Apartment Investment and Management Company (NYSE:AIV) Q2 2020 Earnings Conference Call - Final Transcript
Aug 04, 2020 • 12:00 pm ET
Good day, and welcome to the Aimco Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Lisa Cohn. Please go ahead.
Lisa R. Cohn
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 2020 expectations. 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, Executive Vice President, in charge of Property Operations; Wes Powell, Executive Vice President, in charge of Redevelopment; and Paul Beldin, our Chief Financial Officer. Other members of management are present and will be available during our question-and-answer session, which will follow our prepared remarks.
I will now turn the call to Terry Considine. Terry?
Thank you, Lisa, and thanks to all of you on this call for your interest in Aimco. The second quarter economic contraction was the most abrupt and most severe in U.S. history. The resilient Aimco business absorbed substantial blow and is now recovering from the shock of the pandemic and the lockdown of the economy. In mid-March, the pace of Aimco leasing was cut in half. 10 weeks later, at the end of May, we were behind plan by 1,000 new leases. In June, we saw an increase in customers breaking leases because of job losses and other financial problems. With increased demand and the excellent work of our site teams produced about 100 leases net ahead of plan, leaving a shortfall of 900. In July, early terminations continued, but demand remained strong. Leasing tours were up 20% year-over-year, and we finished the month 225 leases net ahead of plan, leaving a year-to-date shortfall of 675. If this trend continues, Keith expects the bottom and monthly average daily occupancy will be either this month or the month before. In all this, Keith and his ops teammates maintained their usual high standards for customer selection. They were concerned and some rents were carefully adjusted, but they were not panicked in across-the-board rent reduction. They're carefully building a high-quality rent roll, which will make a solid foundation for 2021.
With increasing consumer demand, Wes restarted at a measured pace, some of the short-cycle redevelopments, which have been paused in March. Wes and his team also put the finishing touches at Parc Mosaic in Boulder and continued five long-cycle developments and redevelopments, which when stabilized, will add about $30 million a year to net operating income. In the transaction market, effectively closed in March, demand is good and increasing. In May, Aimco closed the sale of a property in Northern