AIMCO has announced that it will separate its business into two listed companies, Apartment Income REIT or AIR and Aimco. AIR will be a self-managed REIT investing in the multi-family sector, while Aimco will continue to develop and redevelop shared apartments.
AIR will own 93.5% of a portfolio of 98 stabilized properties with 26,599 apartment buildings in Boston, Philadelphia, Washington DC, Denver, the Bay Area, Los Angeles, Miami and San Diego. Taken together, these properties have an estimated market value, or GAV, of $ 10.4 billion, according to the REIT.
The decision to separate the two companies was the result of a long-term study, says Bob Miller, lead director of Aimco. "We believe that both will benefit from a separation with company-tailored balance sheets, improved management focus, expanded opportunities and special risks and opportunities for shareholders, ”he said in prepared comments.
California's $ 2.4 billion deal
The REIT also announced that it has entered into a ten-year joint venture with a passive institutional investor to jointly own 12 apartment buildings with 4,051 units in California. The properties were valued at $ 2.4 billion, or approximately $ 592,000 per unit, which is an implied NOI cap of ~ 4.2% and an implied free cash flow cap of ~ 4.0% based on the NOI and months ended June 30, 2020 based on the six year annualized free cash flow.
The properties secure non-recourse real estate debt of $ 1.22 billion with a weighted average interest rate of 3.17% and an implied equity value of $ 1.18 billion.
In return for a 39% interest in real estate debt of $ 475 million, Aimco received $ 461 million in cash and an additional $ 24 million for future remediation expenses. Aimco retains ownership of the remaining 61% and is responsible for operating the property.