Apartment Investment and Management Company ("Aimco") (AIV) announced today two investments that further the company’s goal of upgrading its Boston area portfolio.
Acquisition of Charlesbank Residences
Aimco closed today on the acquisition of Charlesbank Residences, a 44-apartment home community located in Watertown, Massachusetts. Transaction terms are confidential pursuant to the acquisition agreement. Constructed in 2012, the building overlooks the Charles River and is a short walk to Watertown Square. The property’s average revenue per apartment home is $2,200 per month, and its rents are 19% greater than the Boston market average, making this a “B+” quality asset in Aimco’s portfolio. At closing, the acquisition was funded from Aimco’s credit facility, which Aimco expects to repay later this month with proceeds from the sale of a Florida property containing 262 apartment homes with average revenue per apartment home of $750. Aimco expects the Free Cash Flow Internal Rate of Return (“FCF IRR”) generated by Charlesbank to be approximately 150 basis points greater than expected from the property to be sold.
One Canal Street Development Project
Separately, Aimco has entered into an agreement with Trinity Financial to develop a 12-story building at One Canal Street in the historic Bulfinch Triangle neighborhood of Boston’s West End. Located near the Boston Garden, one block from North Station and adjacent to the historic North End, the site enjoys excellent access to public transit, the Government Center, Financial District, and Massachusetts General Hospital employment centers, as well as the dining, recreation, and shopping amenities of its urban core location. Under the terms of the agreement, Trinity and its experienced development team will be responsible for construction of the building, which Aimco will own and operate after its completion.
Terry Considine, Chairman and CEO, comments
“Aimco’s recent investment activities in Boston are an important step to achieving our stated goal of upgrading our locations in that market. While we like our allocation to the area, we seek to own and operate properties at a higher price point than that of what has been a primarily suburban portfolio. By adding the stabilized Charlesbank community to our portfolio and partnering with Trinity to develop the One Canal Street location, we are better positioned to serve our target customers in Boston.”
Details of the One Canal Street Development Project
Over the next two and one-half years, Aimco expects to invest approximately $190 million in the development of the One Canal Street building, which will include 310 luxury apartment homes, approximately 22,000 square feet of commercial space and 147 parking spaces. The site has been leased to Aimco pursuant to a 99-year ground lease from the Massachusetts Department of Transportation.
The development will be funded in part by a $114 million construction loan and in part by proceeds from the sales of lower-rated properties in less desirable submarkets. The property loan bears interest at a rate of 5.2%, and matures in 2023. Consistent with Aimco’s discipline of upgrading its portfolio through paired-property, leverage-neutral transactions, Aimco has identified four properties with approximately 3,100 apartment homes that Aimco has sold or plans to sell to fund the equity portion of the One Canal Street development. These lower-rated properties are located in Colorado, Indiana, Massachusetts and Texas and have monthly revenues per unit averaging approximately $750. Aimco expects its One Canal Street investment to generate a FCF IRR that is 400 to 450 basis points greater than the properties identified for sale and 200 to 225 basis points greater than is available on the acquisition of a comparable, stabilized property in this submarket.
|Total estimated investment||$190 million|
Projected construction start
|Projected stabilized revenue per apartment home (un-trended)||$3,700|
Aimco is a real estate investment trust that is focused on the ownership and management of quality apartment communities located in the largest markets in the United States. Aimco is one of the country's largest owners and operators of apartments, with 258 communities in 23 states, the District of Columbia and Puerto Rico. 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.
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding projected results and specifically forecasts of One Canal Street development project investments, timelines and stabilized rents. These forward-looking statements are based on management's judgment as of this date and include certain risks and uncertainties, including without limitation, Aimco's ability to: meet One Canal Street development project budgets and timelines; achieve underwritten rental rates. 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 the control of Aimco, including, without limitation: development risks, financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for residents in such markets; national and local economic conditions, including the pace of job growth and the level of unemployment; the terms of governmental regulations that affect Aimco and interpretations of those regulations; the competitive environment in which Aimco operates; insurance risk, including the cost of insurance; natural disasters such as earthquakes; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; energy costs; and possible environmental liabilities. In addition, our 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 our 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, 2012, 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.
- Financials Industry
Investor Relations, 303-691-4350
Elizabeth Coalson, 303-691-4327
Vice President Investor Relations