"Ideally, we would like to see no more than 20% of our assets in any one particular market," Joe Wilber, vice president, tells GlobeSt.com.The locally based REIT, which was established in 1980 and went public in 1994, still has confidence in the Atlanta market. Wilber says the area's high job growth has started to slow, but the softening is not expected to last.
"We see Atlanta long term as a good market for us," Wilber says. "We always want to have a presence here."
Gables is apparently right in its market selections because the company recently reported first quarter FFO earnings of $22.7 million or 76 cents a share compared to $22.6 million or 72 cents a share last year.
Same store revenues increased 3.2% and expense growth was 4%, resulting in 2.8% net operating income, which was in line with the company's budgets, Gables CEO Chris Wheeler says in a prepared statement.
"Our annualized total return for the first quarter has outpaced the NAREIT apartment sector by 393 basis points and the RMS index by 267 basis points," Wheeler says.
"Our strategy revolves around risk-adjusted returns, resilient markets and low volatility," he says in the statement, adding that this approach has helped the company outperform the sector index. The company targets in-fill suburban markets.
Gables has a research-driven strategy focused on six to eight markets including Atlanta that are characterized by high job growth and resiliency to national economic downturns, Wilber says.
Major markets after Atlanta include Houston, accounting for almost 26% of properties, and South Florida, which represents almost 22%. Other primary markets include Austin and Dallas. One new direction was the Washington, DC market.
Among its profitable Atlanta transactions last year was the sale of 2.5 acres in off-Downtown Buckhead for $5.4 million or $2.16 million per acre ($49.59 per sf). The profit from the sale was $950,000.
Gables only deals with class A properties, Wilber says. The company looks for sites that are within master planned communities, when possible.
"In cities, we like to provide rental housing in areas that are among the highest for-sale housing prices," Wilber says. "We feel we can compete at the top of the market."
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