Associated Estates Realty (
) is a real estate investment trust in the business of owning and
operating apartment complexes.
It manages 53 apartment communities with 13,676 units in
Texas, Florida, Georgia, Tennessee, North Carolina, Indiana,
Ohio, Minnesota and in the District of Columbia suburbs of
Virginia and Maryland.
It started as a family-owned business in 1964 managing
commercial real estate in the greater Cleveland area. During the
1970s and 1980s, it managed government-subsidized senior housing.
It still runs affordable housing for several not-for-profit
agencies in northeast Ohio.
In 1993, it was transformed into a REIT and became the only
publicly traded apartment REIT. Three equity offerings in 2010
gave the company $289 million and it expanded out of Ohio. In
recent years, it has made acquisitions in Dallas, the Washington,
D.C., suburbs and Durham, N.C.
Its annual funds from operations, the REIT equivalent of
earnings, peaked in 2008 at $1.34 a share. It dropped to 87 cents
in 2010 and has been working its way back since then.
In 2013, FFO was $1.27 per share. Analysts are expecting it to
be flat in 2014 and to rise 6% to $1.34 in 2015.
As an industry group, REITs are underperforming. The
Finance-Property REIT industry group was ranked in the lower half
of 197 groups IBD tracks.
Over the last three quarters, the company has been unable to
grow FFO. It dropped 3% from the year-ago quarter three quarters
ago, was flat two quarters ago and fell 6% in the most recent
quarter. But over that time, revenue grew 14%, 10% and 15%.
After-tax margin in the most recent quarter was 5.7%.
Associated pays a 19-cent quarterly dividend, which translates
to a 4.7% annualized yield. The dividend has been slowly rising
in recent years. In 2000, it was 20 cents.