Aimco Partners with Sixth Street to Advance Its Next Luxury Rental Development

Rhea-AI Summary

Apartment Investment and Management Company (Aimco) (NYSE: AIV) has secured $56 million in preferred equity from Sixth Street for a luxury waterfront rental development in Miami, Florida. The project, located at 560-640 NE 34th Street, will be a 38-story tower with 114 luxury rental units averaging over 2,500 square feet each. Apollo provided an additional $172 million in senior construction financing.

The development will feature high-end amenities, ~7k square feet of ground floor retail space, and unobstructed views of Biscayne Bay. Aimco will serve as the developer and asset manager. This project aims to capitalize on Miami's strong macroeconomic growth and increasing in-migration, positioning it as a unique rental offering in the rapidly evolving Edgewater submarket.

Positive

• Secured $56 million in preferred equity from Sixth Street
• Obtained $172 million in senior construction financing from Apollo
• Developing a 38-story luxury waterfront rental tower in Miami
• 114 large luxury rental units averaging over 2,500 square feet
• Project located in one of Miami's fastest-growing neighborhoods
• Potential for value creation for Aimco shareholders

Negative

• None.

Financial Analyst

Aimco's partnership with Sixth Street for a $56 million preferred equity investment, coupled with Apollo's $172 million senior construction financing, marks a significant milestone in Miami's luxury real estate market. This total funding of $228 million demonstrates strong investor confidence in the project and Aimco's development capabilities.

The 38-story tower's 114 luxury rental units, averaging over 2,500 square feet, position it as a unique offering in the high-end rental market. This strategic move could potentially yield higher-than-average rental income for Aimco, positively impacting its revenue stream. However, investors should consider the project's execution risks and the potential for market saturation in Miami's luxury segment.

Real Estate Market Analyst

The development in Miami's Edgewater submarket capitalizes on the city's strong macroeconomic tailwinds and ongoing in-migration. This project aligns with the trend of 'renters by choice' - affluent individuals opting for high-end rentals over ownership. The unique offering of condominium-quality finishes in a rental property could create a competitive advantage in this fast-growing market.

However, investors should be aware of potential market volatility. While Miami's real estate market is currently robust, luxury developments can be sensitive to economic fluctuations. The success of this project will largely depend on sustained demand for ultra-luxury rentals and Aimco's ability to maintain occupancy rates in a potentially competitive landscape.

Urban Development Expert

This project represents a significant contribution to Miami's urban landscape, particularly in the rapidly evolving Edgewater submarket. The inclusion of ~7,000 square feet of ground floor retail space adds a mixed-use element, potentially enhancing the area's vibrancy and providing additional revenue streams for Aimco.

The development's focus on oversized private terraces and unobstructed views aligns with post-pandemic preferences for spacious, high-quality living environments. However, the project's success will depend on effective integration with local infrastructure and community needs. Investors should monitor potential zoning changes or community responses that could impact the development timeline or long-term value proposition.

MIAMI, Sept. 16, 2024 /PRNewswire/ -- Apartment Investment and Management Company ("Aimco") (NYSE: AIV) today announced it has secured $56 million of preferred equity from leading investment firm Sixth Street for the development of a luxury water-front rental development, located at 560-640 NE 34^th Street in Miami, Florida. Affiliates of Apollo (NYSE: APO) provided $172 million of senior construction financing to support the development. Aimco will serve as the developer and asset manager. 

The 38-story tower, adjacent to Aimco's recently completed redevelopment of The Hamilton, will include 114 luxury rental units, a highly tailored amenity package and ~7k square feet of ground floor retail space. The rental units will average more than 2,500 square feet, feature 9' – 10' foot ceilings, oversized private terraces, top-of-the-line finishes, and unobstructed views of Biscayne Bay.

"We are thrilled to advance this exciting project and bring a truly unique rental experience to one of Miami's fastest growing, and most desirable, neighborhoods," said Wes Powell, President and CEO of Aimco. "Our partner's commitment to the project and the years of good work by the Aimco team in acquiring the land, planning the development, and navigating the capital markets will create meaningful value for Aimco shareholders and the local Miami community for years to come."

"Miami continues to benefit from strong macroeconomic tailwinds and ongoing in-migration, positioning it as one of the fastest-growing markets in the U.S. We were attracted to this opportunity to deliver a unique, first-of-its-kind rental offering with condominium-quality finishes in Miami's rapidly evolving Edgewater submarket. This waterfront development represents a significant step in expanding our multifamily footprint in the U.S., while partnering with Aimco, one of the nation's premier multifamily developers," said Marcos Alvarado, Head of US Real Estate at Sixth Street. "We look forward to working with the Aimco team to bring this new residential project to life."

About Aimco
Aimco is a diversified real estate company primarily focused on value-add and opportunistic investments, targeting the US multifamily sector. Aimco's mission is to make real estate investments where outcomes are enhanced through its human capital so that substantial value is created for investors, teammates, and the communities in which it operates. Aimco is traded on the New York Stock Exchange as AIV. For more information about Aimco, please visit its website www.aimco.com.

About Sixth Street
Sixth Street is a global investment firm with approximately $75 billion in assets under management and committed capital. Sixth Street uses its long-term flexible capital, data-enabled capabilities, and One Team culture to develop themes and offer solutions to companies across all stages of growth. Sixth Street Real Estate is a global investment platform focused on acquiring properties, real estate-related operating businesses, and providing financing solutions across the full range of real estate sectors, including residential, hospitality, office, industrial, data centers, and retail. The firm has more than 600 team members including more than 200 investment professionals operating around the world. For more information, visit www.sixthstreet.com.

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SOURCE Apartment Investment and Management Company (Aimco)

FAQ

What is the total financing secured by Aimco for its Miami luxury rental development?

Aimco secured a total of $228 million in financing for its Miami luxury rental development, comprising $56 million in preferred equity from Sixth Street and $172 million in senior construction financing from Apollo.

How many luxury rental units will Aimco's new Miami development (AIV) include?

Aimco's new luxury rental development in Miami will include 114 luxury rental units.

What is the average size of the rental units in Aimco's new Miami project (AIV)?

The rental units in Aimco's new Miami project will average more than 2,500 square feet.

Where is Aimco's new luxury rental development located in Miami (AIV)?

Aimco's new luxury rental development is located at 560-640 NE 34th Street in Miami, Florida, in the Edgewater submarket.