aimco invests to
earn leverage-neutral risk-adjusted returns in excess of those expected
from the apartment communities sold in “paired trades” to fund the
redevelopment and development. Of these two activities, Aimco generally
favors redevelopment because it permits adjustment of the scope and
timing of spending to align with changing market conditions and customer
preferences.

During the first quarter, Aimco invested $45 million in redevelopment
and development. Aimco continued phased redevelopment activities in
Miami at its Flamingo South Beach and Bay Parc communities, and
ground-up construction at Parc Mosaic in Boulder, Colorado, The Fremont
on the Anschutz Medical Campus in Denver, Colorado, and Elm Creek
Townhomes in Elmhurst, Illinois.

Aimco also began a $24 million full redevelopment of 707 Leahy in
Redwood City, California. This 110-home community is located in one of
the most dynamic job markets in the world and benefits from higher
density than permitted under the current zoning code. Aimco expects this
investment to generate a Free Cash Flow internal rate of return of
approximately 9%.

Portfolio Management: Revenue Per Apartment
Home Up 6% to $2,181

Aimco’s portfolio of apartment communities is diversified across “A,”
“B,” and “C+” price points, averaging “B/B+” in quality and is also
diversified across several of the largest markets in the United States.

As part of its portfolio strategy, Aimco seeks to sell up to 10% of its
portfolio annually and to reinvest the proceeds from such sales in
accretive uses such as capital enhancements, redevelopments, some
developments, and selective acquisitions with projected Free Cash Flow
internal rates of return higher than expected from the communities being
sold. Through this disciplined approach to capital recycling, Aimco
significantly increases the quality and expected growth rate of its
portfolio.

First Quarter Portfolio – For its entire portfolio, Aimco’s
average monthly revenue per apartment home was $2,181 for first quarter
2019, a 6% increase compared to first quarter 2018. This increase is due
to year-over-year growth in Same Store revenue as well as Aimco’s
acquisition activities, lease-up of redevelopment communities, and sales
of communities with average monthly revenues per apartment home lower
than those of the retained portfolio.

Acquisitions – Aimco evaluates potential acquisitions with an eye
for unique and opportunistic investments and funds acquisitions pursuant
to its strict “paired trade” discipline.

In the first quarter, Aimco made no acquisitions.

In April, Aimco closed the $65 million acquisition of One Ardmore, the
fifth and final community included in the Philadelphia portfolio
acquisition announced one year ago. This 110-home community is located
in the heart of one of Philadelphia’s Main Line suburbs and most
desirable submarkets. Aimco acquired One Ardmore at the completion of
construction, and expects the community to be fully occupied before
year-end.

Dispositions – In the first quarter, Aimco sold seven apartment
communities with 2,206 apartment homes for gross proceeds of $409
million. Proceeds, net of debt repayment and transaction costs, were
$340 million. Three communities are located in suburban Chicago, one in
Alexandria, Virginia, one in Virginia Beach, Virginia, and two in
Nashville, Tennessee. Proceeds from the sales were used to complete the
leverage-neutral, “paired trade” funding for the fourth quarter 2018
common stock repurchases.

Balance Sheet

Aimco Leverage

Aimco’s leverage strategy seeks to increase financial returns by using
leverage with appropriate caution. Aimco limits risk through its balance
sheet structure, employing low leverage, primarily non-recourse and
long-dated property debt; and Aimco builds financial flexibility by
maintaining ample unused and available credit as well as holding
properties with substantial value unencumbered by property debt; and
uses partners’ capital when it enhances financial returns or reduces
investment risk.

Aimco total leverage includes the Aimco share of long-term,
non-recourse, property debt encumbering apartment communities,
outstanding borrowings under its revolving credit facility, and
outstanding preferred equity.

Leverage Ratios

Aimco target leverage ratios are Proportionate Debt and Preferred Equity
to Adjusted EBITDAre below 7.0x and Adjusted EBITDAre to Interest
Expense and Preferred Dividends greater than 2.5x. Aimco calculates
Adjusted EBITDAre and Adjusted Interest Expense used in its leverage
ratios based on current quarter amounts, annualized.

Aimco’s leverage ratios have been calculated on a pro forma basis.
Please refer to Supplemental Schedule 5 and the Glossary for additional
information and supporting calculations.

During first quarter 2019, Aimco retitled its Adjusted EBITDA measure to
Adjusted EBITDAre in its calculation of leverage ratios. The computation
of Adjusted EBITDAre has been modified from Aimco’s prior measure to
include the amortization of debt issuance costs as a component of
interest expense in both the computation of Adjusted Interest Expense
and Adjusted EBITDAre. The impact of this change is less than 0.1x to
each ratio. Aimco also added to the Glossary a reconciliation of Net
Income to EBITDAre, as defined by Nareit.

Liquidity

At March 31, 2019, Aimco held cash and restricted cash of $198 million
and had the capacity to borrow $723 million under its revolving credit
facility, after consideration of $7 million of letters of credit backed
by the facility. Aimco uses its credit facility primarily for working
capital and other short-term purposes and to secure letters of credit.

Aimco also manages its financial flexibility by maintaining an
investment grade rating and holding apartment communities that are
unencumbered by property debt. At March 31, 2019, Aimco held
unencumbered apartment communities with an estimated fair market value
of approximately $2.5 billion. In April 2019, Aimco prepaid, at par,
$168 million of property-level debt maturing during the third quarter
2019, increasing the estimated value of its pool of unencumbered
apartment communities by $740 million to $3.3 billion.

Equity Capital Activities

As previously announced, on February 3, 2019, Aimco’s Board of Directors
declared a special dividend valued at $2.02 per share of common stock
that consisted of $67.1 million in cash and 4.5 million shares of common
stock, which was distributed on March 22, 2019.

In order to facilitate comparisons with previous periods, Aimco
authorized a reverse split to neutralize the effect of the stock
dividend. Taken together, the total number of shares outstanding after
the stock dividend and reverse-split was unchanged by the two actions.

On April 29, 2019, the Aimco Board of Directors declared a quarterly
cash dividend of $0.39 per share of Class A Common Stock for the quarter
ended March 31, 2019, representing an increase of 3% compared to the
dividends paid in second quarter 2018. This dividend is payable on May
31, 2019, to stockholders of record on May 17, 2019.

2019 Outlook

Aimco is herein maintaining Full Year guidance established in the
Fourth Quarter 2018 Earnings Release.

Earnings Conference Call Information

Supplemental Information

The full text of this Earnings Release and the Supplemental Information
referenced in this release are available on Aimco’s website at investors.aimco.com.

Glossary & Reconciliations of Non-GAAP
Financial and Operating Measures

Financial and operating measures found in this Earnings Release and the
Supplemental Information include certain financial measures used by
Aimco management that are measures not defined under accounting
principles generally accepted in the United States, or GAAP. Certain
Aimco terms and Non-GAAP measures are defined in the Glossary in the
Supplemental Information and Non-GAAP measures reconciled to the most
comparable GAAP measures.

About Aimco

Aimco is a real estate investment trust focused on the ownership and
management of quality apartment communities located in select markets in
the United States. Aimco is one of the country’s largest owners and
operators of apartments, with ownership interests in 129 communities in
17 states and the District of Columbia. Aimco common shares are traded
on the New York Stock Exchange under the ticker symbol AIV, and are
included in the S&P 500. For more information about Aimco, please visit
our website at www.aimco.com.

Forward-looking Statements

This Earnings Release and Supplemental Information contain
forward-looking statements within the meaning of the federal securities
laws, including, without limitation, statements regarding projected
results and specifically forecasts of second quarter and full year 2019
results, including but not limited to: Nareit FFO, Pro forma FFO and
selected components thereof; AFFO; Aimco redevelopment and development
investments and projected yield on such investments, timelines and Net
Operating Income contribution; expectations regarding sales of Aimco
apartment communities and the use of proceeds thereof; and Aimco
liquidity and leverage metrics.

These forward-looking statements are based on management’s judgment as
of this date, which is subject to risks and uncertainties. Risks and
uncertainties include, but are not limited to: Aimco’s ability to
maintain current or meet projected occupancy, rental rate and property
operating results; the effect of acquisitions, dispositions,
redevelopments and developments; Aimco’s ability to meet budgeted costs
and timelines, and achieve budgeted rental rates related to Aimco
redevelopment and development investments; expectations regarding Aimco
sales of apartment communities and the use of proceeds thereof; and
Aimco’s ability to comply with debt covenants, including financial
coverage ratios.

Actual results may differ materially from those described in these
forward-looking statements and, in addition, will be affected by a
variety of risks and factors, some of which are beyond Aimco’s control,
including, without limitation:

• Real estate and operating risks, including fluctuations in real estate
  values and the general economic climate in the markets in which Aimco
  operates and competition for residents in such markets; national and
  local economic conditions, including the pace of job growth and the
  level of unemployment; the amount, location and quality of competitive
  new housing supply; the timing of acquisitions, dispositions,
  redevelopments and developments; and changes in operating costs,
  including energy costs;
• Financing risks, including the availability and cost of capital
  markets’ financing; the risk that cash flows from operations may be
  insufficient to meet required payments of principal and interest; and
  the risk that earnings may not be sufficient to maintain compliance
  with debt covenants;
• Insurance risks, including the cost of insurance, and natural
  disasters and severe weather such as hurricanes; and
• Legal and regulatory risks, including costs associated with
  prosecuting or defending claims and any adverse outcomes; the terms of
  governmental regulations that affect Aimco and interpretations of
  those regulations; and possible environmental liabilities, including
  costs, fines or penalties that may be incurred due to necessary
  remediation of contamination of apartment communities presently or
  previously owned by Aimco.

In addition, Aimco’s current and continuing qualification as a real
estate investment trust involves the application of highly technical and
complex provisions of the Internal Revenue Code and depends on Aimco’s
ability to meet the various requirements imposed by the Internal Revenue
Code, through actual operating results, distribution levels and
diversity of stock ownership.

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,
2018, and the other documents Aimco files from time to time with the
Securities and Exchange Commission.

These forward-looking statements reflect management’s judgment as of
this date, and Aimco assumes no obligation to revise or update them to
reflect future events or circumstances. This press release does not
constitute an offer of securities for sale.

Contacts

Matt Foster, Director, Investor Relations
Investor Relations
303-793-4661, [email protected]

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