AIV - Embedded Expectations Analysis - 2018 09 21
Apartment Investment and Management Company (AIV:USA) currently trades at historical highs relative to Uniform Assets, with a 1.7x Uniform P/B. At these levels, markets are pricing in bullish expectations for the firm, while management is concerned about 2019 debt maturities, their ability to retain their residents, and the sustainability of elevated prelease salesSpecifically, they may be exaggerating their focus on profitability in their property operations and may lack confidence in their ability to invest in properties with higher rates of return. Additionally, they may be concerned about refinancing their 2019 debt maturities, and may lack confidence in their ability to meet asset management income expectations. Furthermore, they may lack confidence in their ability to improve average daily occupancy rates, and may be concerned about the seasonality of lease rates. Moreover, management may lack confidence in their ability to retain their residents to avoid turn costs and frictional vacancy, and to maintain robust prelease rates
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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