Morningstar | Aimco Will Have To Rely on Internal Growth as Development Pipeline Shrinks
Apartment Investment and Management Co., or Aimco, owns and operates the most diversified portfolio of multifamily buildings among the U.S. real estate investment trusts we cover. The company invests in metropolitan markets with solid demographic trends that allow the company to maintain high occupancies and pass along consistent rent increases. Demand for apartments is dependent on economic conditions in their markets like job growth, income growth, decreasing homeownership rates, high relative cost of single-family housing, and attractive urban centers that draw younger populations. While Aimco's portfolio is typically more suburban and of lower quality than its multifamily REIT peers, which means its portfolio captures less of the marginal demand generated by these demographic trends, the company does benefit from the fact that new supply has been more concentrated in the luxury, urban segment and has a smaller impact on Aimco's portfolio. The company regularly recycles capital by selling noncore assets or markets and uses the proceeds to fuel its development pipeline or target acquisitions with strong growth prospects, a strategy that has improved the company's performance over the past few years.Aimco has significantly simplified and streamlined its portfolio and strategy over the past decade. While the company has decreased its portfolio from over 300 properties at the end of 2008 to just over 130 properties in the current portfolio, the company owns approximately the same number of assets over that time frame in the 12 markets it currently considers to be its core markets. The company's exit from markets with lower growth prospects has increased the portfolio's expected average growth. The company also completed the sale of the last of its affordable living and asset management businesses in 2018, segments with limited growth prospects that the company has been trying to exit for years. These efforts have brought Aimco's portfolio closer to its peers in terms of both asset quality and market exposure. While Aimco still has a differentiated portfolio from its peers, we expect Aimco to have similar internal and external growth opportunities.Apartment Investment and Management is a self-administered and self-managed real estate investment trust, focused on the ownership, management, redevelopment and limited development of apartment communities in the U.S. The company, through its wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, owns a majority of the ownership interests in AIMCO Properties, L.P. (the Aimco Operating Partnership). The company conducts all of its business and owns all of its assets through the Aimco Operating Partnership. The company's Real Estate portfolio includes garden style, apartment communities. In addition, the company held nominal ownership positions in partnerships that own low-income housing tax credit communities.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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