Aimco (AIV) Plans 11% Dividend Hike; Sees Improvement in FY12 adj.-FFO Outlook

May 11, 2012 9:51 AM EDT
Apartment Investment and Management Company (NYSE: AIV) provided an update on its financial and dividend guidance for 2012, based on its recently announced public offering of 11,000,000 shares of common stock. Aimco intends to use the net proceeds from the offering and available cash to redeem all of its outstanding shares of Class T Cumulative Preferred Stock, Class V Cumulative Preferred Stock and Class Y Cumulative Preferred Stock.

Chairman and Chief Executive Officer, Terry Considine, comments: “We are pleased to have taken a significant step that reduces our cost of capital, increases AFFO, and strengthens our balance sheet. This marks no change in our plans to make steady progress in upgrading our portfolio through sale of lower-rated properties; adding value through redevelopment; strengthening our balance sheet; and simplifying our business. The Aimco Board decided that this was an opportune time to issue equity and accelerate the rate of progress. Based on the expected increase in AFFO, the Aimco Board also intends to increase the company’s quarterly dividend 11%, from $0.18 to $0.20 per share, at its next meeting in July.” The current trading range suggests an annualized yield of 2.9 percent.

Chief Financial Officer, Ernie Freedman, adds: “Through this series of transactions, Aimco expects to increase annual cash flow by approximately $16 million. Aimco estimates that the dilutive impact to Net Asset Value of approximately $0.40 per share will be recovered within five years. While we expect modest dilution to FFO and AFFO until the preferred stocks are redeemed later this quarter, we expect that FFO will increase by $0.01 per share during the second half of this year compared to our original guidance. On an annualized basis, we expect Pro forma FFO to increase by $0.02 and AFFO to increase by $0.07 from these transactions.”

The Street sees FY12 FFO of $1.78 and FY13 FFO of $1.97.

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