Apartment Investment Review & Management: U.S. Real Estate and Debt

Apartment Investment Review & Management: U.S. Real Estate and Debt

Apartment Investment & Management REITAIV5,99 $BuyService in partnership with Tinkoff Investments. Quotes are updated every 15 minutes

Apartment Investment & Management, or Aimco (NYSE: AIV), is an American real estate investment fund. The company invests in real estate, manages it and focuses on maximizing the return on investment. The business was founded in January 1994, and in July of that year, it went public through an offering on the New York Stock Exchange..

Apartment Investment Review & Management: U.S. Real Estate and Debt

What he earns

Aimco owns and operates real estate in the continental United States, where it gives preference to apartment buildings and other mass family housing. The company focuses mainly on direct investments and the position of the managing partner, in order to most accurately control investments and dispose of the acquired real estate at their discretion.

The site has a convenient section with a portfolio of real estate by region and key lots, which are owned by the fund.

In addition to the construction of new facilities, purchase of ready-made and reconstruction of real estate in the secondary market Apartment Investment & Management is also investing in smart home devices as an alternative investment.: for example, the company became a partner of the SmartRent service, offering smart keyless lock technology, Thermostats, water leakage sensors and other devices, which can be useful for Aimco residential real estate.

Apartment Investment Review & Management: U.S. Real Estate and Debt

What's wrong

Debt load. Aimco's Conservative Business Is Saddled with Notable Debt: liabilities exceed the company's equity capital almost in 3,5 Times, and the financial dependence ratio is 0,77, which is slightly higher than the generally accepted norm of 0.6-0.7 points. With such numbers, the organization becomes financially unstable and loses financial independence., which limits the freedom of its actions and investments.

Apartment Investment Review & Management: U.S. Real Estate and Debt

Stocks are overvalued. In my memory, this is the first case., when rated simply by Wall Street, which even has a bull on its logo, stocks are considered significantly overvalued. Analysts believe that the honest price of AIV shares 1,65 $, and the current price in 6,3 $ Specifies, in their opinion, on the revaluation of the issuer's securities almost in 300%.

Apartment Investment Review & Management: U.S. Real Estate and Debt

Overheated housing market in the US. To get a general cut on the U.S. residential real estate market, just look at the Case-Schiller index, which tracks house prices in 20 major U.S. cities. The index curve has been almost recoilless since February. 2012, and even in the midst of the pandemic, it hasn't slowed down., and, vice versa, went up at an even steeper angle and for March 2022 is approaching new peak values in the area of 295 points.

  GDP : Goodrich Petroleum Corporation

Coupled with increasingly hawkish rhetoric FED and the beginning of the increase in the key rate, this information makes it clear, that the housing market in the United States is quite overheated and the state is interested in cooling it and lowering prices., which will not have the best effect on the business of Apartment Investment & Management.

Apartment Investment Review & Management: U.S. Real Estate and Debt

What good

Revenue growth. The company's revenue is steadily increasing at a slow pace in accordance with the conservative business, which the, as opposed to growth stocks, instead of rapid ups and downs, it focuses on systemic value generation and investment portfolio growth.

Apartment Investment Review & Management: U.S. Real Estate and Debt

Split shares and business spin-off. In 2020, the company announced the separation of part of its operations into an independent organization Apartment Income REIT and the distribution of business between two publicly traded companies.: Aimco has retained the construction of new and reconstruction of old properties in secondary markets, and the new company focused on the management of the rental business.

As a result of the Split Apartment Investment & Management left the S index&P 500, its shares have lost significantly in value, and the news itself was perceived by investors extremely negatively.

But at the same time, the division of activities into two businesses has a beneficial effect on maintaining order in current affairs., when heterogeneous processes are distributed and competently delegated to responsible employees and each organization can work more efficiently, solving your own class of problems.

Finally, the arguments that, that cheaper Aimco can simply buy profitably, and this, with an adequate amount of transaction, can also not be called an unsuccessful step for the company in the light of the rhetoric of US regulators aimed at cooling the real estate market..

Diversified pool of investors. That, that Apartment Investment & Management is too early to write off, once again confirms the number of institutional investors. Among several dozen funds, one of the largest shares is held by Vanguard Group and BlackRock , investment giants, names of which even in Russia are known to almost every schoolchild.

Apartment Investment Review & Management: U.S. Real Estate and Debt

What's the bottom line?

Apartment Investment & Management does not pursue the explosive growth of indicators and prefers to calmly invest in real estate in all possible ways.. The company has experienced a sensitive division into two businesses, but to optimize the organizational structure, such a step looks useful.

At the same time, Aimco's debt load raises concerns., especially in light of the cycle of key rate hikes in the US, when it will become increasingly expensive to service loans to organizations. Also, do not forget, that dividends from REITs are always taxed in 30% and filling out the W-8BEN form won't help here.

Scroll to Top