EXHIBIT 9
APARTMENT INVESTMENT AND MANAGEMENT COMPANY ANNOUNCES $1.5 BILLION ACQUISITION
OF 17,383 UNITS FROM CASDEN PROPERTIES OF LOS ANGELES
INCREASES ASSET BASE TO $15 BILLION; 363,000 APARTMENT UNITS
DENVER, Dec. 4 /PRNewswire/ -- Apartment Investment and Management Company
(NYSE: AIV - news; "Aimco"), the nation's largest owner and operator of
apartments, has agreed to acquire 100% ownership of 17,383 apartment units
through the acquisition of Casden Properties, a Los Angeles-based private real
estate investment trust ("REIT"). As part of the transaction, the selling group,
including Alan Casden and affiliates of Blackacre Capital Management, LLC, New
York, will acquire $213 million in Aimco common stock and common OP Units at a
price of $47 per share. The $1.5 billion acquisition is comprised of:
-- 6,356 conventional apartment units located in Southern California of
which 1,381 units, located in the Park La Brea area of Los Angeles,
are under development;
-- 11,027 affordable apartment units (located in 25 states); and
-- National Partnership Investments Corporation ("NAPICO"), a subsidiary
of Casden Properties, which as general partner controls more than 400
properties with more than 41,000 units.
The addition of the Casden portfolio significantly increases Aimco's presence in
Southern California. The acquisition, upon the completion of the Park La Brea
property, will increase Aimco's real estate Free Cash Flow earned in the six
county Southern California area from 3.5% to 15.9%. The acquisition will
increase the real estate Free Cash Flow contribution from properties with
monthly rents greater than $1,000 from 12.2% to 20.3%.
The acquisition increases Aimco's owned and managed asset base from $12.5
billion to $15 billion and Aimco's total owned and managed apartment portfolio
from 304,000 to 363,000 units, with over 99% of pro forma Free Cash Flow
generated from properties in which Aimco has an ownership interest. In addition,
NAPICO increases Aimco's controlled investment management assets by over $1
billion in gross real estate value.
The acquisition and related transactions mentioned later in the release are
expected to add $0.09 to annual Adjusted Funds From Operations ("AFFO"), $0.12
to annual Funds From Operations ("FFO") and $1.21 to Aimco's Net Asset Value
("NAV") resulting in a pro forma NAV of $48.39.
TRANSACTION SUMMARY
Casden Properties and a related REIT will merge into Aimco's operating
partnership. At closing, Aimco will pay $1.063 billion for the 16,002 stabilized
conventional and affordable units and NAPICO. Aimco will issue $213 million of
common stock or common OP Units, priced at $47 per share (Aimco's Net Asset
Value per share - September 30, 2001), pay approximately $166 million in cash
and assume responsibility for existing mortgage indebtedness of approximately
$684 million. The selling group may earn up to an additional $36 million
depending upon property performance for the period ending December 2001. In
addition, Aimco expects to incur transaction costs and Initial Capital
Expenditures ('ICE') aggregating approximately $24 million.
Casden is expected to complete the three phases of the Park La Brea property
between Q2 of 2002 and Q3 of 2004. The purchase price for the 1,381 units is
$418 million and is payable upon completion and 60% occupancy. The selling group
may earn up to an additional $24 million depending on property performance.
Required Casden Properties and the related REIT shareholder approval for the
transactions have been obtained. Aimco shareholder approval is not required. The
merger transaction is subject to customary regulatory and other approvals.
Closing is expected in the first quarter of 2002.
RELATED TRANSACTIONS
Aimco will enter into several additional transactions with Casden Development
Company, LLC, as part of the overall acquisition, including:
-- Invest up to $50 million for a 20% limited liability interest in
Casden Development, which will pursue new development
opportunities in Southern California and other markets. Alan
Casden and affiliates of Blackacre have collectively agreed to
invest up to $200 million in Casden Development. Aimco will have
an option to purchase, at completion, all multifamily rental
projects of Casden Development;
-- Agree to purchase a proposed 350 apartment unit project located
in the heart of Westwood Village in West Los Angeles with
projected stabilization in 2005. The purchase agreement is
subject to several contingencies including securing development
approvals and completion and stabilization of the property;
-- Retain Casden Development to accelerate the redevelopment of
Aimco's affordable portfolio; and
-- Provide a stand by facility of up to $70 million in debt
financing associated with the construction of the Park La Brea
and Westwood Village properties.
EARNINGS IMPACT
For pro forma earnings, the portfolio acquisition and related transactions have
been underwritten on a leverage neutral basis (assumed Free Cash Flow to
interest expense coverage of 2.25 to 1 and equity at a constant cost of capital
assuming all common stock at $47 per share). Aimco expects to repay any
short-term borrowings with internal operating cash flow and proceeds from the
sale of other Aimco properties.
On a leverage neutral basis, the sum of the acquisition of the 16,002 stabilized
units and NAPICO, the investment in Casden Development and the debt financing
for Park La Brea are expected to add from $0.08 to $0.11 per share to Aimco's
annual AFFO ($0.09 to $0.12 per share to FFO). The range of earnings realization
is based on the rate of NOI growth for the 16,002 stabilized properties.
With existing leverage, the sum of the acquisition of the 16,002 stabilized
units and NAPICO, the investment in Casden Development and the debt financing
for Park La Brea are expected to add from $0.08 to $0.11 per share to Aimco's
annual AFFO ($0.11 to $0.14 per share to FFO). Attached as Exhibit IV is the pro
forma AFFO modeled at $0.09 per share (FFO at $0.12 per share).
The Park La Brea property, based on pro forma leverage of 55% and interest rates
ranging from 7% to 7.5%, is expected to add on a pro forma basis:
-- $2.4 million to $2.7 million to Aimco's 2003 AFFO ($2.5 million to
$2.8 million to FFO)
-- $9.0 million to $10.9 million to Aimco's 2004 AFFO ($9.3 million to
$11.2 million to FFO)
-- $15.9 million to $21.0 million to Aimco's 2005 AFFO ($16.4 million
to $21.5 million FFO)
The range of earnings realization for Park La Brea is based on a range of rental
rates with the lower figures based on market rents available today and the
higher figures based on anticipated rental rents at stabilization.
ACQUISITION COMPONENTS
A. 6,356 Conventional Apartment Units
1. 4,975 Stabilized Conventional Apartment Units
-- 16 properties (4,767 units) in Southern California and one
property (208 units) in South Florida (See Exhibit III for
detail)
-- Weighted average monthly rents (9/30/01) -- $1,286 per unit and
weighted average age -- 15 years
-- Allocated value -- $630.4 million, assumed debt $385.7 million
with weighted average interest rate -- 5.85%. This is comprised
of taxable debt -- $166.3 million with weighted average interest
rate -- 7.24% and tax-exempt debt--$219.4 million with weighted
average interest rate -- 4.8%
-- Pro forma Free Cash Flow (NOI less a Capital Replacement Reserve
of $380 per unit) Yield
-- 4,975 units -- 8.88%
-- Taxable financed properties (1,817 units) -- 9.48%
-- Tax-exempt financed properties (3,158 units) -- 8.51%
-- Pro forma NOI Yield
-- 4,975 units -- 9.18%
-- Taxable financed properties (1,817 units) -- 9.76%
-- Tax-exempt financed properties (3,158 units) -- 8.82%
-- Pro forma AFFO Yield -- 13.66%
-- Price per unit -- $126,709
-- Weighted average occupancy (9/30/01) -- 96.1%
-- Pro forma completion of the transaction, the 4,975 units will
generate $56 million in Free Cash Flow (98.8% or $55.3 million
is in Southern California) and $33.4 million in AFFO.
2. Park La Brea Property -- 1,381 Units
-- Park La Brea is an existing 4,230 unit, large scale residential
community located north of Wilshire Boulevard, south of West
Hollywood and east of Beverly Hills
-- Aimco has agreed to acquire a new property being constructed in
three phases on Park La Brea land according to the following
pro forma schedule:
-- Phase I -- as of 11/16/01, the property was 24% occupied
and 40% leased
-- 250 units stabilized in 2002 with pro forma rents
of $2,200 per month
-- Purchase price of $55.5 million with $3.2 million
earnout
-- Free Cash Flow Yield
8.23% on existing market rents
8.84% on pro forma rents
-- NOI Yield
8.4% on existing market rents
9.0% on pro forma rents
-- Phase II
-- 521 units stabilized in 2003 with pro forma rents of
$3,100 per month
-- Purchase price of $162.9 million with $9.5 million
earnout
-- Free Cash Flow Yield
8.05% on existing market rents
9.01% on pro forma rents
-- NOI Yield
8.17% on existing market rents
9.13% on pro forma rents
-- Phase III
-- 610 units stabilized in 2004 with pro forma rents of
$3,200 per month
-- Purchase price of $199.3 million with $11.6 million
earnout
-- Free Cash Flow Yield 7.55% on existing market rents
9.13% on pro forma rent
-- NOI Yield
7.66% on existing market rents
9.25% on pro forma rents
-- Payment by Aimco of the Park La Brea acquisition
purchase price is dependent upon the seller achieving
60% economic and physical occupancy for each phase.
B. 11,027 Affordable Apartment Units
-- 99 properties located in 25 states (See Exhibit III for detail)
-- Weighted average monthly rents -- $669 per unit and weighted
average age -- 22 years
-- Pro forma Free Cash Flow Yield -- 10.53%
-- Pro forma NOI Yield -- 11.58%
-- Pro forma AFFO Yield -- 17.85%
-- Price per unit -- $35,976
-- Pro forma completion of the transaction, the affordable properties
will generate $41.8 million in Free Cash Flow and $17.6 million in
AFFO
-- The affordable properties provide conventional conversion, tax credit
and sale opportunities which Aimco will pursue consistent with its
existing affordable holdings strategy
-- The affordable portfolio has a number of properties located in major
metropolitan areas, including several locations in New York City,
downtown Los Angeles, and Springfield, Massachusetts.
C. NAPICO
-- Controls more than 400 properties with more than 41,000 units as
General Partner, typically as a Co-General Partner with a local
managing partner
-- 35-year operating history with annual placement of approximately
$100 million in tax credit equity
-- Through an affiliate provides property management to 71 properties
(6,512 units)
-- Provides opportunities to redevelop tax credit properties and
repurchase third party interests in NAPICO properties
-- Provides significant infrastructure to maximize value within
Aimco's existing affordable portfolio
-- Allocated value -- $36 million
-- While NAPICO generated $9.5 million in Free Cash Flow in 2000 and
is expected to generate a like amount for 2001, Aimco has used an
estimate of $4 million for pro forma NAPICO Free Cash Flow and
AFFO in 2002 (of which $1 million is controlled property
management Free Cash Flow).
INTEGRATION
The Casden Properties will be integrated into Aimco's existing conventional and
affordable operating structure. The 16 Southern California properties will be
managed by Aimco's Regional Operating Center in Los Angeles, which is currently
responsible for 46 properties throughout the state. The 170 affordable
properties (99 wholly-owned and 71 through NAPICO) will be managed by Aimco's
affordable division which is currently responsible for 524 properties throughout
the United States.
In aggregate, Casden will add 187 properties or 12% to Aimco's existing managed
portfolio of approximately 1,600 properties. Other integration elements --
information technology systems, accounting and human resources are under way and
will be completed prior to closing of the transaction.
It is expected that many of the employees of Casden and NAPICO will be offered
employment with AIMCO.
FUNDING OF ACQUISITION
Aimco's total cash requirement at closing or shortly thereafter will be $217
million (for 16,002 stabilized conventional and affordable units, NAPICO, the
development company investment and transactions costs, net of $23 million of
expected refinancing proceeds from certain of the acquired properties). In
addition, Aimco may be required to pay up to $36 million in additional cash
consideration depending upon property performance for the period ending December
2001. This cash requirement is expected to be initially funded with short-term
borrowings. The borrowings will be repaid with internal operating cash flow and
the proceeds from property sales.
The cash required for the purchase of the Park La Brea property of $167 million
(net of pro forma long-term mortgage debt at 60% LTV) will be paid as phases are
completed and stabilized during the period from 2002 to 2004. The projected cash
requirement by phase is $22 million in 2002, $65 million in 2003 and $80 million
in 2004. Aimco has agreed to provide up to $68 million in debt financing for
construction of the Park La Brea phases which will be repaid or credited against
the $167 million of equity required and will be funded by Aimco's credit
facility or short-term borrowings.
Aimco's liquidity from internal operating cash flow and customary sales proceeds
in 2002 and 2003 is expected to be approximately $350 to $400 million per year
(compared to $370 million projected for 2001). The amount of liquidity is
sufficient to fund internal uses as well as retire any short-term borrowings
from this transaction within 12 to 24 months. Aimco's availability on the $400
million credit facility at September 30, 2001 was $291 million. Balance sheet
information is attached on Exhibit V.
NET ASSET VALUE
Aimco's Net Asset Value based on third quarter results is $47.18 per share. Pro
forma the 16,002 stabilized unit acquisition, NAPICO, the investment in Casden
Development and the debt financing for Park La Brea, Aimco's Net Asset Value
increases to $48.39 per share. The pro forma Net Asset Value will be available
on Aimco's website as an attachment to this press release. Aimco has not assumed
any NAV improvement from Park La Brea, Westwood Village or the development
company investment.
CONFERENCE CALL AND INVESTOR TOUR IN LOS ANGELES
Aimco will host a conference call to discuss the details of the transaction on
Thursday, December 6, 2001 at 1:00 p.m. Eastern Standard Time. You may
participate in the conference call by dialing 1-888-228-8198, or 1-706-634-5947
for international callers, approximately five
minutes before the call is scheduled to begin and indicate that you wish to join
the Apartment Investment Management Company conference call. If you are unable
to participate in the conference call, you may access the replay by dialing
1-800-642-1687, or 1-706-645-9291 for international callers, access code
2575552. The replay will be available through 12:00 midnight Eastern Standard
Time on Friday, December 21, 2001.
In addition, Aimco will host an Investor and Analyst Tour and Information
Session in Los Angeles early in 2002. Aimco will provide details of the time and
place of the meeting shortly.
COMPANY INFORMATION
Aimco is a real estate investment trust with headquarters in Denver, Colorado
and 18 regional operating centers, which holds a geographically diversified
portfolio of apartment communities. Aimco, through its subsidiaries, operates
approximately 1,600 properties, including approximately 304,000 apartment units,
and serves approximately one million residents. Aimco's properties are located
in 46 states, the District of Columbia and Puerto Rico.
Contact: Paul J. McAuliffe, Executive Vice President and Chief Financial
Officer, +1-303-691-4339
Patricia Heath, Senior Vice President and Treasurer,
+1-303-691-4343
E-Mail: investor@aimco.com
Additional disclosures will be available on Aimco's web site at
http://www.aimco.com/about/casden as noted below:
Release with Exhibits
Pro Forma Net Asset Value
SOURCE: Apartment Investment and Management Company