Apartment Investment and Management Company Q3 FY2021 earnings call

• The multifamily business is in a good time with healthy economy and strong customer demand, rents above 2019 peaks and long-term trend line. - Keith and his team have excelled in increasing occupancies, raising rents and lowering costs. - John McGrath took advantage of asset pricing, raised $1.7 billion, with $1 billion used to repay debt and $380 million plus $130 million of OP units used to buy 4 properties in Washington, D.C. - Company's year-end leverage is 5.3:1, better than target of 5.5:1, with capacity to invest almost $400 million without raising equity. - Welcomed new executives like John McGrath and Joshua Minix, thanked and said goodbye to certain directors and welcomed new board members.

In the third quarter, occupancy was 96.6%, up 120 basis points from the second quarter. Signed blended rate was up 10%, with September new lease rates up 14.4%. Revenue was up 6% from the third quarter of 2020. Net operating income was up 8.6% from the third quarter of 2020. Operating margin was 72.4% in the third quarter, marking the 20th consecutive quarter with margins above 70%. Across markets, Miami and San Diego had new lease rates at or above 20%, Los Angeles, Washington, D.C., Boston and Denver achieved double-digit rates, and the Bay Area and Philadelphia had rates up 3% to 6%. Revenue contribution is from the strong performance across various multifamily markets managed by AIR's teams.

• Full year FFO per share is expected between $2.12 and $2.16, at midpoint an 8% increase from guidance 9 months ago. - Fourth quarter FFO is expected to be $0.56 per share at midpoint. - Proceeds from asset sales will be used for deleveraging, funding pair trades, etc., and the pair trade in Washington, D.C. is expected to be accretive to results in 2022 and beyond.

• Lingering governmental restrictions in a few markets. - Economic uncertainties that may affect business performance. - Elevated asset prices which could pose risks. - Regulatory risks in certain locales with uncertain road law.

Q: Why fund new investments more on the disposition side versus equity and illuminate on the 50% increase in returns?

A: Terry Considine said one reason is they said they would delever and another is attractive pricing; John McGrath said it comes down to Keith and his team and the platform driving the advantage.

Q: How did the JV with the Blackstone affiliate come about and what are the economics like on the fee side?

A: Terry Considine said it came about due to long-known relationship and useful strategic relationship; John McGrath said they are at the GP and property manager and will have fees associated with those positions.

Q: For the California asset sales, will they be outright sales or in JVs?

A: John McGrath said they will all be outright sales.

Q: What was the pricing on the OP units in the D.C. portfolio?

A: Paul Beldin said they're priced upon a trailing average upon the closing of the transaction, ending up being just about $50 a unit.