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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the Aimco First Quarter 2019 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, Executive Vice President and General Counsel. Please go ahead, ma'am.
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 2019 results. 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 AFFO and FFO. 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 Aimco's website. Prepared remarks today come from Terry Considine, our Chairman and CEO; Keith Kimmel, Executive Vice President, in charge of Property Operations; Wes Powell, Executive Vice President, in charge of Redevelopment; and Paul Beldin, our CFO. John Bezzant, our Chief Investment Officer, is present and will also be available to answer questions during the session that follows our prepared remarks. I will now turn the call to Terry Considine. Terry?
Thank you, Lisa, and good day to each of you on this call. Thank you for your interest in Aimco. Business is good and for Aimco, it's getting better and better. First quarter results were solid, ahead of our plan and are the product of an intentional strategy to create net asset value per share through excellence in operations, accretive redevelopment, disciplined capital allocation and most importantly, by Aimco teammates across the country, working together with enthusiasm, focus and accountability.
These solid results are highlighted in operations, where Keith and his team averaged 97% in daily occupancy, posted peer-leading margins and peer-leading same-store net operating income growth. In redevelopment, these results were evidenced, where Wes and his team started a new redevelopment and continued our investment in ongoing highly accretive projects throughout the portfolio. And was evidenced again in portfolio management, where Lisa and her team completed the leverage-neutral paired trade funding of last year's fourth quarter stock buyback by selling 7 lower-rated properties at prices slightly better than what we had estimated in our most recent calculation of net asset value.
And these results are evidenced on the Aimco balance sheet, which is safe, strong, provides a solid foundation for further growth. Today, Paul has $0.75 billion in cash and available credit and more than $3 billion in our pool of unencumbered properties, providing safety and great flexibility to pursue future opportunities. Amidst all this hard work, Aimco was named by the Denver Post for the seventh consecutive year, a top workplace in Colorado. As we begin the summer leasing season, the U.S. economy is healthy, and we enjoy strong consumer demand and investor interest. I'm thankful for the Aimco team, its culture, energy and optimism. And while these remain early days, our prospects are bright, and we expect 2019 to be another good year. And now for more a detailed report on the first quarter, I'd like to turn the call over to Keith Kimmel, Head of Property Operations. Keith?
Thanks, Terry. I'm pleased to report that we had a solid first quarter in operations. We've continued to maximize revenue growth through a focus on occupancy. The first quarter finished at 97%, 90 basis points better than the first quarter of 2018. Occupancy has been consistent from month-to-month, with all 3 months finishing at or above 97%. Due to our consistently high customer satisfaction and our focus on customer selection, first quarter trailing 12 month turnover was 44%, a 50 basis point improvement from last quarter and our lowest turnover on record. Turning to our same-store results. Revenues were up 4.2% for the quarter. Our top markets with growth over 4.5% were Washington, D.C, the Bay Area, Boston, Los Angeles and Philadelphia. This list includes our 4 largest markets and in total, represents 65% of same-store revenue contribution. We had solid performances of 3% growth in San Diego, Seattle and Chicago. Finally, with growth over 1.5%, New York City, Denver, Atlanta and Miami. In the first quarter, as planned, expenses returned to a more Aimco-like 80 basis points. This includes an increase in our maintenance cost as we continue to invest in our communities and an increase in our property taxes. This was offset by decreases in turnover expense in marketing, due to our resident retention as well as a reduction in personnel costs from our continued focus on team [ effort ] efficiency. This led to our first quarter margin of 73.2%, 90 basis points better than last year. As a result of our quarterly revenue and expense performance, net operating income was up 5.5%. Looking at leases, which transacted in the quarter. New leases were up 80 basis points, renewals were up 5.2% and same-store blended lease rates were up 2.9%. Our strongest new lease rates were in Denver, the Bay Area, Philadelphia and Los Angeles, and with the most pressure on new lease rates in Chicago and Atlanta. Finally, as we look at our preliminary April same-store results, we see a solid start to the second quarter that shows a continuation of our momentum. Blended lease rates are up 3.4%, new lease rates up 1.6% and renewals up 5%, all while maintaining average daily occupancy of 97%, some 60 basis points higher than 2018. And with great thanks to our teams in the field and here in Denver for your commitment and success, I'll turn the call over to Wes Powell, our Executive Vice President of Redevelopment. Wes?
Thank you, Keith. Today, I will cover our redevelopment and development activity, and then move on to acquisitions. During the first quarter, we invested a total of $45 million in redevelopment and development, and are maintaining our target investment range of between $225 million and $275 million for the year. Current projects remain on plan, with construction progressing on the approved phases of investment at Bay Parc and the Flamingo in Miami and at our ground-up projects in Denver and Elmhurst, Illinois, outside of Chicago. In Boulder, Colorado, at Parc Mosaic, we have pre-released over 10% of our community at rents ahead of underwriting 60 days prior to our initial delivery of apartment homes.
Also, during the first quarter, we began redevelopment activities in Northern California at our 707 Leahy community located in Redwood City. This 110-unit property is in the process of being vacated in preparation for a construction start early this summer. We are fully repositioning the community, originally constructed in 1973, to attract higher income residents who work nearby in -- is one of the world's most dynamic job markets. The renovated homes will be delivered in 3 phases beginning early next year. Aimco expects to invest $24 million in the redevelopment of Leahy and generate a free cash flow IRR of about 9%. Moving to acquisitions. In April, we closed, for $65 million, the purchase of One Ardmore, a newly constructed property, also containing 110 apartment homes, and the fifth and final community included in the Philadelphia portfolio acquisition announced last year. One Ardmore is located within the heart of downtown Ardmore, one of Philadelphia's close-in main line suburbs and just 2 blocks from the commuter rail station, providing direct access to Center City. The premier location and quality of the asset has attracted affluent and mature residence during our pre-leasing process. To date, we have leased about 20% of the property at rates ahead of our underwriting. As originally reported, last year's Philadelphia portfolio acquisition was expected to produce an NOI yield of more than 5%. At our allocated purchase price, One Ardmore stabilized NOI yield was projected to be approximately 5.75% at the time the acquisition was announced. Based on our early leasing success, we now expect yields on One Ardmore to stabilize north of 6%. And with thanks to all my teammates for their continued hard work and their pursuit of value-creating opportunities, both inside and outside of the portfolio, I would now like to turn the call over to Paul Beldin, our Chief Financial Officer. Paul?
Thank you, Wes. Today, I'm going to cover our balance sheet, our first quarter financial results and 2019 guidance, and then the changes to our supplemental schedules and reporting. First, our balance sheet is safe and liquid, which creates opportunity and flexibility. During the first quarter, Aimco sold 7 communities, generating sufficient proceeds to complete the leverage-neutral paired trade funding for the fourth quarter 2018 share repurchases. The $400 million paired trade is neutral on an NOI yield basis. At Aimco, we believe it is more appropriate to focus on a free cash flow yield and free cash flow internal rates of return, as these metrics contemplate capital spending, required to offset depreciation, which is a very real cost of ownership. This paired trade provides a 20 basis point improvement to free cash flow yields and increases free cash flow internal rates of returns by 250 basis points. Following the sales, Aimco ended the first quarter with $198 million in cash on hands and the capacity to borrow $723 million on our revolving credit facility. And on April 1, Aimco prepaid, at par, our $168 million of 2019 debt maturities. The repayment of this debt added $740 million of property value to Aimco's pool of unencumbered properties for a total of $3.3 billion. Also in April, as previously announced, Aimco gave notice that we would redeem the shares of our Class A perpetual preferred stock, when callable on May 16. At 6.875%, this $125 million redemption lowers Aimco's cost of leverage. Inclusive of our balance sheet activities during past 12 months and after the redemption of the preferred shares, Aimco has reduced net leverage by $200 million, lowered the cost of leverage by 35 basis points and increased the size of our unencumbered pool by more than 60%. Next, onto financial results for the quarter. AFFO was $0.55 per share, $0.02 ahead of the midpoint of guidance, due to better-than-expected operating results by Keith and his team and the timing of G&A-related costs. Our first quarter same-store sales have us well positioned as we enter the important summer leasing season, and we are ahead of the initial expectations embedded in the midpoint of our guidance. But the year is still young with approximately 2/3 of our 2019 leasing activity still in front of us. Accordingly, we are maintaining our guidance ranges at this time. Finally, with the first quarter earnings release, Aimco has made a few changes to supplemental schedules and reporting. The most substantive change is that on January 1, Aimco adopted an accounting standard that changes how indirect costs incurred to obtain resident leases are recognized. These costs are now immediately expensed, rather than deferred and amortized. For comparability between periods, Aimco has recast 2018 pro forma FFO to be consistent with 2019's accounting requirements. As mentioned in our fourth quarter earnings call, the full year impact of this change to pro forma FFO is $0.02 and there is no effect to our reported AFFO. Additionally, Aimco began presenting turnover on a trailing 12-month basis, rather than the current quarter standing-alone or the current quarter multiplied by 4. We believe this presentation is more meaningful than single quarter metrics because turnover is highly seasonal. A detailed definition of how we calculate turnover can be found in the glossary of earnings release. Lastly, Aimco's Board of Directors declared a quarterly cash dividend of $0.39 per share for the quarter ended March 31, 2019. This is a 3% increase over the quarterly dividend paid in 2018. With that, we will now open up the call for questions. [Operator Instructions]
Rocco, I'll turn it over to you for the first question.
[Operator Instructions] Today's first question comes from Trent Trujillo of Scotiabank.
I'll start by just congratulating on a good quarter and a nice start to the year. So Paul, you touched on this in your prepared remarks just a minute ago, but with strong same-store revenue and same-store NOI growth above the 2019 midpoint and your first quarter results above what you had contemplated in guidance, why the hesitation really to raise your guidance? I guess maybe said another way, under what scenario would Aimco only achieve the low end of its range?
Trent, thank you for the question. The guidance range we believe is still appropriate, as stated. It's something that we looked at. But the facts are that we're only 1/3 of the way through our leasing activity for the year. And so as we complete more of our business, we'll update guidance at that time.
Okay. And Terry, swinging this one to you. With your interest in politics, it seems like it's a question right up your alley. What are your latest thoughts on rent control and affordability initiatives that are sweeping across the country?
Brent, it's very worrisome. And there is a political discussion going on in the country over what should be the role of the government versus a free market. And it won't surprise you to learn that I think that the free market is more efficient and greater at wealth production. But it's a fact that during this quarter, Oregon adopted a rent-control statute, which is fairly benign, but nevertheless a step in that direction. It's a fact that in California, notwithstanding our success at the ballot box last fall, it's again in front of the general assembly. And in our state of Colorado, it's been raised and discussed, I don't think it's going forward this year, but it's been a subject of discussion. That would also be true of Illinois, where it was raised and discussed and -- but not going forward this year. And of course, in New York, it's still pending in Albany. So it's an important issue. It's impacting our business, depends a little bit on the exact nature of the rent controlling terms. But we'll just have to deal with it and then allocate our capital appropriately.
And our next question today comes from Austin Wurschmidt of KeyBanc Capital Markets.
First one, just wanted to touch on the 707 Leahy redevelopment. And was wondering if you could give us a little better sense of the scope of that renovation in light of the $215,000 per unit spend? And then, if my math is right, I think your all-in basis is a little under $500,000 per unit. So I'm just curious how you think that stacks up, I guess, versus replacement cost in the Northern California market?
Austin, it's Wes. I'll take that one. First off, a little bit on the property. It's located about a mile from downtown Redwood City, 3 miles from Stanford. So it's a fantastic location. Very high land values. And in this -- in particular instance, the current improvements or the current building that is, has more density than would be allowed if we tore down the building and started over. And so that really led us to a comprehensive repositioning. So the scope is going to effectively produce something that should price and appeal to customers in a way that a brand-new property would when we're done. And so I guess that's how we look at the investment there. And that -- there may be a second part to your question, which I've missed. But was that responsive?
Yes. I was just curious, so I was getting you an all-in basis of around a little under $500,000 unit for that property. And I was curious how that stacks up versus replacement cost in the market? And then if you could also provide what you think the cash-on-cash return would be for that? That'd be helpful.
Sure. At an all-in basis of $500,000, I think you're close to, if not still at a bit of a discount to replacement cost and surely if you're including a land value in there. And on the yield, we're looking at about a 5% yield on that one.
Great. And just switching over to dispositions. You guys have sold about $400 million, a little over $400 million at this point year-to-date, at a free cash flow cap rate of 5%. So as we think about the remaining $400 million embedded in your guidance, how should we think about the quality of assets or cap rate for those deals? And then the timing?
Austin, this is Paul. We are evaluating the assets that we are going to sell for the remainder of the year. As you mentioned we still have about $400 million to go as part of our plan. So the exact free cash flow cap rate is subject to change, but our expectation today is that would not vary significantly from that 5% experienced in the first quarter. And in regards to the timing, it's probably roughly a $100 million here in the second quarter, a similar number in the third and then $200 million in the fourth.
And our next question today comes from Rob Stevenson of Janney.
Paul, give me your commentary on turnover. What's the -- been the positive impact to NOI for that 150 basis points lower rate of turnover, given that renewal rates are still higher than new rates? Is that $1 million annually, is that 150 basis points throughout the year saves you $5 million? What's the magnitude there that we should be thinking about?
Rob, that's a -- it's a good question. And we've looked at that in a number of different ways. And really the way that we think about it most often internally is centered around the differences in profitability between a new lease and our renewal lease because that kind of contemplates turnover, the benefits of our customer service and all aspects of our operations and the -- and various initiatives they have undertaken. And so broadly, a lease that renews is 20% to 30% more profitable than a new lease.
And that incorporates any downtime as well? Or is downtime in addition?
It does. It incorporates vacancy loss and any related operating expenses.
Okay. And then second question, the portfolio breakout that you guys provide in the supplemental suggests 52% As, 32% Bs and 16% Cs. Keith, any notable performance differential between the same-store performance of those buckets in the first quarter or over the trailing sort of 6 months or a year?
Rod, we -- when we look at it, we like to use -- new lease price as the best barometer, just sort of what's transacting in that moment. And when we look at it over this past quarter, the Bs have been outperforming the As by about 90 basis points. Now what I would really point out is as that becomes varied by market and also by property. So depending on if it's in Miami or Los Angeles or Boston, you get some different variations with that. But that's the general overview.
Okay. And Terry, what's the going-forward rationale for maintaining that sort of 16% weighting in Cs? It's been pretty consistent for you guys for a while now. What do you get out of that portfolio-wise?
Primarily, it's a land bank for a future redevelopment. And so it's properties that we don't think are as highly rated that's why it's graded as C, but there's some value or attributes that aren't captured in the current rental rate.
And our next question today comes from Shirley Wu, Bank of America Merrill Lynch.
So your occupancy has been very high at 97%. Could you talk about your length of stay trend? And maybe some of the initiatives, the strategies that you're using to kind of drive that number? Or has this mostly been on the tenant behavior side?
Shirley, this is Keith. Just -- I want to make sure I answer. I heard the first part about length of stay. What was the second piece of the question?
I was curious that if you guys have changed any of your strategies or had a new initiative on the leasing side to kind of drive different length of stay?
Okay. So first, if we go to our length of stay. We've seen it -- been creeping up. And that's really a reflection of the turnover number. So if you look at the turnover number, at the end of the day, it's that our residents are becoming more sticky. And we're seeing them stay with us longer over periods of time. And we think that's a direct reflection also to the -- our customer satisfaction and the way we think about serving our residents. Ultimately, we're looking to create a special customer experience in which they'll stay with us longer. And through those pieces it ultimately has found its way to our average daily occupancy increasing.
Okay. And so your Los Angeles market has been one of the strongest this quarter. Could you talk about the latest mix that you're seeing in that market, given what we've been hearing about a little bit weaker job growth in that market?
Shirley, I can't speak to the economics of the city, but I could speak to what I can tell you about our buildings. And those that are located on the West side of L.A. in Mid-Wilshire have been just performing at really a tremendous level. Our occupancy has been north of 97%. And what I'd say is this, that while there is -- the city is very large. And there's different submarkets within Los Angeles and where we're located, we're quite pleased and we've seen some nice strength.
And our next question today comes from Nick Nate Joseph of Citi.
It looks like the number of same-store units went up 8% sequentially from last quarter. What's the impact of the pool change on same-store revenue growth in 1Q?
Thanks, Nick. Yes, we -- at the beginning of the year, as is our tradition, we update our same-store pool for the expected activity that's going to occur through the year. And so in '19, what that did was that it added a total of 11 communities to our same-store pool, primarily communities that were coming out of occupancy and NOI stabilization from redevelopment and lease-up activities at One Canal and Indigo. And then we removed 8 communities, 5 due to their sales here in the first quarter and 3 others due to either their expected redevelopment or their expected sale later in 2019. And so although there was a lot of activity in the change in the pool, the actual impact to the same-store growth rate is pretty minimal. As we looked at the numbers, we estimated that was about a 10 basis point impact to both revenue and NOI.
And now that the buyback is completed, the sales, special dividend reverse stock split. How do you think about the execution of the paired trade overall versus your objective? And then what's your appetite to do more if the stock continues to trade at a discount versus your NAV estimate?
Nick, I'm happy to answer that. We like to eat our own cooking. And if the price is right, we'll buy again.
So you're happy with the execution on the first buyback?
I think so. I do.
And Nick, this is Paul. Just to jump in, the feedback that we've received from our investor base has been quite positive. And they have appreciated the fact that the combination of the stock dividend and reverse stock split allowed for easier comparability of our per share metrics. And so we are happy that our primary goal was achieved in that effort.
And our next question today comes from John Kim of BMO Capital Markets.
On your improvement on your new lease growth rate that you had progressing throughout the year, what would you say is the #1 reason why this is happening? Is it attributable to your company-specific reduced turnover? Or is it market forces, including new supply, bringing up market rent?
John, I'll start and see if anybody wants to add. I'd say it's a bunch of combinations. The first is that we solve to total revenue. So there's lots of levers that come into that. And so we don't focus on one particular thing or solve to just new lease rate or just occupancy. Certainly, when you get more highly occupied, that gives you some different choices potentially as how you can push rates or make different decisions. We're seeing some good growth as basically -- that the season has been picking up. And that's also part of it, is that as you come out of the winter months, we're seeing a nice spring acceleration. That's where I'd leave it.
Yes, John, what I would add -- it's Terry. What I would add to it is 2 things. First of all, the economy is quite good. And so there's a following wind for all of us. And secondly, it's the accumulation of many, many individual activities, whether it's individual teammates who are just -- we're getting better at what we do or the properties are in better condition because of consistent spending over many years or the upgrades provided by Wes and his team. And the fact is we're just -- we're getting better.
Okay. And then on your dispositions. Looks like the price per unit was a pretty modest price. Can you share what the cap rate was? And also, it's a little bit surprising that your percentage of Cs hasn't changed in the past year, just given -- it looks like you're selling some Cs, you've been upgrading some buildings. And then you have developments and acquisitions that are mostly on the A side. So if you can comment on that scenario, that'd be great as well.
This is Paul, I'll comment on the economics and then I'll turn it over for somebody else to jump in about the portfolio mix. The economics of the first quarter sales, as we mentioned in our prepared remarks, were in line with the pricing we expected to achieve and in fact, a little bit better than what was included in our net asset value. And so new sales prices translated to an NOI cap rate of 5.6% and a free cash flow cap rate of 5%.
Well, and John, if I could jump in here. We don't determine the grade of C, that grade is determined by the market, by the rental rates being paid by individual customers. So a property can be a C for its current use as a rental apartment, but it might be A as a piece of land. And so as I said in my answer to Rob earlier, most of what we have -- I think maybe all of what we have in the C category would be something that is being held for future redevelopment.
But is it typical for a B to fall into C over a year?
Yes. And there may be some changes in mix in names. But over a lifetime, properties start as As and eventually become Bs and eventually become Cs.
And our next question today comes from Drew Babin of Baird.
This is [ Alex ] on for Drew. We were hoping for some market level comments regarding leasing trends through April. Any markets jumping off the page, starting peak leasing season off to a great foot? Are there any disappointing or lagging thus far?
This is Keith, I'll walk you through it. Listen, it's early days, and we've started off strong. I would tell you that we continue to see strength in the Bay Area, that has been really playing out well. D.C. also, of course, has picked up and we're feeling good about that. Outside of that, I just say that it's still early and a lot of work in front of us.
Understood. And just kind of coming back to the asset disposition pool. Can you -- were those assets sold, in any portfolio constitutions or all one-offs? And if so, could you give us kind of how that NOI cap rate varied across assets? And just kind of what those asset age profile and quality looked like?
[ Alex ], this is John. They were sold as one-off deals. And the composition of them is they are generally older, generally garden-style communities. I think we had 1 tower that sold -- an older tower in suburban D.C that was sold. But most of them are older garden communities.
And would you say most of those assets were kind of in the ballpark of that 5.6%? Or was there a range?
Yes. No, they were all pretty tight, pretty tight to that.
And our next question today comes from Rich Anderson at SMBC.
So Keith, question to you. At 97% occupied, I know you said you have levers to solve for total revenue. But is it reasonable to assume, heading into heavy leasing season, that you'll see occupancy drift down a bit, while you push rents when the getting is good?
Rich, thanks for the question. Listen, I think what's important to know is that the majority of our leases expire in the second and third quarter. So you get some frictional vacancy just by the number of transactions and activity that's recurring. And we will use each of those levers as we work our way through that peak season, whether it's new or renewal or occupancy to make sure that they all work to solve to total revenue.
Okay. So I guess I'll leave it at that. And then second follow-up question is, there are some unique characteristics to Aimco that sort of paint the picture for you, whether it's top echelon same-store growth that you're producing right now, your paired trade strategy, redevelopment, Philadelphia entrée, these are all kind of unique to you guys to some degree and also quality of income improvements. I'm wondering of the things that you think are unique to you, what could still be improved upon, whether it's increasing the unencumbered pool that you described earlier, maybe more deleveraging beyond paying off the preferred later this year? You're going to stay with redevelopment in the range that you communicated in the past. But I'm just wondering, what sort of fixes at the margin are you looking at for Aimco 2020?
Rich, I'm going to ask for the opportunity to answer that, partly because I want to say what a pleasure it is to hear your voice, so glad to have you back. Yes, I think the -- your list of -- your list was important, but it didn't include what I actually think is the foundation for what we're doing, which is culture. And culture eats strategy for breakfast. And what we have today at Aimco is a remarkable team that's cohesive and hardworking and highly productive, and that is something that's hard to give an exact metric on. We get different accolades from different evaluators and so forth, and we measure it and we try to respond to it.
But I think people who work with the company recognize that there is a very talented team, and that gives us the opportunity to look at a lot of different directions. The -- if you look at then against the other items, some of which you listed, in operations, if I -- Keith will be the first to tell you that I look at it and say only 97% occupancy and only 5.5% NOI growth, and he feels the same way. So we have 100 different things in operations that we can do better, and we're working on them. In redevelopment where Wes is building a team, we're not opportunity constrained, we're more constrained by our management capacity to address all of them. And as his team matures and develops, I think, we will see that continue to grow beyond the increase that's built-in, in this year.
In terms of the balance sheet, Paul has put us in very good shape. We've got lots of flexibility, we have a very safe balance sheet, primarily nonrecourse, very limited refunding risk, no entity risk. And so -- but the natural process of that will be to increase the unencumbered pool, which will give us enhanced flexibility, both either today or in a difficult time that might be in the future. I think what I skipped over in that list was portfolio management and I think that we would -- we're focusing, as a team, on more opportunities to find anomalies in a market that is fairly fully priced. And so it's not to say, do more volume, that could be profitless. But to look for anomalies that might have the potential for higher growth and that's what we're working on.
And our next question today comes from Tayo Okusanya of Jefferies.
In regards to acquisitions, you didn't do any during the quarter, although you did a subsequent deal. When you think about your acquisition outlook, just curious, specifically what you're kind of looking at and what you'd be interested in? Whether it's specific markets, whether it's [indiscernible] further on B assets over A assets because of pricing? Just trying to get a general sense.
Tayo, this is Terry again. We're looking for the highest free cash flow IRRs on a risk-adjusted basis and of course -- and leverage neutral. So if we could -- and that's a question of price. In today's market where money is very inexpensive and there's lots of it, many assets are very fully priced. And so what we are looking for is not so much a particular asset class, but at ones where there is some particular aspect, that would create the opportunity for above-average growth. And I think if you look at our acquisitions in the last year you'll see there's a different reason behind each of them. And so when we bought Bent Tree in -- a year ago, that was an operational advantage. We think that the value creation there was partly Wes' team identifying that it could be -- its results were not as good as those of our neighboring properties. And then having confidence that Keith's team could come in and achieve significant increases over the predecessors in operation. Another transaction that followed was the Dranoff transaction was a very excellent developer in a market that we like, we don't necessarily look at what others do. And the opportunity to buy in scale and have a placement of equity at a price that was then well above market in the OP unit transaction, and so forth. So we're looking for different opportunities. We love covered land plays because we think over time land depreciates and buildings don't. And we just look for what opportunities might be out there. But it wouldn't be necessarily one for across all of our requisition interest.
And our next question today comes from John Pawlowski of Green Street Advisors.
Terry, I'd like to go back to the political climate out here in California. Curious to get your thoughts on Senate Bill 50, perhaps one of the more productive responses to affordable housing issues. And whether that changes your views on the demand versus supply backdrop across your portfolio over the next, call it, 5, 10 years.
John, I'm not familiar with Senate Bill 50 and any current versions. Is that the one that is providing incentives for building in -- around transit stops and so forth?
Yes, around transit stops, but also it breaks down barriers to apartment [ supply ] in single-family-zone neighborhoods. So they've broadened it.
Yes. That's -- the -- I guess what I would -- that I'm generally familiar with it, I'm not familiar in particular. But what it shows is even in California, with high levels of regulation, there is a bit of a market at work. California has population growth has stalled because of the high cost of housing and the burden of regulation on economic growth. And so even with the most -- or one of the most regulated governments, they're trying to find a way to have markets work to create housing for people. And they have chosen to do it by attacking those regulations, if you will. That's what that is. That's deregulating the -- just the maze of restrictions on development activity in California, at least in those specific locations. And so I think that's very positive for California, be positive for economic growth and in the end, will be positive for Aimco and it's our -- probably $4 billion, $5 billion investment in the state. Because it's -- it'll mean that California does better.
Okay. Makes sense. Paul or Keith, of the $100 million you guys spent last year on capital enhancements, which I believe a lot is revenue generating in nature. Could you quantify the lift on 2019 same-store revenue growth for us?
John, this is Paul. I'll take that. And in our capital enhancement spending, where we last year spent about $100 million, the midpoint of our range this year is a little bit lower than that. It encompasses a wide range of spending. So there's an element of it that does provide for future revenue growth, and we think that's a very good investment because it allows us to be a more profitable operating entity for our investors, which is I think everybody's ultimate goal in this business. And then -- there was also elements of the CE spending that is -- allows us to reduce our operating expenses. So we get a benefit and the shareholders get a benefit regardless of the classification. What I would say is there is not really a lift to the 2019 results because our spending is similar year-over-year. So it's built-in to our run rate, if you will.
Okay. Paul, I understand, not the year-to-year dynamics, just the aggregate lift of -- on the run rate. How much lower would the run rate be if you had not spent this type of capital over the last several years?
John, I hate to get into hypotheticals like that, and say what we didn't do because there are other things that we didn't do, that we could have done. So I'm just going to stay away from that.
Yes. Understood. Last one, if I may. G&A run rate over the next 3 to 5 years, is inflation a good kind of bogey? Or there are opportunities to cut G&A?
John, I hope there's opportunities to increase G&A because it's all connected to adding value to the company. And so if we have a change in activities, a change in scale, a change in concentration on redevelopment, whatever our business evolves, if it'll turn on the men and women on the Aimco team doing that. And if the appropriate consequence of that is that they're highly paid for their contribution, it could increase. So that's not something that I would want to manage outside of context. Beyond that, we have a general goal and cultural of being frugal. So I think those are 2 balance points.
And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Terry Considine for any closing remarks.
Rocco, thank you, and thank you all of you on the call. Many of you I hope we will see in New York, and I look forward to seeing you there. And if not, I wish you a happy spring and an early summer. Talk you later. Bye.
Thank you. Today's conference has now concluded, and we thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.