Apartment Income REIT Corp. (NYSE:AIRC) Q2 2022 Earnings Conference Call July 29, 2022 1:00 PM ET

Company Participants

Lisa Cohn - President and General Counsel, AIR Communities

Terry Considine - CEO

Keith Kimmel - President of Property Operations

John McGrath - Co-CIO and Chairman of Investment Committee

Paul Beldin - Chief Financial Officer

Conference Call Participants

Michael Bilerman - Citi

Rich Anderson - SMBC

Barry Liu - Mizuho

Chandni Luthra - Goldman Sachs

Operator

Good afternoon. Thank you for attending. My name is Matt, and I will be your moderator for today's call. At this time, I would like to welcome everyone to the Air Communities Second Quarter 2022 Earnings Conference Call [Operator Instructions].

I would now like to pass the conference over to our host, Lisa Cohn, President and General Counsel of AIR Communities.

Lisa Cohn

Thank you, Matt, and good day. My name is Lisa Cohn, and I am President and General Counsel of AIR Communities. During this conference call, the forward-looking statements we make are based on management's judgment, including projections related to 2022 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 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 Web site. Prepared remarks today come from Terry Considine, our CEO; Keith Kimmel, President of Property Operations; John McGrath, our Co-CIO and Chairman of our Investment Committee; and Paul Beldin, our Chief Financial Officer. Other members of management are also present, all of us will be available during the question-and-answer session, which will follow our prepared remarks.

We'll now turn the call to Terry Considine. Terry?

Terry Considine

Thank you, Lisa, and thanks to all of you for your interest at AIR. In the past few months, AIR has largely completed its separation from the old Aimco 18 months ahead of schedule. At AIR’s IPO, 12% of AIR NAV was entangled with Aimco, now it is less than 30 basis points. The acceleration of the Aimco note and the cancellation of the Aimco master lease of four properties created noise in the quarter, making modeling more difficult, but they are important milestones in simplifying AIR'S business, which is growing steadily. AIR was designed to be the most efficient and effective way to invest in public ownership of multifamily real estate. With the separation from old Aimco now behind us, we can see more clearly what AIR will be. We can see the strength of the AIR operating platform, what Keith calls the AIR Edge. For example, challenged by inflation, peers increased second quarter operating expenses year-over-year by almost 5%. AIR costs were essentially flat. Our emphasis on customer selection and satisfaction results in stable communities with good neighbors and peer leading margins, coupled with low G&A, AIR enjoys the highest conversion of rent to free cash flow. Rent growth matters a lot. What matters more is how much of that revenue gets through to distribution to our investment for shareholders.