Over the weekend I was reading the Letter to Shareholders dated 1/31/04 by M. Winer manager of the Third Avenue Real Estate Value Fund and he mentioned many apartment REIT were paying out more than 90% of their taxable income and in effect going into debt to pay their dividend. (page 15) Does MAA participate in this kind of payout?
What % of taxable income did MAA pay out in dividends last year?
As recounted on this board many times, MAA pays out a few cents a share or so more than it takes in. Closing that gap has been their #1 mission in the past couple of years (since Eric Bolton became CEO).
They have made great strides, and within a year or two, I believe, there will be no gap.
As background: The former CEO (and founder) George Cates, believed it was OK to pay out a little more than they took in because the company regularly sold off a property or two a year (the older ones, mostly) and always had capital gains from that to cover the difference. But our new CEO saw, I think, that the market didn't really like that unconventional view of things, and was penalizing the stock as a result -- so Eric has focused on rectifying that.
You can see by the dramatic stock price rise over the past year that the market likes the new, more conventional way of doing things. MAA has outperformed just about every other apartment REIT, in large part, as a direct result of this new policy. The discount we used to get is now turning into a premium, as quality of management is being recognized.