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Apartment Income REIT: Cause For Pause

Aug. 24, 2023 8:00 AM ETApartment Income REIT Corp. (AIRC)AIV, AVB, CPT, EQR, ESS, MAA, UDR, VNQ21 Comments


  • Apartment Income REIT focuses on resident recruitment and retention through "good neighbor" policies and has a strong focus on affluent residents with strong credit.
  • AIRC has achieved peer-leading same-store revenue growth and free cash flow conversion and has formed joint venture partnerships to raise funds for new acquisitions.
  • Despite a decline in occupancy, AIRC expects improvement in the coming quarters and its CEO believes the business is returning to normal after the impacts of COVID-19.
  • The company has exhibited rapid growth in revenue, pays a higher-than-average dividend yield, and sells for an attractive price.
  • There is some cause for concern about a possible dividend cut, and shares are trading near their all-time low.

"Panama Papers" Renew Focus On Miami Luxury Real Estate Market Boom

Joe Raedle/Getty Images News

Now that apartment rental growth rates have stabilized slightly higher than inflation, leaving concerns about oversupply appearing a bit overblown (as documented in previous articles), and since Freddie Mac estimates that the U.S. housing

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This article was written by

Philip Eric Jones profile picture

Philip Eric Jones is a financial writer, educator, artist, and inspirational speaker. He writes about investing for retirement with a focus on Growth stocks and REITs.

He is a contributor to the investing group Hoya Capital Income Builder. The service features a team of analysts focusing on real income-producing asset classes that offer the opportunity for reliable income, diversification, and inflation hedging. Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CPT, VNQ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

A Buy, Sell, or Hold rating in this article does not constitute a Buy, Sell, or Hold recommendation. All investors should exercise their own due diligence, before investing in any stock.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

Thanks for a first rate article.
Philip Eric Jones profile picture
@jeffgr My pleasure. I appreciate those encouraging words.
Philip Eric Jones profile picture
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Xav Welsh profile picture
Thanks for the article - long AIRC with a modest position that I want to increase. Adding a bit here and a lot more if it drops further. Thanks and GLTA.
EuroInvest profile picture
$170k median tenant income is hard to believe, but I assume it's from a. Management report. Thank you for the article, I'm less familiar compared to ESS, AVB and EQR
Philip Eric Jones profile picture
@EuroInvest Yep, it's from their investor presentation.
Can somebody explain how a company that has spent almost a billion dollars on stock buybacks has *more* shares outstanding today than they did 5 years ago?
Philip Eric Jones profile picture
@elvislevel AIRC is less than 3 years old
AIRC is one of my largest holdings which I just picked up over the past couple months. They've had a couple sub-par years after covid due to exposure to areas where governments allowed people to free-load and not pay rent without being evicted. Thanks to ridiculous government policies AIRC is just now getting the scum evicted from their properties which should bode well for improved metrics the next couple of quarters.
Orangejulius profile picture
This was a quality analysis, thank you. I've been an ESS and AVB investor off and on since 2020, (bought in 2020, sold by 2022) and got back into both earlier this year. I'm familiar with MAA, EQR and CPT, but never found them as interesting as ESS or AVB.

ESS became very cheap when it bounced off $200, around 14x FFO. AVB has gone in and out of my buy zone of $160-$170. Ideally, I'd like to see it at 15x for a good margin of safety.

AIRC is intriguing. They're definitely on the smaller side and just have a BBB credit rating, but their payout ratio appears to be around 75% of FFO, and 82% AFFO, so I see no risk of a dividend cut currently. It's definitely more interesting than some of the larger peers at the sub-14x FFO level, so I think I may be dipping my toes into this name.
Philip Eric Jones profile picture
@Orangejulius Thanks for your take. I would be interested in hearing what you decide to do.
Justification for Higher Education profile picture
If you hadn't a "hold" rating in the letterhead, I would have thought this is an easy "strong buy" research article. I am buying it. Thanks for letting me know about this reit that I never heard of before.
Philip Eric Jones profile picture
@Justification for Higher Education My pleasure. Hope this works out well for you.
AIRC is a buy for today or buy for tomorrow type of decision, definitely a hold at the moment.
Thanks for your back to back reviews of AIRC and IRT. I made an initial investment in AIRC on Monday after narrowing my choice down to those two stocks. I wound up being confident that AIRC has a high quality management team. That helped me to conclude their growth strategy will prove to be successful. I didn't get there for IRT. My investment in AIRC also added more geographic diversity to my current investments in MAA and CPT. But, your reviews are giving me more to think about for both these stocks. Thanks again.
Philip Eric Jones profile picture
@Skeptical Sam My pleasure. I agree about AIRC management
Diesel Good profile picture
Good well written article. Easy to read. I will study AIRC.
Philip Eric Jones profile picture
@Diesel Good Thanks for those encouraging words. I would be interested to hear what you decide, if you feel like sharing.
gastro4 profile picture
Thanks for update. Long AIRC!
Philip Eric Jones profile picture
@gastro4 My pleasure. Happy investing!
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