DENVER--(BUSINESS WIRE)--
Apartment Investment and Management Company (“Aimco”) (NYSE:AIV) today
announced that it acquired the 47% interest in the Palazzo joint venture
owned by institutional investors advised by J.P. Morgan Asset Management
for $451.5 million.
Aimco now owns 100% of the three Palazzo communities: Palazzo at Park La
Brea, a 521-apartment home community; Palazzo East, a 611-apartment home
community; and Villas at Park La Brea, a 250-apartment home community.
The communities are well located in the mature Mid-Wilshire district of
Los Angeles and benefit from their central location to employment
centers—two miles from Beverly Hills, Hollywood and Century City, and
six miles in opposite directions from both Downtown LA and Santa Monica.
“First, I want to thank J.P. Morgan for our highly successful
partnership over the past decade. Second, we are glad of the opportunity
to re-acquire 100% ownership of the three Palazzo properties. We know
them well having contracted for their construction 15 years ago and
having operated them ever since,” said Aimco Chairman and CEO Terry
Considine.
“We appreciate the Mid-Wilshire submarket with its highly educated and
high-income customers who value the proximity to transportation, job
centers, and upscale retail, including The Grove, literally across the
street…and where we can see clearly that future development is
increasingly difficult. We expect to continue the operation of the
properties and to redevelop each, over time and at the right time, to
serve different and distinctive market segments.”
The acquisition was funded by taking title subject to existing allocable
debt of $140.5 million and by payment of $311 million in cash proceeds
funded with bank borrowings pending the sales of properties located in
Rhode Island, Virginia, Maryland, and New Jersey. This leverage neutral
paired trade transaction is expected to result in a 150 basis points
higher free cash flow internal rate of return, to increase Aimco average
monthly revenue per apartment home by $65, and to shift capital from
submarkets with lower revenue growth prospects to a submarket with
higher rent growth and higher margins.
Palazzo Acquisition Analysis:
|
| QUALITY COMPARISON |
|
|
| Palazzo |
|
|
|
|
| Avg. of
Property Sales
to Fund
Acquisition |
|
|
|
|
| Acquisition
vs. Property
Sales |
|
Age
|
|
|
|
12 years
|
|
|
|
|
|
34 years
|
|
|
|
|
|
-
| $22 |
|
Average revenue per apartment home
|
|
|
| $3,525 |
|
|
|
|
| $1,300 |
|
|
|
|
|
+
| $2,225 |
|
Median home values (1) |
|
|
| $1,000,000 |
|
|
|
|
| $280,000 |
|
|
|
|
|
+
| $720,000 |
| FINANCIAL COMPARISON |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Year FCF IRR (2) |
|
|
|
8.1%
|
|
|
|
|
|
6.6%
|
|
|
|
|
|
+
|
150 bps
|
|
10-Year avg. annual revenue growth rate (3) |
|
|
|
3.4%
|
|
|
|
|
|
2.6%
|
|
|
|
|
|
+
|
80 bps
|
|
NOI yield
|
|
|
|
4.2%
|
|
|
|
|
|
6.2%
|
|
|
|
|
|
-
|
200 bps
|
|
FCF yield (2) |
|
|
|
4.1%
|
|
|
|
|
|
5.4%
|
|
|
|
|
|
-
|
130 bps
|
|
NOI margin
|
|
|
|
71%
|
|
|
|
|
|
64%
|
|
|
|
|
|
+
|
700 bps
|
|
FCF margin (2) |
|
|
|
68%
|
|
|
|
|
|
56%
|
|
|
|
|
|
+
|
1200 bps
|
|
(1) Source: ESRI, one mile radius
|
|
(2) FCF assumes annual capital replacements spending of $1,200 per
apartment home for the communities acquired and sold
|
|
(3) Source: REIS
|
| |
|
|
| |
|
|
|
|
| |
|
|
|
|
| | |
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 188 communities in
22 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170705005736/en/
Aimco
Investor Relations
Lynn Stanfield, 303-793-4661
Sr.
Vice President, Finance
Investor@aimco.com
Source: Aimco