Why Apartment Investment and Management Stock Plummeted 86% in December

What happened

Shares of Apartment Investment and Management Co. (NYSE:AIV) sank 86% in December, according to data from YCharts. The stock plunged after the company officially separated its business and stock into two distinct units on Dec. 15. 

AIV Chart

AIV data by YCharts

Apartment Investment and Management Co (Aimco) announced in September that it would be splitting into two separately run, publicly traded companies. The split resulted in Aimco being dropped from the S&P 500 index; Tesla was added as its replacement soon after. 

A bear outweighing a bull on a scale.

Image source: Getty Images.

So what

The current Aimco remains focused on the development and renovation of apartment properties, while the recently formed Apartment Income REIT (NYSE:AIRC) generates revenue from long-term apartment property rentals. 

Shareholders of record as of Dec. 5 received one share of Apartment Income REIT for each Aimco share they owned. Roughly 90% of Aimco’s properties were spun off to the real estate investment trust (REIT), which crushed the former’s share price.

Apartment Income REIT’s unit price climbed 10.4% across December’s trading. Between the stock spinoff and gains for the Apartment Income REIT’s unit price, Aimco shareholders actually notched significant gains last month. 

Now what

Aimco will remain focused on developing and redeveloping apartment communities, while Apartment Income REIT stands as a pure play in the existing apartment rental market. American Income’s REIT status means it is required by law to return at least 90% of its pre-tax income to shareholders in the form of cash dividends, and the trust looks like the more dependable of the two companies.

READ:  Why Shares of Teladoc Health Are Sinking Today

Following the separation, some investors and analysts believe Aimco is in position to be acquired or taken private. The company received a non-binding acquisition offer from Westdale Partners prior to its separation from American Income REIT last month, though no potential buyout price was mentioned. Aimco’s management rejected the offer and went ahead with its planned separation, stating that the buyout proposal significantly undervalued the company.

Aimco’s December stock collapse also isn’t what it looks like at first glance. But Investors looking for a dependable income generator in the apartment property space will be best served by American Income REIT.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


View more information: https://www.fool.com/investing/2021/01/04/why-apartment-investment-and-management-stock-plum/

Xem thêm bài viết thuộc chuyên mục: investing

Related Articles

Leave a Reply

Back to top button