Apartment Investment and Management Company (NYSE:AIV) Q4 2016 Earnings Conference Call - Final Transcript
Feb 03, 2017 • 01:00 pm ET
Good afternoon and welcome to the Aimco Fourth Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Lisa Cohn. Please go ahead.
Thank you, and good day. During this conference call, the forward-looking statements we make are based on management's judgment including projections related to 2017 and 2018 results. These statements are subject to certain risks and uncertainties, a description of which can be found in our SEC filings. Actual results may differ materially from what may be discussed today. We will also discuss certain non-GAAP financial measures, such as AFFO and FFO. These are defined and are reconciled to the most comparable GAAP measures in the supplemental information that is part of the full earnings release published on Aimco's website. Prepared remarks today come from Terry Considine, our Chairman and CEO, Keith Kimmel, Head of Property Operations, John Bezzant, our Chief Investment Officer, and Paul Beldin, our Chief Financial Officer. A question-and-answer session will follow our prepared remarks. I'll now turn the call over to Terry Considine. Terry?
Thank you, Lisa. And good morning to all of you on this call. I appreciate your interest in Aimco. And 2016 was a good year for Aimco by many metrics. As my colleagues will discuss in detail, property operations were solid, portfolio quality was improved, our balance sheet was strengthened, and our business was profitable. Adjusted funds from operation, our measure for current return, was up 5%. And economic income per share defined as cash dividends plus the change in net asset value, our measure for total return, provided a 15% return on our starting net asset value. In short, 2016 results reflected the steady execution of the Aimco strategy which has produced consistent improvements to our business. For this I thank my teammates and say to them, well done. Looking forward, 2017 seems likely to be of more difficult year for the apartment business. Economic growth is projected to be positive but still slow, political turbulence increases the risk of economic dislocation. The supply of new apartments continues to increase and there are many markets where new lease rent increases have slowed or turned to negative. Inflation and a number of locales minimum wage legislation, increased costs and compressed margins. These factors make us cautious. But none of this is new, at Aimco where we have been preparing for the past many years for this completely normal and predictable phase in local building cycles. We have emphasized customer selection in quality. Our average new customer is financially stable, has an annual income approaching six figures, and has ample financial wherewithal to pay rent including reasonable increases. We have high measured and publicly reported customer satisfaction and relatively high customer retention rates. We have made regular investments in the physical condition of our properties. Our portfolio is