Apartment Investment and Management Company Q1 FY2020 earnings call

Management Statement and Operational Highlights: - Prioritized health and safety of teammates, allowing work from home with pay, covering COVID-19 testing/treatment, no layoffs or pay cuts. - Enhanced cleaning, reduced in-person interactions, supported sheltering at home with Wi-Fi, redeployed staff. - Utilized technology and AI for social distancing, increased liquidity by drawing down credit line, reducing capital spending, placing term loan, and net proceeds from property loans. - Focused on customer selection and satisfaction, even during challenges. Lease-ups of 5 long cycle projects expected to increase annual net operating income by ~$30M or $0.18/share.

Segment Performance: In the first quarter, customer satisfaction was 4.3 out of 5 stars based on 13,000 surveys. Average daily occupancy in Q1 was a record 97.6%, 60 basis points better than 2019. Revenues were up 3.5% Y/Y. Controllable operating expenses were down 3.5%, but total expenses were down 40 basis points due to increased taxes and insurance. Same-store first quarter net operating income grew 5%, margins 74%, a 100 basis point improvement Y/Y. In April, turnover reached a new low at 41.1%. Average daily occupancy was 96.6%, with new lease rates up 90 basis points, renewals up 6%, and blended lease rates up 4.2%.

Guidance: - Expect easing in occupancy but won't lower customer selection standards. - Completion of 5 long cycle projects with lease-ups being arduous but expected to increase annual net operating income by ~$30M or $0.18/share. - Reallocate capital to states with property rights, economic dynamism, and comparative advantage in operations. - Expect property pricing to be similar to 6 months ago, +/- 5%. - Plan to adjust leverage via lease-ups and property sales.

Risks: - Economic downturn, unemployment, potential disregard for rule of law affecting rent setting and collection. - Impact on eds and meds (universities, hospitals) causing financial stress and affecting leasing. - Higher bad debt risk in certain markets like Southern California due to local regulations and industry impacts.

Q: Piljung Kim asked about occupancy timing.

A: Terry Considine said it's hard to know, but Keith Kimmel noted increasing leasing activity since early April and surpassing March 15 levels.

Q: Austin Wurschmidt asked about Parkmerced cash interest.

A: Paul Beldin said they collected $600,000 of cash rent based on property operations, and Terry Considine explained the note's collectibility and accounting.

Q: Robert Stevenson asked about operating expenses.

A: Keith Kimmel discussed offsetting expenses like increased cleaning vs. lower turnover costs.

Q: Hardik Goel asked about capital allocation for Parkmerced.

A: Terry Considine explained the internal investment process and optionality of owning 30% of the business.

Q: Richard Anderson asked about rent increases and customer satisfaction.

A: Keith Kimmel said they use individualized pricing based on market and resident circumstances.

Q: Sumit Sharma asked about Parkmerced impairment and Parc Mosaic leasing.

A: Terry Considine and Keith Kimmel provided insights on property performance and Parc Mosaic lease-up status.

Q: John Pawlowski asked about Parkmerced remedies.

A: John Bezzant discussed foreclosure remedies and the situation as an ongoing assessment based on specific circumstances.