EXHIBIT 99.1
[AIMCO LOGO]
APARTMENT INVESTMENT AND MANAGEMENT COMPANY ANNOUNCES
ACQUISITION OF ELEVEN FLATLEY PROPERTIES
IN GREATER BOSTON AREA
DENVER, COLORADO - August 12, 2002
Apartment Investment and Management Company (NYSE:AIV) ("Aimco") has
agreed to acquire 100% ownership of eleven conventional garden and mid-rise
apartment properties with 4,323 apartments located in the greater Boston area
for $500 million. Aimco is purchasing the properties from Thomas J. Flatley.
The portfolio surrounds Boston extending from Nashua, New Hampshire,
Swampscott and North Andover, Massachusetts to the north to Framingham,
Marlborough and Worcester, Massachusetts to the west and Bridgewater and Fall
River, Massachusetts and Warwick, Rhode Island to the south. The pro forma
average monthly rent for these established communities is $1,263 and the units
average 945 square feet in size. Weighted average occupancy for the portfolio is
currently 94.6%.
"These are very solid properties that make a great addition to the Aimco
portfolio," said Terry Considine, Aimco chairman and chief executive officer.
"Their developer, Tom Flatley, is a New England real estate legend and he built
these 'to keep'. I am delighted that when he decided to sell, Tom Flatley chose
Aimco. We will make every effort to maintain the Flatley tradition of attention
to detail and customer service. We welcome to Aimco the members of the Flatley
organization who have made these properties such attractive places to live.
"In addition to the existing cash flows, we believe that there are
excellent upsides available from the improving Boston market and utilization of
Aimco efficiencies," added Mr. Considine. "The low density, campus-like settings
are, literally, irreplaceable."
The addition of this portfolio significantly increases Aimco's presence in
the Boston area where the company currently owns one conventional property and
seven affordable properties. The acquisition is projected to increase Aimco's
real estate Free Cash Flow ("FCF") earned in the Boston area from less than 1%
to 6%, making Boston Aimco's third largest market. The acquisition will also
increase significantly Aimco's real estate Free Cash Flow from properties with
monthly rents greater than $1,000: from 16% to 21%.
Initial funding for the acquisition will be a combination of long-term
mortgage debt together with borrowing pursuant to Aimco's credit facility, which
will be repaid with operating cash flow and proceeds from the sale of lower
rated properties. For the
Apartment Investment and Management Company
August 12, 2002
Page 2
acquisition, Aimco has secured $309 million of 20-year, fully amortizing
mortgage debt at interest rates averaging 5.69%.
Pro forma calendar 2003, Aimco expects the acquisition to be immediately
accretive to Aimco, projecting accretion in:
- Adjusted Funds From Operations ("AFFO") of approximately $2.7
million or $0.02 per share; and
- Funds From Operations ("FFO") of approximately $4.9 million or
$0.04 per share.
This accretion is based on the cost of committed long-term property debt
plus an 11% assumed cost of equity, even though the latter will be funded in the
near term with lower cost borrowing under Aimco's line of credit. Pro forma Net
Income and EPS will be available after closing.
Aimco shareholder approval is not required for the transaction. The
transaction is subject to ordinary closing conditions. Closing is expected on or
before August 29, 2002.
ACQUISITION SUMMARY
Aimco is purchasing eleven properties consisting of 4,323 conventional
apartment units in the greater Boston area. Seven of the properties are garden
style and four are mid-rise. (Please see Exhibit I for further detail on the
properties).
- The purchase price averages $117,670 per unit and $125 per
square foot, or $113,900 per unit and $121 per square foot for
the garden style communities and $134,100 per unit and $141
per square foot for the mid-rise communities.
- The capitalization rate is 8.31% and is based on pro forma
2003 FCF, which is net of $500 per unit in Capital
Replacements.
- The pro forma average rent per unit is $1,263.
- The pro forma physical occupancy is 94.4%.
- The pro forma economic occupancy is 91.3%.
- The portfolio contains 553 acres of land or an average density
of 7.8 units per acre.
Imbedded in this acquisition are various opportunities that have not been
factored into the earnings projections. These include:
- Potential expansion: four of the properties have additional
acreage that can accommodate development of approximately 750
additional units;
- Continuation of a "kitchen and bath" improvement program: the
Flatley Company has already begun this effort completing
approximately 800 units and meeting good consumer response;
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August 12, 2002
Page 3
- Returning occupancy to historical levels: occupancy at
month-end July was approximately 94.6%, which exceeds Aimco's
budgeted figure of 94.4%. The average occupancy for the past
20 years in the Boston area has been 96.6%; and
- Possible addition of garages and storage space: a number of
the properties have the land and may have the demand for
economically rewarding construction of additional garages and
storage areas.
INTEGRATION OF PROPERTIES INTO AIMCO OPERATIONS
Aimco expects to retain many members of the Flatley organization
responsible for operating the properties. "The Flatley organization has a well
deserved reputation as excellent operators, and we hope to benefit from their
experience," said Peter Kompaniez, Aimco's president. The properties will be
integrated into Aimco's conventional Regional Operating Center ("ROC")
structure. Aimco intends to establish a Boston ROC that will also be responsible
for Aimco's conventional properties in New Hampshire and central Connecticut.
Other integration efforts, for example in information technology systems,
accounting and human resources, are under way and will be completed prior to
closing of the transaction.
FUNDING OF ACQUISITION
The total cost of the acquisition will include $500 million for the
properties, $6.2 million of initial capital expenditures and $2.5 million in
transaction costs. Aimco will fund this total through borrowing, pursuant to
commitments from two institutional lenders, $308.7 million in property debt with
fixed interest rates averaging 5.69% and with full amortization over 20 year
terms. The remainder of the purchase price will be funded initially from Aimco's
credit facility. Aimco expects to repay the short-term debt from internal
operating cash flows and with proceeds from the sale of lower rated properties.
Aimco currently has more than 200 properties, with more than 38,000 units,
in the process of being sold. Aimco expects to complete these dispositions over
the next 12 to 15 months with cash proceeds, after the repayment of related
property debt and distributions to partners, approximating $300 million. At
August 9th, Aimco had $374 million available to borrow on its $400 million
credit facility. Balance sheet information is attached on Exhibit V.
EARNINGS IMPACT
Financial projections indicate that the transaction is accretive to Aimco,
and property results from the most recent quarter ending June 30, 2002 show that
the portfolio is on track to deliver the expected results. The table below
projects three-year
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August 12, 2002
Page 4
results based on the pro forma statements. Pro forma results are based on the
committed $308.7 million of fixed rate mortgage debt, which has an average
interest rate of 5.69%, and a hypothetical current equity cost of 11%.
PROJECTED EARNINGS IMPACT
2003-2005 ($MM)
<Table>
<Caption>
2003 2004 2005
---------- ---------- ----------
NOI $ 44 $ 46 $ 48
FCF $ 42 $ 44 $ 46
Accretion in AFFO $ 2.7 $ 4.7 $ 6.6
Accretion in FFO $ 4.9 $ 6.8 $ 8.8
</Table>
Pro forma results for calendar year 2003 of approximately $42 million free
cash flow are based on the following inputs:
- Rents increase by $2.4 million, or 3.8%, over June 2002. This
is equivalent to $45 per unit per month;
- Physical occupancy increases from an average of 93.2% during
the first six months of this year to an annual average of
94.4%. (Occupancy in the Flatley portfolio has begun to
recover from recent vacancies resulting from the recent
recession as evidenced by the current physical occupancy of
94.6%.);
- Other rent loss is reduced $1.1 million from 5.1% of gross
potential rent ("GPR") to 3.1% GPR, due to a reduction in
concessions from 4.0% to 2.2%; and
- Expenses increase $1.1 million, primarily due to increases in
taxes and insurance of approximately $1 million, as well as
increases in onsite and offsite payroll costs. The budgeted
expenses of $4,008 per unit are consistent with the trailing
12-month results of Aimco's Bay Ridge property in Nashua, New
Hampshire.
CONFERENCE CALL AND WEBSITE INFORMATION
Aimco will host a conference call to discuss the details of the
transaction on Monday, August 12, 2002 at 2:00 p.m. mountain time, or 4:00 p.m.
eastern time. You may participate in the conference call by dialing
888-228-8198, or 706-634-5947 for international callers, approximately five
minutes before the call is scheduled to begin and indicate that you wish to join
the Aimco call with Terry Considine. If you are unable to participate in the
conference call, you may access the replay by dialing 800-642-1687, or
Apartment Investment and Management Company
August 12, 2002
Page 5
706-645-9291 for international callers, access code 5260213. The replay will be
available for seven business days.
A map of the area and pictures of the properties will be available on
Aimco's website prior to the call. Go to www.aimco.com/about and click on
"Investment Information".
INVESTOR TOUR IN BOSTON
Aimco will host an investor and analyst tour in Boston after the
transaction is closed. Details will be announced at a later time.
FORWARD-LOOKING ASSUMPTIONS
This news release contains forward-looking statements including statements
regarding 2002 through 2005 results that are subject to certain risks and
uncertainties, including but not limited to the Company's ability to maintain
current occupancy, rent levels, and "same store" results. Actual results may
differ materially from those described and could be affected by a variety of
factors including economic conditions; changes in interest rates; governmental
regulations; competition; financing risks; variations in real estate values; the
failure of acquisitions to perform in accordance with expectations; possible
environmental liabilities; and other risks described in our filings with the
Securities and Exchange Commission. These forward-looking statements reflect
management's judgment as of this date, and we assume no obligation to revise or
update them to reflect future events or circumstances.
COMPANY INFORMATION
Aimco is a real estate investment trust with headquarters in Denver,
Colorado and 19 regional operating centers that holds a geographically
diversified portfolio of apartment communities. Aimco, through its subsidiaries,
operates approximately 1,800 properties, including approximately 326,000
apartment units, and serves approximately one million residents each year.
Aimco's properties are located in 47 states, the District of Columbia and Puerto
Rico.
Contacts: Paul J. McAuliffe
Executive Vice President and Chief Financial Officer
(303) 691-4339
Jennifer Martin
Vice President Investor Relations
(303) 691-4440
Email: investor@aimco.com
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August 12, 2002
Page 6
EXHIBIT I - PROPERTY SUMMARY
<Table>
<Caption>
AVERAGE
SQUARE
AVG. RENT FEET PER JULY 2002 YEAR UNITS PER
FLATLEY PORTFOLIO CITY STATE UNITS 2003 UNIT OCCUPANCY BUILT ACRES ACRE
----------------- ---- ----- ----- --------- -------- --------- ----- ----- ---------
Waterford Village Bridgewater MA 588 $ 1,103 791 100.0% 1971 119 4.94
Royal Crest - Fall River Fall River MA 216 1,006 923 99.5% 1974 79 2.73
Georgetown Apartments [1] Framingham MA 207 1,347 876 92.8% 1964 8 25.36
Granada Apartments [1] Framingham MA 72 1,290 890 88.9% 1968 3 25.36
Bayberry Hill Estates [1] Framingham MA 425 1,401 922 92.5% 1971 11 39.72
Royal Crest - Marlborough Marlborough MA 473 1,294 904 89.6% 1970 36 12.99
Royal Crest - North Andover North Andover MA 588 1,568 1,169 89.8% 1970 76 7.74
Vantage Pointe [1] Swampscott MA 96 1,820 1,300 87.5% 1987 3 32.00
Wexford Village Worcester MA 264 1,096 852 99.2% 1974 50 5.33
Royal Crest - Nashua Nashua NH 902 1,153 938 94.1% 1970 88 10.25
Royal Crest - Warwick Warwick RI 492 1,193 962 99.4% 1972 80 6.15
----- ------- --- ---- ---- --- ----
TOTAL 4,323 $ 1,263 945 94.6% 1972 553 7.82
</Table>
FOOTNOTES:
[1] These four properties are mid rise communities. The other 7 properties are
garden style communities.
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August 12, 2002
Page 7
EXHIBIT II - MARKETS
A. CONTRIBUTION TO REAL ESTATE FREE CASH FLOW - PRE- ACQUISITION
<Table>
<Caption>
2Q02 PERCENT OF REAL ESTATE
RANK TOP FIVE MARKETS FREE CASH FLOW
---- ---------------- ----------------------
1 Washington, D.C. 11.2%
2 Los Angeles 9.1%
3 Chicago 5.8%
4 Houston 4.5%
5 Phoenix 3.7%
38 BOSTON 0.6%
</Table>
B. CONTRIBUTION TO REAL ESTATE FREE CASH FLOW - POST ACQUISITION
<Table>
<Caption>
2Q02 PERCENT OF REAL ESTATE
RANK TOP FIVE MARKETS FREE CASH FLOW
---- ---------------- ----------------------
1 Washington, D.C. 10.6%
2 Los Angeles 8.6%
3 BOSTON 5.7%
4 Chicago 5.5%
5 Houston 4.2%
</Table>
Apartment Investment and Management Company
August 12, 2002
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EXHIBIT III - REGIONAL AND PRICE POINT CONTRIBUTION TO REAL ESTATE FREE CASH
FLOW
A. REGIONS
<Table>
<Caption>
2Q02 PRO FORMA WITH
REGIONS PRE-ACQUISITION FLATLEY ACQUISITION ACQUISITION
------- --------------- ------------------- --------------
Midwest 19.1% 0.0% 18.1%
Northeast 20.9% 100.0% 25.0%
California 12.2% 0.0% 11.6%
Southeast 15.0% 0.0% 14.2%
Florida 12.8% 0.0% 12.1%
Texas 9.9% 0.0% 9.4%
West 10.1% 0.0% 9.6%
</Table>
B. PRICE POINT
<Table>
<Caption>
2Q02 PRO FORMA WITH
PRICE POINT PER UNIT PRE-ACQUISITION FLATLEY ACQUISITION ACQUISITION
-------------------- --------------- ------------------- --------------
21% GREATER THAN $1,000
Greater than $1,200 per unit 11.1% 49.3% 13.1%
From $1,000 to $1,200 5.0% 50.7% 7.4%
----- ----- -----
SUBTOTAL 16.1% 100.0% 20.5%
----- ----- -----
34% FROM $700 TO $1,000
From $900 to $1,000 10.9% 0.0% 10.3%
From $800 to $900 11.6% 0.0% 11.0%
From $700 to $800 13.1% 0.0% 12.5%
----- ----- -----
SUBTOTAL 35.6% 0.0% 33.8%
----- ----- -----
35% LESS THAN $700
From $600 to $700 16.6% 0.0% 15.7%
From $500 to $600 16.2% 0.0% 15.3%
Less than $500 per unit 3.7% 0.0% 3.5%
----- ----- -----
SUBTOTAL 36.5% 0.0% 34.5%
----- ----- -----
TOTAL CONVENTIONAL 88.2% 100.0% 88.8%
Affordable 9.8% 0.0% 9.3%
Other 2.0% 0.0% 1.9%
----- ----- -----
</Table>
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August 12, 2002
Page 9
EXHIBIT IV - EARNINGS IMPACT
<Table>
<Caption>
PRO FORMA 2003
--------------
REAL ESTATE
Greater than $1,200 per unit $ 20,852,024
From $1,000 to $1,200 21,421,574
--------------
TOTAL REAL ESTATE CONTRIBUTION 42,273,598
--------------
FREE CASH FLOW 42,273,598
--------------
INTEREST EXPENSE
Secured debt [1] 17,565,030
Short term debt [2] 22,000,000
--------------
TOTAL INTEREST EXPENSE 39,565,030
AFFO $ 2,708,568
--------------
Add back: capital replacements @ $500 per door 2,161,500
--------------
FFO $ 4,870,068
==============
EARNINGS IMPACT PER SHARE
AFFO $ 0.02
FFO $ 0.04
PRO FORMA FULLY DILUTED SHARES OUTSTANDING 117,685,000
</Table>
FOOTNOTES:
[1] $308.7 million of 20-year, fully amortizing mortgage debt at 5.69%.
[2] Assumes 11% cost of equity, even though this component will be funded in
the near term with low cost borrowing under Aimco's line of credit.
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August 12, 2002
Page 10
EXHIBIT V - PRO FORMA FINANCIAL DATA
(IN THOUSANDS)
<Table>
<Caption>
PRE ACQUISITION
AS OF PRO FORMA
JUNE 30, 2002 ACQUISITION ACQUISITION
--------------- -------------- --------------
TOTAL MARKET CAPITALIZATION
Secured notes payable [1] $ 3,972,620 $ 308,700 $ 4,281,320
Secured tax-exempt bond financing [1] 1,225,471 1,225,471
Short-term debt 150,000 200,000 350,000
Perpetual preferred 552,520 552,520
Convertible preferred 578,059 578,059
Common and OP Unit equity 5,113,159 5,113,159
-------------- -------------- --------------
Total $ 11,591,829 $ 508,700 $ 12,100,529
-------------- -------------- --------------
Shares outstanding 91,423 91,423
OP Units outstanding 12,503 12,503
-------------- -------------- --------------
Total 103,926 -- 103,926
-------------- -------------- --------------
Share price (as of 6/30/02) $ 49.20 $ 49.20
FULLY DILUTED SHARES OUTSTANDING
Common share and common share equivalents 102,628 102,628
Operating Partnership and other units 15,056 15,056
-------------- -------------- --------------
Total 117,685 -- 117,685
-------------- -------------- --------------
TOTAL MORTGAGE DEBT
Consolidated
Fixed $ 4,186,631 $ 308,700 $ 4,495,331
Variable 868,823 868,823
Unconsolidated
Fixed 553,017 553,017
Variable 70,795 70,795
-------------- -------------- --------------
Total mortgage debt (consolidated and pro rata
Share unconsolidated) 5,679,266 308,700 5,987,966
-------------- -------------- --------------
Minority Interest (481,175) (481,175)
-------------- -------------- --------------
Aimco's Share of Mortgage Debt $ 5,198,091 $ 308,700 $ 5,506,791
-------------- -------------- --------------
</Table>
<Table>
<Caption>
PRE- PRO FORMA
ACQUISITION ACQUISITION
2ND QTR 2002 2ND QTR 2002
------------ ------------
2002 FIXED CHARGE COVERAGE RATIOS
Free Cash Flow coverage of interest expense 1.85 1.84
And preferred dividends [2]
</Table>
FOOTNOTES:
[1] Minority Interest has been deducted to indicate Aimco's Share of Mortgage
Debt.
[2] Pro forma assumes near term borrowings under Aimco's line of credit at an
annual interest rate of 4.5%.