Morgan Keegan Comments on Apartment Investment & Management Refinancing

Over the past six months, Apartment Investment & Management Co. AIV has placed $674 million of “new 10-year secured loans; proceeds were used to pay off existing secured debt (average remaining term = 2.6 years),” Morgan Keegan reports. “The loans are expected to be sold in a securitized pool to Freddie Mac,” Morgan Keegan writes. “AIV expects to purchase a mezzanine tranche and the first-loss position (together, $101 million value) for $51 million. The discount is expected to be accrued into FFO over the next 10 years. “Prepayment penalties were incurred totaling $21 million; AIV's share of prepayment penalties was $18 million ($0.14 per share). In addition, AIV will incur a negative $0.01 per share charge to write-off unamortized deferred financing costs for certain loans repaid. “Pro forma FFO/share guidance for 2011 was reduced from an old range of $1.49-1.59 to a new range of $1.34-1.44. Our 2011 estimate is reduced by $0.12 per share, from $1.51 to $1.39; our 2012 estimate is increased by $0.02, from $1.71 to $1.73.” Apartment Investment & Management closed Wednesday at $25.75.