You would add up the value of the properties
(income / divided by going CAP rate), subtract
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.
in taking advantage of this superior buying
As noted in response to another, we're sure not
selling any stock, and I continue to buy
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.
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
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
Back in December, i asked Mr. Cates to
on the company's debt load...
ceased to post.
One of the reasons i bought into
MAA was because of
willingness to be forthright
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
posting..if this is indeed the case, i feel
notify us as such.
2) the company is in a "quiet
period" before a major
not out of the question, given the low
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.