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Apartment Income REIT Corp (AIRC) Q1 2021 Earnings Call Transcript

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AIRC earnings call for the period ending March 31, 2021.

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Apartment Income REIT Corp (AIRC -1.25%)
Q1 2021 Earnings Call
Apr 30, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day. Welcome to the AIR Communities First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Lisa Cohn. Pleas to go ahead, ma'am.

Lisa R. Cohn -- President and General Counsel

Thank you, and good day. During this conference call, the forward-looking statements we make are based on management's judgment, including projections related to 2021 expectations. These statements are subject to certain risks and uncertainties, a description of which can be found in our SEC filings. Actual results may differ materially from what may be discussed today. We will also discuss certain non-GAAP financial measures, such as funds from operations. These measures are defined and are reconciled to the most comparable GAAP measures in the supplemental information that is part of the full earnings release published on AIR's website. Prepared remarks today come from Terry Considine, our CEO; Keith Kimmel, our President and Charge of Property Operations; and Paul Beldin, our Chief Financial Officer. Other members of management are present and will be available during our question-and-answer session, which will follow our prepared remarks.

I will now turn the call to Terry Considine, Terry?

Terry Considine -- Chief Executive Officer

Thank you, Lisa, and good morning to all of you on this call. I thank you for your interest in AIR. We had a solid first quarter, and more importantly, we have excellent prospects for the full year and beyond.

In our markets fourth quarter results marked an inflection point. First quarter was much better. Second quarter-to-date shows further acceleration. We expect AIR to thrive in this economy. We created AIR to provide investors with the most efficient way to invest in multifamily properties for a current cash return and long-term capital appreciation.

Our plan for AIR includes a number of specific objectives, which we communicated to investors. We've accomplished many already. We're working to advance others, but their completion remains in the future. Here's what we've already achieved. We chose and have a business model with minimal execution risk and without complex investments. Our business is simple and highly transparent. We own a high quality and diversified portfolio of stabilized multifamily properties. It's quality and resilience have been tested and confirmed by overcoming the challenges of the past 12 months.

We are the best in property operations. We have a long record of measured customer satisfaction, flat controllable costs, and pure leading margins. Results year-to-date confirmed the excellence of Keith's team, and are the reason for the recent increase in guidance for full year FFO. We want our leverage at a low cost. Our cost of borrowing aided by low market rates is already low.

Our new $1.4 billion bank credit and term loan makes it lower, with an all-in cost of 1.6%. We want to be efficient. The G&A as a percent of GAD, the lowest in the sector. And at 15 basis points, it is. We targeted higher FFO based on lower overhead costs and elimination of lease-up drag, it's working. We believe the high quality of earnings supports an improved dividend payout ratio. Our year-to-date results have almost no non-recurring or non-cash income. We want flexibility if Income tax rules change as many now recommend. We are glad to have refreshed our tax basis.

We have other objectives, where we're making progress, but still have work to do. We want our leverage to be low at a level comparable to peers. We made a good start with our recent equity raise, lowered leverage by almost one turn. We're on track to reach our long-term target of leveraged EBITDA 5.5 times by the end of this year, a full year ahead of schedule. We want to increase FFO and cash dividends by their organic growth and also the accretive acquisition of well located stabilized properties.

In a dynamic economy where submarkets struggle to stagnant demand, high taxes and uncertain rule of law, we are interested to reallocate capital to markets with growing populations, lower taxes and less political risk. Our cost of equity capital is much improved. We sold unregistered shares earlier this week at a price that supports accretive investment. The world awash with liquidity, our competitive advantage is the superior property operations.

We're committed to excellence in corporate governance. We're the only publicly traded Maryland apartment REIT dropped out of [Indecipherable] provisions that permit a classified Board. We one of three to separate the role of Chairman and CEO. We recognized -- we've received numerous recognitions for our independent and diverse and engaged Board. With four new directors in the past five years, we're committed to Board refreshment and more is forthcoming this year.

We believe our work is more than a business, it's also a mission to serve others. We noted for our numerous programs for community service, and have been voted a Best Place to Work for the past eight years. We were committed to further progress on the achievement, measurement and reporting of our ESG goals. So one thing might be made -- might be -- promises made, promises kept. Would also like the best is yet to come.

I am upbeat about 2021 and see bright prospects beyond. These good results and future opportunities are due to the hard work and respectful collaboration in my AIR teammates. I think each of you through your hard work to give first to AIR and to deliver on its promise. I celebrate your commitment each and every day for our residents, our shareholders and to each other to be the best we can be. AIR is best in class because you, my AIR colleagues, are the very best. I am proud of you and grateful to be your teammate.

With that, I'll turn the call to Keith Kimmel, Head of Property Operations, Keith?

Keith M. Kimmel -- President, Property Operations

Thanks, Terry. Given the rapid changes in business one year ago, year-over-year comparisons are both too easy and too distorting to be helpful. So I'm going to break from my norm and focus my comments on sequential changes in the business.

The first quarter brought clear signs that the inflection in our business is in the rearview, and a rebound is well under way. First quarter average daily occupancy increased 110 basis points from the fourth quarter. Turnover was down 42.3%, and applications accelerated up 25% quarter-over-quarter instead of the more typical flat seasonal pattern. Rental rates strengthened sequentially. Blended rates increased from negative 8.2% to negative 1.8% in the first quarter, with improvement in each of our eight markets. As a result, revenue growth was up 1.5%. Through it all, we maintained our customer focused and cost discipline to deliver strong operating margins.

Our first quarter margin was 71.3%, up 80 basis points from our peer leading fourth quarter mark. Even our challenged markets are recovering. Here is one example. Just last week in Philadelphia, we leased more than 50 apartment homes. The biggest week we've had in two years at a positive rate. This past October, we had a similar number of leases for the entire month and at a negative 17% lease-to-lease. As I said, the rebound is well under way.

Our first quarter results demonstrated the benefit of our diversified portfolio. San Diego and Miami were our strongest markets during the quarter with sequential revenue growth of 3.3%. Average daily occupancy was 98%, up from 97% in the fourth quarter and rents accelerated rapidly, with signed new lease rates up over 8% and asking rents now more than 10% ahead of pre-COVID peaks. We saw steady results in Denver, Washington DC and Boston, where revenue was up 40 basis points sequentially. Occupancy in these markets was 96.5%, up from 95.8% in the fourth quarter. And with signed blended rates of positive 80 basis points, an improvement from negative 6.7% in the fourth quarter. And asking rents have now recovered to pre-COVID levels.

In Philadelphia, we're now seeing the return of students and Center City office workers. Leasing pace has been strong, about 65% ahead of the fourth quarter, well ahead of the normal seasonal acceleration. Blended rates also improved, increasing from negative 14% in the fourth quarter to negative 4% in the first quarter. Occupancy has grown from 86.9% in August to 91% in March. And as we look forward, we anticipate another occupancy leap in September as the school year begins.

In Los Angeles, occupancy was solid at 96.7%. And rates improved from a blend of negative 11% in the fourth quarter to negative 3% in the first quarter. With SB-91, we see a path toward resolution of the long-dated delinquencies, which representing 5% drag on Los Angeles' revenue growth.

In Northern California, we see early signs of the tech companies return, with first quarter lease space 60% ahead of the fourth quarter as opposed to the typical 10% increase. Occupancies rebounding too, up 200 basis points from the fourth quarter. And while rates remain pressured, we expect the gradual gains we've made to accelerate as occupancy demand improved throughout peak season.

In April, momentum continued to build. Average daily occupancy is 95.4%, with leased pace increasing another 20% from March, right on our seasonal expectations. We have already pre-leased 43% of our upcoming second quarter notices by far the best mark in the past five years. While we expect occupancy to flatten over the next few months and as we work through our seasonal increase in frictional vacancy, our leasing velocity gives us confidence we will exit summer with high occupancies.

AIR [Phonetic] follows occupancy and now is also strengthening, with signed blended rates increasing from up 40 basis points in March to up 1.4% in April, with improvement in all eight markets. To show how quickly rates are accelerating even since our press release just two weeks ago, effective asking rents have increased by an average of $25 or over 1% across the entire portfolio and now stand above our asking rents on January 1st of 2020. This growing momentum makes me increasingly optimistic about the balance of 2021. If we were to compare a snapshot of today, with one taken March 1st of last year, we'd see many similarities. Leasing pace is the same. Asking rents are the same. Renewal offers are going out at the same increases and our offices are open and operating normally.

That said, we still have much to do. We need to recover the 160 basis point occupancy gap to our pre-COVID levels. Two thirds of our leasing activities left this year with much of it in the next three months. We need to cycle through leases that signed last year and restore the average rate in our rent roll that is $50 lower than a year ago. We need to be free to address delinquencies and bad debt. Our collections have been consistent, but too many financially capable residents continue to take advantage of local ordinances to live rent free. We expect this will be corrected by year-end with special consideration for those with genuine needs. But we do not control the pace at which local governments open courts and restore our access to legal remedies. And we need to continue to provide world class customer service that minimizes turnover and maximizes renewal rates.

My thanks to the entire AIR team for your continued energy, innovation and dedication to serving our residents.

And with that, I'll now turn the call over to Paul Beldin, our Chief Financial Officer. Paul?

Paul Beldin -- Executive Vice President, Chief Financial Officer

Thank you, Keith. Today, I will discuss AIR's strong balance sheet, including the benefits of the recent equity issuance. I will then discuss our expectations for the remainder of 2021 and conclude by discussing the dividend.

First, AIR's balance sheet is strong and flexible. We closed new $1.4 billion credit facility described in our earnings release. We sold 7.8 million shares of common stock, generating over $342 million of proceeds. As a new issuer, we are not yet eligible to file a shelf registration statement. Until we have 12 months of post separation filings, the registration process will entail a longer SEC clearance process and marketing period, introducing greater uncertainty in pricing and execution. To avoid this risk, we opted to sell the shares in a private placement. We are using the proceeds from the offering to repay property debt with a weighted average interest cost of 4.6%. The repayment of this high cost debt neutralizes any dilution from additional shares outstanding. And in doing so, reduces leverage to EBITDA by approximately nineteenths of a turn.

Looking ahead, leverage remains higher than our targeted leverage to EBITDA ratio. We expect $580 million in net proceeds from property sales, reducing leverage and EBITDA by an additional nineteenths of a turn. We expect an additional half turn reduction from growth in property NOI. In sum, we expect year end 2021 leveraged EBITDA to approximate 5.5 times consistent with the long-term leverage target we set when we announced AIR's separation from Aimco and more than one year ahead of our original schedule.

On looking ahead, we expect full year FFO per share between $1.96 and $2.06, just as we said two weeks ago. At the midpoint, this is a $0.03 increase from the guidance we gave in February. The net $0.03 increase is a result of $0.03 to $0.06 of incremental FFO from increased same-store NOI, $0.02 of lower interest expense due to completed the leverage neutral refinancing activity, a $0.03 reduction in FFO from property sales. And finally, as mentioned earlier, less than on $0.05 reduction in per share FFO due to the equity issuance.

The strong operating results benefit 2021. They also provide a solid foundation for 2022 as leases executed during peak leasing season are fully earned in. Finally, on April 26, the AIR Board of Directors declared a quarterly cash dividend of $0.43 per share. A 5% increase over the 2020 regular quarterly dividends paid last year by Aimco. Increased dividend reflects AIR's high quality of earnings, lower leverage and greater predictability of cash flows. As AIR earnings continue to grow, we expect that our dividend will do the same.

With that, we will now open up the call for questions. Please limit your questions to two per time in the queue. Rocco, I'll turn over to you for the first question.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions] Today's first question comes from Haendel St. Juste with Mizuho. Please go ahead.

Haendel St. Juste -- Mizuho -- Analyst

Hey, good morning out there.

Terry Considine -- Chief Executive Officer

Good morning.

Paul Beldin -- Executive Vice President, Chief Financial Officer

Good morning.

Haendel St. Juste -- Mizuho -- Analyst

Hey, so, Terry, hope you're well. Let's talk quarter here with guidance raise, reinforcements of your favorable portfolio and operational attributes. But I wanted to focus on a couple of other things. I guess, can you talk to us about the decision to sell equity here and the pricing involved? You previously outlined, as you said a goal of getting the 5.5 times by end of next year, be it organic cash flow in select asset sales. So I'm curious what's changing your thinking and why? And was it just perhaps the stock price being up and the ability to execute clearly earnings neutral or whether other considerations? Thank you.

Terry Considine -- Chief Executive Officer

Haendel I think you've described it perfectly that the stock was at a 52-week high, that it was -- we had an opportunity to reinvest the proceeds in a way that minimized or eliminated dilution from delevering, which is hard to do. And it just proceeded to increase the equitization, if you will, of the company as we move from a more levered model to one that's primarily equity.

Haendel St. Juste -- Mizuho -- Analyst

Yeah, that'll be OK. And then I guess the question on the AIR stock price performance since the split last year. The stock is up with trails, peers, you still trade at a discount to the sector average after simplifying the platform, the story, the operational results are very solid, you've improved the balance sheet, corporate governance and have dealt with the exit from the institution. I guess, I'm curious what you think the market might not be fully appreciating about the story here and what are the levers you can or would be considered -- would consider to pull to close that valuation gap?

Terry Considine -- Chief Executive Officer

Well, I think the, I think the market is -- it's been pretty good. We're not far behind peers year to date. And I think when we look at the outperformance in the last couple of weeks of 2020, you get a more complete view. I think that when we look forward, growth is going to come from mainly two major areas. The first is, Keith will continue to produce results that are superior to peers. So that's not to be missed. The second is that the subtractions from that outcomes for G&A and overhead will be lower than among peers. And the third will be the opportunity to acquire properties, where again, Keith's operating advantage trades above average returns by comparison to the properties being sold to fund it. So if you think of paired trades, the typical property that we will buy in a market with superior growth prospects and where there is an upside due to operating advantages and will be funded with sales from properties in markets with lower growth prospects and which have already had the advantages of Keith's tender loving care.

Haendel St. Juste -- Mizuho -- Analyst

Thank you for that. And can you equity clarify for me Paul that the recent guidance increase compensated the equity issuance. In other words, would have been more upside beyond the new guidance rates had you not done the equity?

Paul Beldin -- Executive Vice President, Chief Financial Officer

Haendel, the impact of the equity issuance was really a non-event when it comes FFO guidance, because we're using the proceeds to pay our high cost debt. The dilution is less than a $0.05 for the year.

Haendel St. Juste -- Mizuho -- Analyst

Got. All right, thank you.

Operator

And our next question today comes from Rich Anderson with SMBC. Please go ahead.

Richard Anderson -- SMBC -- Analyst

Thanks, good afternoon -- good morning. So, Terry, question for you on leverage or maybe Paul, whomever. The story of Aimco was -- you could have higher leverage, and I'm saying Aimco back in the day. Because of this, the nature of the debt, the no entity risk story, and then you got investment grade rated, but we're not going to use that was the kind of the tag line, now your drop in net leverage down to a comparable to your peers. I'm curious kind of what happened for you to change your stripes on the leverage narrative for this company? Did you bump your head and suddenly have an epiphany or what happened to make this happen?

Terry Considine -- Chief Executive Officer

Rich, I think there are two factors, that -- first is that for a long period of time shareholders who appreciated the higher returns and by the way we're supportive, but also there were other shareholders we didn't have, so the opportunity cost of shareholders who we're of a mind that low leverage was a better way to go. So I thought in this particular case, I think we'll have a lower cost of equity capital and higher appreciation in the stock by just not fighting the tape as they say, but by embracing what the customer or if you will, in this case, shareholder feedback was.

The second one is that there is a part of me that is concerned that the prices are high and that we are in a bit of a bubble economy, and that it's good to be cautious. And that by de-risking the company in every way that I could, it minimizes our exposure to a cyclical fluctuation. And so that's why we focused on both the balance sheet, but also the business model.

Richard Anderson -- SMBC -- Analyst

Okay, fair enough. And then my second question is, the company now kind of has that new car smell to it with everything that you did to make it simpler and everything. But there might be an appetite for risk from investors to speaking of them for a full risk if we're heading into this euphoric stage of multifamily following a terrible past year. To what degree is AIR willing to take on some risk and kind of potentially muddy the thesis of what you're trying to accomplish here which is simple and transparent, will you take on stuff like Brickle or something like it or is it kind of off the radar screen no matter what?

Terry Considine -- Chief Executive Officer

Richard, it's, the short answer is it's off the screen no matter what. And we've tried again and again and again to communicate that and including in my opening remarks just to say here's what we're going to do and here's what we're not going to do. I think that, Brickle, as you mentioned is one that made the market scratch its head a little bit, but it's already I believe on paper has a significant un-booked gain. But the case today is to provide a simple, transparent business that has low risk and has easy to understand and has an opportunity for growth through superior outperformance by the gentleman sitting to my immediate left, We're counting on you, Keith.

Richard Anderson -- SMBC -- Analyst

Okay. Thanks very much.

Terry Considine -- Chief Executive Officer

Thank you.

Operator

And our next question today comes from Alex Kalmus with Zelman and Associates. Please go ahead.

Alexander Kalmus -- Zelman and Associates -- Analyst

Hi, thank you for taking the question. Just going back to the equity sale, just curious how the process came about? And you said it's real estate, that confirms. I'm just curious if there is any strategic benefits with the investment itself as well? Thank you.

Terry Considine -- Chief Executive Officer

There is -- there is -- it came about because of conversations that I have regularly with investors in the stock and many of the people on this call will have called in or I will have spoken to them in the last 90 days or expect to speak to them in the next 90 days. In one of those conversations it emerged that that the investor which has been identified as Zimmer partners was interested in purchasing the amount of shares that they did, and I thought that the price that was agreed, it would be very much to the advantage of the company.

As for strategic advantages, I think I'm not aware of any. It would make them probably the largest shareholder and maybe six. And so, obviously, all shareholders matter to us, and the six will matter importantly, but not out of the range than any of the others. And, but actually I would say there is an advantage that Mr. Zimmer's had a wonderful track record of making good investments and I'm really grateful for his seeing the opportunity to invest inside AIR. And I think it was a bit of an endorsement.

Alexander Kalmus -- Zelman and Associates -- Analyst

Great, great, thank you. And on the marketing aspect for the properties up for sale. How is that proceeding? We're obviously hearing about low cap rates, so an advantageous time for sellers. And if you have locations that you're looking at, obviously, you've said New York as the potential one in the past, but if there is any other locations that you're thinking about disposing?

Terry Considine -- Chief Executive Officer

Well, in general, we're moving from markets, as I said earlier, with superior growth, moving to markets with superior growth prospects and Florida would be no secret as an example. And we're selling properties in markets with lower expected growth and often with unpredictable rule of law. And so blue states like California, New York and Chicago are ones that we have to keep a weather eye on what our future prospects will be.

Alexander Kalmus -- Zelman and Associates -- Analyst

Got it, thank you. [Operator Instructions] Today's next question comes from Nick Joseph with Citi. Please go ahead.

Michael Bilerman -- Citi -- Analyst

Hey, it's Michael Bilerman here with Nick. Terry, I was wondering if you can provide a little bit more detail around the debt repayment with the equity proceeds. I think it said you're going to pay back debt at 4.6%. Can you share with us sort of the term of that debt? The prepayment make holes that may be there. So obviously, there is a cost to repaying that debt or maybe some that is fully pre-payable. So maybe if we can address that, and then I had a follow-up as well.

Terry Considine -- Chief Executive Officer

Michael. It's a great question. I can take a cut out of it, but Paul knows it better than I, and may I hand it off to him.

Paul Beldin -- Executive Vice President, Chief Financial Officer

Yeah, thank you for the question, Michael. As you mentioned, we are looking to pay off debt with a weighted average cost of about 4.6% when the market today is in the high-twos, right around 2.9%. There is a make whole provision or a prepayment penalty HHM. And when we looked at this, what we considered was the payback period as compared to our marginal cost. And we did that analysis. We have come to the conclusion that on an NPV basis, we're at a breakeven point to slightly positive. And that was a consideration, but it wasn't only a consideration. It's also very important to us as we have talked earlier in this call about our ability to restructure our balance sheet to reduce the level of property debt and that really allows us to accelerate the progress on increasing the flexibility of our balance sheet, and that's important because it makes just issuing corporate debt easier and more cost effective. So in sum, we thought it made a lot of sense to use the proceeds from the equity raise in that manner.

Michael Bilerman -- Citi -- Analyst

So $340 million of debt retained and how much additional prepayment above that, $20 million, $15 million.

Paul Beldin -- Executive Vice President, Chief Financial Officer

Yeah, there will be an amount and we've looked at that amount as of March 31st. But as you know, that number changes every day, the interest rates change and so [Speech Overlap]

Michael Bilerman -- Citi -- Analyst

All right, but as a spot basis today when you evaluated raising the equity and payment debt, can you just give us a sense of the underwriting in the amount?

Paul Beldin -- Executive Vice President, Chief Financial Officer

Yeah, Michael. As we look at it at March 31st, it was not quite today, but hopefully close enough for your purposes. It was about $35 million bucks.

Michael Bilerman -- Citi -- Analyst

On top, or is that embedded in the $340 million?

Paul Beldin -- Executive Vice President, Chief Financial Officer

Embedded on the $340 million.

Michael Bilerman -- Citi -- Analyst

Okay and then just as a second question. Terry, can you just step back and it sounds like this came out of a conversation with Stewart that Stewart wanted to invest capital. So at that point you now had the information that you have an investor that wants to incrementally put capital and they have a choice of buying in the public markets or doing a direct deal. Once you had that information, can you sort of share with us how you thought about doing a direct deal with one investor? And I recognize you didn't have a shelf because you're a new issuer. But how you decided to issue almost 5% of the company to one shareholders? And you said you look out for all shareholders, protecting those shareholders that may want to maintain their rights and and also buy the stock at a 5% discount to the 15D to the closing price, the data you announced the deal. And maybe you can talk a little about how you viewed NAV? I think the last time you -- and you've over the years, over the decades, you've always put out NAV estimate. How is this valuation compared to your view of value of the enterprise? Thank you.

Terry Considine -- Chief Executive Officer

Michael, thank you very much. As you and I've discussed, I can see the point of view that any material offering might be a -- might in a democratic egalitarian way may be made available to all shareholders. Although, I know that a marketed offering isn't perfect either, because for that we would want to have a rights offering.

But there is another point of view that the companies and entities separate and distinct from any one individual shareholders and should source capital from the broadest possible menu, including private markets for debt, joint venture equity, private placements. The view of the company, its Board and its advisors, was that the alternative available to us was the two-day marketed offering, which would have resulted in a similar or greater decline in pricing and require substantial commissions and banking fees. So it's important to compare apples to apples, as it transpired, what we did was good to the company, and therefore to shareholders.

But I thought also of your question of whether some felt disadvantaged. And I just encourage you to encourage them to call me. And if so, I'll work with them to give them the same opportunity.

Michael Bilerman -- Citi -- Analyst

So you can issue $340 million. I don't know if that's maybe what shareholders want. But how does it compare to the NAV value from your shared over the past?

Terry Considine -- Chief Executive Officer

Any of these have different, there's a wide range as you know. And it's, I think maybe a market-based way would be to look at it that we issued at more than 20% above the consensus NAV, which I think is pretty good premium.

Michael Bilerman -- Citi -- Analyst

Right. I think it's the way you look at things and that's helpful, right it was a desire for the spin selling assets and doing all those things that the market was recognizing what you believed to be the true value of your enterprise that you've cultivated over decades, and so that's where I was just trying to understand in selling the equity at the price you did, how that internally viewed relative to the value you see of your assets? Which you've talked about many times, and you're the first ones to put out the whole presentation with all the details, which was extraordinarily helpful. You think about when you did the asset management transaction and it was clearly an uplift in that the market was in a scribing value for. So that's what I'm just trying to get a little bit into you in the Board's head, it was above consensus, above our NAV, which we've said in our publication, great. But I'm trying to get a sense of how the [Speech Overlap]

Terry Considine -- Chief Executive Officer

It was, it was $7 or $10 above your NAV, Michael. But the point of it -- from the company point of view was that in terms of a growing concern, in terms of providing a better access to corporate debt in terms of the better share price going forward that this is the right thing to do.

Operator

Thank you. Our next question today comes from John Pawlowski with Green Street. Please go ahead.

John Pawlowski -- Green Street -- Analyst

Hey, thank you for your time. Paul or Terry, could you share a bit more thoughts on the expected pricing of the upcoming dispositions?

Terry Considine -- Chief Executive Officer

John it's -- it will vary by property. But it's fair to say that the market is strong and pricing is high to the extent, and there's probably a bell bar way of thinking about this that we will have the lowest cap rates where we sell either in a joint venture position as we did in California a year ago, which we might do again, or if we sell in a market such as a New York City, which has very discounted current earnings, but therefore, it will have an apparently low cap rate, or if we sell in some of our, that's favorite locations, where we might have higher cap rates. But in both cases, we're looking through what the long-term expected value of those assets being sold compared to the benefits of lower leverage in this case.

John Pawlowski -- Green Street -- Analyst

Understood. The pricing on, just in terms of total value, is it kind of consistent with your internal? Any of the estimate above or below?

Terry Considine -- Chief Executive Officer

I think share that -- I think share and property prices today are more bullish even when the stock market.

John Pawlowski -- Green Street -- Analyst

Okay. Last one for me, Terry. I don't have a good sense for what the team under John Bazan and more recently Conner looked like. What share of the head count is now with Aimco versus the AIRC? But more importantly, how our markets and property is going to be underwritten over the coming quarters? What that transaction process looks like with the CIO team and the broader organization that just the organizational chart being in transition? Could you spend a few minutes talking about how the CIO worlds run? It's going to be around these next few years?

Terry Considine -- Chief Executive Officer

Look John, I think that's where the $20 that Conner would have paid his old colleague to ask about what a big hole he is going to leave, because he has been a terrific colleague, has been very influential in our thinking and [Indecipherable] So I don't want to minimize that at all. But I would say that there is a team, there is a process, and that there are people who work on it. But also say that in the end, it's all subject to approval by an independent board.

So we have a lot of people in place, a lot of opportunities we're researching even now, and we will do the best we can and will fill that void left by our dear friends leaving, but we'll take our time and make sure we get it right.

John Pawlowski -- Green Street -- Analyst

Okay, thank you for the time.

Operator

And our next question today comes from John Kim with BMO Capital Markets. Please go ahead.

John Kim -- BMO Capital Markets -- Analyst

Thanks, good morning. Just a follow-up on the capital raise. I guess I want to understand why, as far as timing, why you decided to sell at this time? I realize you pre-announced positive first quarter results, but you still sold the stake ahead of a recovery in fundamentals in many of your market. So if you could just provide some clarity on the timing and also whether or not [Indecipherable] stake it's subject to any lockup.

Terry Considine -- Chief Executive Officer

Used to take that question in reverse. That is unregistered shares, it can't be transferred without our approval, that will be registered soon. At that point, it will be truly disposable by him and his companies and whatever their decision-making process might be.

The first question as to timing was that we just, it's not that I would be able to pick a particular time over the course of the year that would be absolutely the best. But I thought it was a time that was good enough. We were at a 52-week high. We had a lot of momentum. We had a lot of interest in the stock. And I thought let's just take a couple of chips off the table and make a step forward in our announced plan to delever.

John Kim -- BMO Capital Markets -- Analyst

And by delevering in your view that would help the share price?

Terry Considine -- Chief Executive Officer

It would both help the share price and also fulfill a promise made.

John Kim -- BMO Capital Markets -- Analyst

All right. And then also on the external growth opportunities, can you just remind us what the value that's been pre-determined when you acquired the development and redevelopment projects back from Aimco, like what that did in term and value is or when you make that, just given how much cap rates are compressed in the market recently?

Terry Considine -- Chief Executive Officer

It's all based on fair market value. And so, I cannot tell you what that will be because some of those are three and four years away from completion. But at that time, we have an option, not an obligation. And we have an option to buy at a discount to fair market value. And as those things emerge, we'll look at it and we'll make what we hope will be good decisions comparing our opportunity to invest in these properties, which we know well to the sale of other properties we know well, and we'll try and put our capital where it will have the highest return.

John Kim -- BMO Capital Markets -- Analyst

So it's the fair market value at time of completion.

Terry Considine -- Chief Executive Officer

At a 5% discount to the value creation during the time of the lease.

John Kim -- BMO Capital Markets -- Analyst

Okay. Thank you.

Terry Considine -- Chief Executive Officer

You bet, thanks.

Operator

Dear ladies and gentlemen, this concludes the question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Terry Considine -- Chief Executive Officer

Well Rocco, we thank you for choregraphing yet one more of our meetings, and we thank everyone on the call for their interest in Aimco -- or AIR rather, and I look forward to when we're together next and wish you all a great weekend. Thank you.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Lisa R. Cohn -- President and General Counsel

Terry Considine -- Chief Executive Officer

Keith M. Kimmel -- President, Property Operations

Paul Beldin -- Executive Vice President, Chief Financial Officer

Haendel St. Juste -- Mizuho -- Analyst

Richard Anderson -- SMBC -- Analyst

Alexander Kalmus -- Zelman and Associates -- Analyst

Michael Bilerman -- Citi -- Analyst

John Pawlowski -- Green Street -- Analyst

John Kim -- BMO Capital Markets -- Analyst

John Kim -- BMO Capital Markets -- Analyst

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