UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: Reitnut Big red star, 1000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76768  
Subject: Re: Taken to the Woodshed Date: 3/3/2013 6:33 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 12
AVB has always been a little pricy for me, I buy mostly from the bargain bin, but at this price I might dabble in AVB or some other apartment REIT.

I do not believe that AVB is pricey, unless one believes that cap rates on really good properties in prime locations should be no different from all properties everywhere. AVB's property cap rates are, and should be, lower. As a result, the P/AFFO ratio for AVB should be higher than those of its peers. That makes the stock look expensive relative to, say, HME, AEC and MAA.

I prefer to look at NAV premiums. On that metric, AVB is not expensive at all, selling at an NAV discount of about 7%. That, in my opinion, is crazy cheap. Of course, if cap rates rise in the apartment sector, AVB stock will be less cheap. But there is no evidence of cap rates going up in this sector, or in any other sector. We should also keep debt leverage in mind when considering the "fairness" of REIT stock prices. And, here, AVB stands out, with a debt to estimated asset value of something less than 30%.

Mr. Market doesn't agree with me, as AVB has been an underperformer of late. However, I continue to add to my position at current prices, and believe that I will do well with it over any reasonable time period. Just my opinion, of course.

Ralph
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

Related Boards
Real Estate Investing
This is a great board for Real Estate other than REITs.

Buying & Selling a Home
Get your personal advice about mortgages, agents, etc. here.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement