Aimco (AIV) Reaffirms Significant Value Proposition of Business Separation

APARTMENT INVESTMENT AND MANAGEMENT COMPANY (NYSE: AIV) (“Aimco” or the “Company”) today commented on the Preliminary Solicitation Statement filed by Land & Buildings Investment Management, LLC (“Land & Buildings”) in connection with its effort to solicit consents in order to convene a Special Meeting of Aimco Shareholders:

The Aimco Board of Directors and management team are committed to delivering value to Aimco shareholders. The Company maintains open communications with its shareholders and welcomes ideas that advance the goal of enhancing shareholder value. Consistent with this philosophy, Aimco’s independent Board and management, working closely with multiple outside financial, legal, and tax advisors, thoroughly evaluated a range of alternatives and transactions. Following this review, the Board and management determined that a separation of the development company (the “Development Company”), which represents less than 10% of Aimco’s Gross Asset Value (“GAV”), is the best path forward to maximize value for Aimco shareholders.

In reaching this conclusion the Board determined that:

• By separating the Development Company, Aimco will be creating a best in class multi-family REIT (“the Multi-Family REIT”) which will:
  • Manage a high quality portfolio of diversified and stabilized apartment communities in top U.S. markets;
  • Through a simplified business model, best-in-class operations, strong balance sheet and with a seasoned management team, provide investors with a highly attractive and efficient new opportunity to allocate capital to multi-family real estate. The $2.4 billion California JV transaction announced in connection with the separation is an immediate validation of the Multi-Family REIT’s strategy and the value embedded in its attractive real estate portfolio; and
  • As a result of its low leverage and overhead, reduced execution risk and higher earnings predictability, have a sector leading financial and operating profile allowing it to grow Funds from Operations and increase its dividend by approximately 5% in 2021, an equivalent of $1.72 per share.

• The independent growth-oriented Development Company will have the ability to pursue a broader set of attractive investment opportunities that provide higher risk adjusted returns. Although the Development Company comprises less than 10% of Aimco’s current GAV, it will:
  • Retain its growing development and redevelopment business while gaining greater flexibility to pursue other accretive transactions;
  • Be led by a veteran management team with a primary focus on an identified set of organic and external opportunities;
  • Retain the ability, but not the obligation, to partner with the Multi-Family REIT on projects which provide significant upside and benefits for both companies; and
  • Be well capitalized with $1.3 billion of owned assets, $100 million of cash and an expected $100 million of revolver capacity and have the ability to access attractive financing, including non-recourse debt, construction loans and third party equity.

• After reviewing all potential structures and the related tax implications, the Board determined that a taxable separation today will increase Aimco’s strategic and financial flexibility to grow, return capital, and maximize shareholder value.

• The separation will provide substantial value to shareholders by creating two focused, independent companies with distinct and attractive investment profiles. The separation maximizes the strategic focus and financial flexibility for both companies to grow and return capital to shareholders. With strong, independent boards, dedicated management teams, expanded growth and investment opportunities, and optimized balance sheets, the Board believes that the separation of the Development Company will create far greater value for shareholders than as a combined entity. To accomplish the 10% separation of the Development Company, the legal form will be to distribute the Multi-Family REIT to shareholders. In addition, the Board believes the separation will make both companies more competitive and appealing to a broader investor audience moving forward, providing them with the opportunity to invest in two companies with compelling value propositions and distinct risk/reward profiles.

The Aimco Board of Directors is actively engaged in driving the Company’s strategic plan and remains open to all opportunities to create value. The Board strongly believes in the merits of the announced transaction and remains committed to completing the transaction, and is confident this will lead to improved performance for both companies, resulting in increased value for all Aimco shareholders. In addition, the Board is encouraged by shareholder feedback thus far. The Board and management team welcome the feedback of all of its investors, including with respect to the proposed transaction.

The Board, in consultation with its financial and legal advisors, will carefully review Land & Buildings’ preliminary solicitation statement to call a special meeting and will provide additional details to shareholders in due course. Aimco shareholders are advised to take no action at this time.

In addition, the Company published an FAQ detailing the tax benefits of the transaction on its investor webpage and filed supplemental tax information on Form 8-K with the Securities and Exchange Commission.

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