I am the President of the Woodmere Youth Group,
in Woodmere Village, Ohio.
The President of AEC,
Jeffrey I. Friedman, owns a reasonably sized lot in the
village, on which he previously had a bowling alley and
Big Boy's restaurant. Those establishments were
demolished about two years ago, and nothing has come of the
The youth group acquired a large amount
of money recently, and when inquiring about
purchasing the land, I got an uncooperative response.
Allegedly, President Friedman has directly or indirectly
owned the land for the last 25 years, and is ABSOLUTELY
UNWILLING to sell the land.
I don't think any aquisition would clearly be at
a higher ffo/share than the stock is now. The main
question I have is'What are the ffo earnings growth
potential of the porfolio if properly managed." This is
waht anyone buying the REIT would look at. I spent the
day walking a 216 unit apt I own in a secondary
market with limited rent growth. Is this the type of
property that AEC owns, or are the untis they own they
undermanaged compared to the competition?
looking at the 10K's the properties seem to be as occuped
as the competition, and similar rents, however G&A
needs to be cut, perhaps significantly based upon ALex
Brown research I have been studying.
understand why there have not been mgt. efficiencies after
the aquisions. It appears it may be the opposite. I
don't think I will be a buyer until I understand why
1. but this 10% rule would not go into effect if
another REIT staged a hostile bid for AEC, would
2. i agree, with the kind of results this mgmt gets
for its investment efforts, the shareholders, and the
company, is better off paying out 100% of the cashflow
if ownership is held in excess of 10% by a single
entity then the co may not qualify as an REIT and will
be taxed as a "C" corp. This co has wide ownership
despite stong ownership form two or more groups that have
self dealing. The biggest problem holding the stock
back is FFO/share has not only not grown-but actually
retreated from 1997 or earlier years. Negative ffo does not
make institutions want to buy the co-these buyers move
the market not people reading post boards.
would say that mgt. should reduce the dividend. I don't
know. In the case of this co. they may be better off
having the shareholders get the money rather than having
mgt. retain cash and investing it with results like
I also don't like the fact thaat fund
long term investments with short term funding lines.
If rates go down and they refiance this could >
earnings but I don't thinlk that the shareholders are in
to speculate on rates.
geneglo says there are questionable dealings with
insiders; i agree; there are; though not as outrageous as
many other REITS have, even those sweet dealings
should be stopped; it gives the company a rancid smell;
god knows this company has to smell like roses if it
wants to see its stock go up
A tender offer for an REIT is difficult since the
ownership is so widely disbursed due to max 10% REIT
ownership requirements. I don't think an inadequate tender
is something to worry about.
concern is that mgt seems to have little ability to raise
FFO or meet its own projections. Thus no confidence
from analysts. No analyst comfort no recs. No recs no
or few buyers. Result--- stock in the tank. Mgt is
probably rightfully scared to go on a road show supporting
the stock due to their own record of broken
promises.This would be akin to asking your teacher to give you
an "A" after turning in your homework late. This
problem will take many quarters of stable or meeting
projections to change, and will not happen overnite. Those
that want a quick turnaround or short term return in
excess of the dividend may be disappointed & probably
shouldn't own it.
Mgt also appears to have one of
the highest G&A ratios of expenses to revenues in the
business- at over 5%. IF this was cout down to the industry
norm of 3% income would FFO and ROE would go way up.
The stock is cheap relative to existing FOO but the
market)(stock pushers) wants earnings growth-not purchasing of
discounted earnings.The market(analysts) want earnings
growth rasther than buying existing earnings at a
discount.This company has done a poor job here.
I am an
apt investor/dev. and don't own any stock as of
today.This is my opinion only and is not intended as
I know of two REITs selling for less today than
when they went public in 1994: CWN and AEC. Whether
you think they are CLOWNS, DRONES or THIEVES,
investing with these people is a mistake, and no amount of
discount is enough. Be prepared to protect your interest
if the control group makes a tender offer.