Dane Bowler
Value, hedge fund analyst, REITs, long/short equity

Associated Estates: Drastically Undervalued Despite Continual Success

Operational performance and market performance tend to, and should, move in tandem, but occasionally, an opportunity pops up where the market just gets it wrong. This year, a small ($758mm) multi-family REIT, Associated Estates (NYSE:AEC), became a phenomenal opportunity as its operational outperformance was met with market underperformance.

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We will cover AEC in more depth later, but first, let us cover the fundamentals of the multi-family sector.

The sector has had a long run of success, and its upward trend seems to be continuing, but at a declining speed. 3rd-quarter vacancy rate fell down to an incredible 4.6% from the already low 5.6% in 3Q11. Such occupancy has provided landlords with the power to raise...

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