AIMCO Inks JV Deal with GE Real Estate

AIMCO already has transferred the joint venture interest in 33 of its apartments properties with a total of 9,534 units to the JV, while GE Real Estate contributed cash. The 33 properties have a gross value estimated at about $346 million and currently have $204 million in mortgage debt that was assumed by the JV.

GE Real Estate received a 75% non-managing member interest in the JV, and AIMCO received a 25% managing member interest in the JV. AIMCO will continue to manage the properties and will receive a promoted interest if leveraged returns to GE Real Estate exceed 11%.

As a result of its control over day-to-day operations, AIMCO will continue to consolidate in its financial statements the properties contributed to the JV. AIMCO will not recognize any GAAP gain or loss as a result of the transaction.

AIMCO received about $107 million in cash from GE at the closing, before transaction costs and funding of reserves. AIMCO intends to use the net proceeds to redeem preferred stock, to fund acquisitions of limited partnership interests and for general corporate purposes.

The annualized effect of the transaction on AIMCO's Adjusted Funds from Operations and Funds from Operations ("FFO") is expected to be zero cents per share and a reduction of two cents per share, respectively, assuming 75% of the proceeds is used to redeem preferred stock and 25% is used to fund acquisitions of limited partnership interests.

Based on the expected timing of the preferred stock redemption, AIMCO anticipates that there will be an incremental reduction in AFFO and FFO of one cent per share in first quarter 2004.

"We are pleased to expand our relationship with GE Real Estate through the formation of this joint venture," says Paul McAuliffe, AIMCO's CFO. "This transaction allows AIMCO to raise equity capital at a competitive cost compared to property sales and to reduce mortgage and preferred leverage."

The JV is expected to acquire additional apartment properties in 2004, including five properties that have been underwritten and are expected to close in the first and second quarter of 2004, bringing the total to 38 properties.

GE Real Estate plans to invest up to $300 million of equity in the JV for investment in apartment properties, including the investment made to date, subject to its underwriting approval. "This JV brings together two organizations with significant complementary resources," says Rick Hurd, managing director, Institutional Equity Group at GE Real Estate. "GE Real Estate will provide a reliable source of capital while AIMCO offers valuable experience in real estate operations to help maximize the value of these properties. We are pleased to partner with AIMCO, and we look forward to adding properties to the joint venture over the coming months."

The 38 properties, which include 10,794 apartments units, are part of AIMCO's core portfolio and properties in Houston, Dallas, Nashville,TN, Chicago, Cincinnati, Grand Rapids,MI, Tampa,FL, Washington, DC, Virginia and Southern California.