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Mid-America Apartment Communities Inc. Message Board

  • csstacy csstacy Jan 5, 1998 7:55 PM Flag

    Hello all!

    Anyone have any thoughts on this one. Still not back to where the IPO price was but the divs are nice.

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    • SEe #94; good answer

    • You would add up the value of the properties
      (income / divided by going CAP rate), subtract
      outstanding debt.

      This calcuation assumes development
      is worth the amount invested, and that the company's
      value as a going concern is zero. Unless you think
      management is worth nothing or has a negative value, it
      should be worth more than NAV.

      When they express
      that they are selling into JV's at an implied value of
      $27-$28, they mean that they are getting market rate for
      the properies sold, which may imply that NAV is
      correctly calculated since someone is willing to pay that
      amount for the assets despite the stock trading lower.
      Either the management has negative value or people just
      don't want stock.

      --Alfonso

    • Very informative info so far. Could you give an idea about how your j.v. deals are structured or methodology to imply a value of $27/sh?

    • in taking advantage of this superior buying
      opportunity.

      As noted in response to another, we're sure not
      selling any stock, and I continue to buy
      regularly.

      Since we're not selling stock, this mispricing period
      represents a wonderful buying time for the true long term
      investor, of which I number myself one.

    • Mr. Cates has some thoughts. He's 61 years old
      and until someone showed him (again) how to reply
      (confusing "password" and "yahoo ID" to us old relics)was
      shut out and, incidentally, had a couple of other
      things to attend to.

      We just completed a $98
      million joint venture which will, in fact, increase
      slightly our level of debt (by 2% or 3%). I'd have
      preferred under normal circumstances to add equity, had it
      been reasonably priced. It isn't.

      The private
      market "paid" us the equivalent of about $27 - $28 per
      share for the j.v. properties, far above the public
      market's valuation. If the mispricing of our public shares
      continues for a prolonged period, we have numerous
      constructive alternates, none of which I'll be discussing here
      on public forum however (as noted above, I wasn't
      born yesterday).

    • Our experience over many years shows this entire
      area to be greatly overrated as an influence, paling
      in importance compared to the combination of
      apartment starts (new supply) and job formations and the
      like (demographics pertinent to demand). To back that
      up, we've found that our resident turnover -
      generally in the 60-65% per year range for many years -
      actually dropped (slightly) below 60% for the first time
      in many years.

      Apart for the valid question
      as to the significance of this small shift, it's
      nevertheless important to note that it at least FELL while
      home affordability reached new (easier) heights. The
      #1 reason that our customers leave us is to buy
      homes - and I feel very confident that such will always
      be the case. We work to keep them longer (than 15.7
      month average) through programs such as First Down,
      where we provide $1,000 at the closing of a home
      purchase to a customer who has stayed with us, and on the
      First Down program, for three years or more. We win,
      they win, and our owners win by reducing one of our
      higher cost items, turnover.

      Let it be noted,
      though, that at all times we certainly feel the heat from
      home buying - to note redundantly, it's still and
      always will be the #1 reason that our customers leave us
      (#2 is job transfers; #3 is changing personal
      circumstances such as marriage, divorce, roommate change).
      Those three account for about 3/4 of our total turnover
      each year...

    • don't see something whatever is wrong with MAA. $22.0625 where MAA is at now is a new 52 week low despite earnings/FFO edging up slightly.

    • Back in December, i asked Mr. Cates to
      comment
      on the company's debt load...
      he consequently
      ceased to post.

      One of the reasons i bought into
      MAA was because of
      management's apparent
      willingness to be forthright
      with shareholders.
      I'm
      beginning to re-examine my logic.

      It's obvious that
      the company monitors this board.

      Hence, i see
      only 2 apparent explanations...

      1) the legal
      dept has asked Mr. Cates to refrain
      from
      posting..if this is indeed the case, i feel
      he should
      notify us as such.
      2) the company is in a "quiet
      period" before a major
      announcement....takeover,
      perhaps?
      not out of the question, given the low
      valuation.

      Anyone with any thoughts???

    • hurt the apartment industry. Admittedly, I don't
      see everyone moving out of apartments into houses,
      but what if the increased affordability increased
      apartment vacancies by 2-3% over several years - or worse
      yet 5%. New housing starts just jumped 3.5% for
      December and someone has to move into the older houses.
      All the associated costs with buying a house have
      become surprisingly cheap and more tax deductible over
      the last few years. MAA is my opinion is a good
      company, but I don't want to see it start any new
      construction or become more leveraged.

    • preferred that they use extra cash to buy back shares for a while. At least with a REIT an increase in dividend does not increase taxes as the increase will be all an increase in return of capital.

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MAA
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