Denver-based apartment REIT AIMCO announced its first-quarter results yesterday, and the news was not good: Net income for the quarter dropped from $21.8 million in the first quarter of 2003 to $14 million in the first quarter of 2004. Earnings per share (EPS) was dropped 6 cents in the first quarter of 2004, while a year earlier they were flat.

"The turnaround in AIMCO property operations is well under way and during the first quarter key pricing and resident quality initiatives began to take hold," said AIMCO chairman and CEO Terry Considine during the company’s earning call. "However, the anticipated decline in occupancy from implementing higher resident quality standards has been greater and lasted longer than expected and had negatively impacted ‘same store’ revenue with ‘same store’ net operating income at the low end of AIMCO’s guidance for the first quarter."

Jeff Adler, AIMCO’s executive vice president, said AIMCO recovered some pricing power during the last quarter by raising renewal rents by 3% and rents paid by new residents by 8%. Adler also said AIMCO established better cost controls with its team of 15 regional financial officers.

AIMCO spent $18.6 million on general and administrative (G&A) expenses during the first quarter, nearly double the $9.7 million it spent over the same period in 2003. AIMCO reports that $3 million of that G&A expense was due to "higher IT consulting, legal and compliance costs."

While AIMCO senior counsel Miles Cortez did not go into detail about the ongoing SEC investigation into the firm, he did tell one analyst that the probe should not have any "material impact" on AIMCO’s earnings. AIMCO disclosed in March that the SEC was conducting a formal investigation into the firm. The investigation was apparently centered on incorrect new rental income figures from last year, according to the company. Unlike most apartment REITs, AIMCO releases monthly net rental income figures.

However, AIMCO executives said during the call that these figures would no longer be released on a monthly basis. AIMCO (NYSE:AIV) shares closed yesterday at $29.46, down from a 52-week high of $42.05 posted on Oct., 15 2003.