67 WALL STREET, New York - June 18, 2013 - The Wall Street Transcript has just published its REITs Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Acquisition and Financing Costs - Pricing Power Outlook - Residential and Commercial REITs - Inexpensive Access to Capital - Apartment, Lodging, Self-Storage and Office REITs
Companies include: American Assets Trust, Inc. (AAT) and many more.
In the following excerpt from the REITs Report, the EVP and CFO of American Assets Trust, Inc. (AAT) discusses company strategy and the outlook for this vital industry:
TWST: To what extent is the company growing today, or planning to grow, and is that targeted at any particular property types or markets?
Mr. Barton: Our target NOI allocation is approximately 35% office, and the reason for that is over many years we've seen that there's much more volatility in office than there is in retail. We have a saying around here when it comes to office product, "when you have tenants, you don't have space; and when you have space, you don't have tenants."
Historically, our tenant retention for retail is approximately 92%, whereas office is more in the 82%, 84% range. Also, our margins are stronger for retail than they are for office. Whereas our margins are probably high 60s for office, my operating margins for retail are in the low 70s.
Our focus is on creating predictable, consistent cash flow, and we think that keeping a general guideline of NOI office allocation at around 35% is the right strategy for us. As we look into the future, our best guess is that the pie will be somewhat the same, just bigger. And then lastly, we have no interest in being big for the sake of being big. Anything that we do, our focus is on NAV creation and accretion.
It has to be accretive for our existing shareholders. If it doesn't create increasing net asset value for our shareholders, we have no interest in the transaction. Said another way, we don't mind paying a high multiple if there is strong internal growth or strong same store NOI. That gets us to an unlevered cash on cash return in excess of our weighted average cost of capital in a relatively short period of time.
TWST: Tell us about the state of your balance sheet, your leverage policy, and your access to capital if you were to find attractive acquisitions to pursue.
Mr. Barton: Our balance sheet is very strong. We have around...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
- Utility Industry