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Mid-America Apartment Communities Inc. Message Board

  • storkdoc63 storkdoc63 Feb 12, 1999 1:10 PM Flag

    Sapper..and others...

    given this reit's debt load,
    why buy it
    instead of udr?

    udr yields ~10.8%, less debt, and
    strong track record...
    should raise the dividend
    slightly, and restructuring
    should raise ffo later this

    so again, what makes maa a buy over udr?
    (i own

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I just decided to buy some more.

    • I guess that there are as many reasons for making
      this (wrong) decision as there are investors, but one
      common thread seems to be that small cap stocks such as
      ours are out, generically.

      Others don't like
      "high" leverage. I don't consider ours high, running at
      levels far below the traditional (80% or so) debt levels
      at which private real estate should

      Another is - that the markets are often wrong.

    • What's fun is adding to share value. If that can
      be done better with plan A than plan B, we're all
      for plan A.

      I commend "Here's Your Sign" on
      this bulletin board page for some very thoughtful
      insights regarding development, its risks and rewards, all
      in the context vis-a-vis share buybacks (which
      several of you have raised, and which we assess more or
      less continually - but see earlier note, that I won't
      be commenting on our specific thinking in this
      regard on this public page).

    • The source of my patience is first and foremost
      the yield and secondly the growing FFO. The source of
      my worries are languishing price (is the market
      smarter than me), debt level, and rapid expansion (i.e.

    • that this bloodbath in the REIT sector is
      designed to make you
      so disgusted that you capitulate
      and sell your shares at a loss
      for it only to be
      snatched up by "strong hands". IMHO if it's
      good enough
      to buy at 25 it's even better to buy at 20,
      of course, these are good co.'s with strong cash
      For some strange reason, anything that throws off
      cash now
      is reviled, while anything that promises
      to throw off cash in the
      future,no matter how far
      out, e.g., internet stocks, is coveted.

    • I wonder why? Most that I follow, and to my
      recent regret own in some cases, went down between 1%
      and 2.5%. Most of my favorite REITs are improving FFO
      at a pretty good rate (equal to the S&P). A few of
      them with the cheapest valuations have a certain risk
      to them, but others with little apparent downside
      risk are doing just as poorly. I just can't get it or
      even figure out what it is - just frustrated.

    • The problem with buying back shares is that it isn't as much fun as building new stuff. More profitable, a better decision, but not very exciting stuff.

    • I don't know what the problem is at UDR, but its
      FFO slid a penny or 3% in the latest quarter and its
      FFO for the year exactly equalled the previous year.
      Such results are unusual among REITs today I think.
      MAA's FFO grew 5.7% in its most recent quarter and 7.4%
      for the year over previous year. Both REITs have
      almost the same fiscal year and the earnings were both
      published in the last week or two. UDR has the nod in yield
      at 10.8 versus 10.3 and price to FFO at 7.2 versus
      MAA's 7.8. The yahoo detailed research for the forward
      five years estimated the growth rates at 7.3% for MAA
      and 6.3% for UDR. Admittedly, five year forward
      estimates can't be too accurate, but I think that you can
      say that MAA is expected to grow its FFO better than
      UDR. That growth should be worth the half percent less
      yield for MAA and if MAA does improve its FFO at a
      faster rate than UDR as expected you should expect it to
      increase its dividends at a faster rate.
      As far as
      debt, according to the yahoo profile (which often has
      this information wrong) page the debt equity ratio for
      MAA is 1.45 and for 1.27 for UDR so UDR seems to have
      a better debt ratio, but UDR has preferred shares
      and these probably aren't considered in the
      debt/equity ratio so that might make UDR's debt situation not
      that superior over MAA.
      I am less concerned with
      debt than you are. This amount of debt does not appear
      that excessive for an apartment REIT for my tasted.
      Office, hotel, or retail REITs with this amount of debt
      would make me think twice about holding the

      I am more concerned with what MAA does with its
      extra cash than its amount of debt. I would love to see
      it buy back shares, but few REITs seem to do this.
      At these valuations it would seem like a no risk no
      brainer. I also wouldn't mind it buying existing
      properties should they be able to find motivated sellers and
      good prices, but not new construction which appears
      expensive right now. Until they find such value properties
      the stock piling of cash or reduction of debt to make
      the purchase of those properties

      Overall, I would give the edge to MAA for its slightly
      better growth potential. Inside buying which is
      something that I like looks pretty good at both MAA & UDR.

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