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Associated Estates Realty's CEO Discusses Q2 2012 Results - Earnings Call Transcript

We’ve repeatedly explained that we will not lever back up and that we need to raise $0.50 of equity for every dollar we spend. We said on our earnings calls in February and April that the midpoint of our acquisition guidance of $75 million could be accomplished while staying in our targeted debt-to-book value range of 48% to 52%, without needing to issue any additional equity.

In a very short period of time, we were able to tie up both marketed and off-market deals that we expect will generate strong returns for many years to come. These properties were under managed and we bought them below replacement cost. We are at a point in the cycle at these properties where we expect strong operating performance for quite some time.

Our re-entry into Raleigh-Durham is consistent with our objectives on all fronts. So why does our stock continue to trade at such a discount? We have delivered sector-leading results over multiple cycles. We have been clear about our strategy. In our case, the market has not been efficient and there is a major disconnect between our stock price, our multiple and the value per share.

Our job is to narrow that gap. We are confident that our continued execution will do just that. We are focused on the long term and every decision we make, every step we take is with that in mind. We have a strong experienced management team committed and focused on creating long-term value and sustainable and predictable earnings. We can’t be swayed by opinions about where we should buy or build and where we shouldn’t.

Would we have wanted our stock price to be higher when we did the follow-on last month? Absolutely. We expect our acquisitions to more than make up for the FFO and NAV dilution associated with our recent follow-on.

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