Analyst Note| Kevin Brown |
We have updated our model for Apartment Income REIT to reflect the impact of the company's separation from Aimco, and as a result, we are reducing our fair value estimate to $44 from $55.72 for the no-moat company. After a reverse stock split and a special dividend, the new company maintains the same number of outstanding shares but has effectively split off the development pipeline and lease-up assets into a new publicly traded Aimco entity while Apartment Income retains 99 of the former company's 126 multifamily asset portfolio. The portfolio that Apartment Income owns is almost fully stabilized and includes most of the high-quality assets from the prior portfolio. Additionally, the new portfolio reduces the company's core markets from 12 to eight, eliminating some markets that management believes to have lower growth prospects.