Apartment Investment & Management Co. (AIV), also known as Aimco, is a real estate investment trust (REIT). The company is scheduled to report its third quarter 2011 earnings before the market opens on October 28, 2011. The current Zacks Consensus Estimate for the third quarter is pegged at 41 cents per share, representing a year-over-year growth of 2.2%.
Second Quarter Recap
Aimco reported funds from operations (FFO) of $32.3 million or 27 cents per share in the second quarter of 2011 compared with $46.9 million or 40 cents per share in the year-ago period. Fund from operations, 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.
The reported FFO missed the Zacks Consensus Estimate by 2 cents. During the quarter, total revenue stood at $281.0 million, compared with $276.5 million in the year-ago period. Total revenue in the reported quarter surpassed the Zacks Consensus Estimate of $274 million. The year-over-year increase in total revenue was primarily due to sustainable reduction in operating costs to the tune of 1.5%.
Total same-store net operating income (NOI) increased 5.1% year over year.
Agreement of Analysts
In the last 7 days and 30 days, none of the analysts revised their earnings estimates for the first quarter or for fiscal 2011. This demonstrates that analysts are mostly neutral regarding the future outlook of the company.
Magnitude of Estimate Revisions
Over the last 7 days, earnings estimates for the third quarter and fiscal 2011 remained unchanged at 41 cents and $1.49 per share, respectively, reflecting the cautious stance adopted by the analysts regarding the performance of the company.
Our Take
Headquartered in Denver, Colorado, Apartment Investment and Management Company (Aimco) is engaged in the acquisition, ownership, management, and redevelopment of apartment properties
Aimco is one of the largest owners and operators of multifamily apartments in the U.S., with a diversified portfolio of conventional, affordable and student housing communities. The company has a strong portfolio of Class ‘B’ and Class ‘C’ properties primarily catering to the middle-income market. In addition, Aimco rents and leases its apartment units to a diverse base of residents.
Aimco continues to sell older assets to reposition its portfolio and focus on fewer markets with higher growth potential. Furthermore, the company is focusing on redevelopments to mitigate operating risk amid challenging macroeconomic environment.
However, Aimco competes with other housing alternatives such as rental apartments, condominiums and single-family homes that are available for rent, and new and existing condominiums and single-family homes available for sale. This puts considerable pressure on maintaining its profitability through stringent cost-cutting measures.
We have a Neutral recommendation on Apartment Investment and Management Co., which presently has a Zacks #3 Rank that translates into a short-term Hold rating. One of its competitors, Equity Residential (EQR) also holds a Zacks #3 Rank.
APARTMENT INVT (AIV): Free Stock Analysis Report
EQUITY RESIDENT (EQR): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment