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As an investment vehicle, Gables wants to be a long-term holding that provides shareowners with a superior total return through dividend income, earnings growth and value creation. We pursue quality growth through various strategies - all of which lead to increased earnings per share. These strategies range from active management of our core portfolio, to new investments where we can create value through our development expertise, to capitalizing on our core competencies in order to generate ancillary sources of income. Our asset disposition strategy improves earnings as well by recycling invested capital into higher quality assets with enhanced growth characteristics. Real estate is capital intensive, and how well we manage our capital structure has a direct impact on creating value for our shareowners. By focusing on both the numerator (earnings) and the denominator (shares), we can increase our per share results. And that leads to superior total returns.
A. Gables’ shares have been trading at a significant discount to our net asset value over the past year. In this type of an environment, we can create shareowner value by capitalizing on the arbitrage between public and private values by selling assets and using a portion of the proceeds to buy back shares. By reducing the number of shares outstanding, we can unlock value to drive growth in earnings per share and total return - our bottom line goals.
Q. Why has capital been flowing away from REITs?
A. The stock market is totally focused on growth, often very aggressive growth. REITs are income vehicles that offer relatively safe growth. At some point, the market will swing in our favor. We believe this shift will occur as the baby boomer population ages and begins to look for attractive income options. In the meantime, lower valuations have presented a great buying opportunity for the Company itself.
Q. How does the Company pursue external development during periods of capital constraint in the public markets?
A. We have been very successful obtaining funds from a variety of sources, including private placements and joint ventures with life insurance companies and pension funds. As long as the real estate fundamentals are right, we are open to flexible and creative ways of accretively financing new opportunities. We only have one aversion: we will not put undue leverage pressure on our balance sheet.
Q. What is the current condition of your balance sheet?
A. Excellent. We are very proud of our investment grade ratings and believe they provide investors with an additional level of comfort. Our solid capital structure is an important strength of the Company and a key part of riding out any economic or real estate cyclicality. |
Q.
Over
the past year, Gables has repurchased over $55 million of its
shares. Why is this an attractive use of capital?
