2008 Interview with: American Realty Investors, Inc. (ARL-NYSE), President and COO, Daniel J. Moos - featuring: their real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, hotels, shopping centers and developed and undeveloped land..
|American Realty Investors, Inc. (ARL-NYSE)|
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The Underlying Quality Of Their Assets
And An Experienced Management Team Is Allowing American Realty Investors To
Be Successful Even During The Current Real Estate Slow Down
President and Chief Operating Officer (effective April 2007) of ARI, TCI, IORI and (effective March 2007) of Prime; Senior Vice President and Business Line Manager of U.S. Bank (NYSE) from 2003 to April 2007; Executive Vice President and Chief Financial Officer, Fleetcor Technologies a privately held transaction processing company that was headquartered in New Orleans, Louisiana from 1998 to 2003; Senior Vice President and Chief Financial Officer, ICSA a privately held internet security and information company headquartered in Carlisle, Pennsylvania from 1996 to 1998; and previously was employed in various financial and operating roles for PhoneTel Technologies, Inc. which was a publicly traded telecommunication company on the American Stock Exchange headquartered in Cleveland, Ohio and LDI which was a publicly traded computer equipment sales/service and asset leasing company listed on the NASDAQ and headquartered in Corporation of Cleveland, Ohio.
American Realty Investors, Inc., a Dallas-based
real estate investment company, holds a diverse portfolio of equity real
estate located across the U.S., including office buildings, apartments,
hotels, shopping centers and developed and undeveloped land. We invest in
real estate through direct equity ownership and occasionally through
partnership structures on a nationwide basis.
Mr. Moos: “We look for undervalued and underperforming assets and transform them to create long term above-market returns. At the same time, we develop the land or focus on improving the existing asset’s operating earnings. We’re about building value.”
CEOCFO: You have a wide range of properties; how do you find them?
Mr. Moos: “We have a large portfolio throughout the United States with assets in virtually every market segment. From a geographic perspective, we have significant assets in Texas, Louisiana, and Mississippi. It goes back to the underlying theme I mentioned before; we look to acquire assets that are undervalued or underperforming. Since we are headquartered here in Dallas, we tend to see more deals that are in or around our geographic area. There’s a much higher chance that we hear about an opportunity here in Dallas, New Orleans, or Jackson, Mississippi because we are very active in those markets. Lenders and investors see the positive impact we’re making in those markets and call us looking for joint venture or investment opportunities.”
CEOCFO: Is there a certain mix of properties that you are going for or is it just a matter of opportunity?
Mr. Moos: “It’s based on opportunity, but part of that strategy is to have a highly diversified group of assets so that when there are dips in certain sectors, we are not as significantly impacted. For example, until recently, we had a substantial hotel portfolio. We saw a peak in the market so we sold a number of hotel properties last year. We kept certain hotels that are in high growth markets with stronger earning potential.”
“We are further diversified with a fair amount of land for development, multi-family assets, and a commercial portfolio consisting of office buildings and warehouse. Land development tied to single-family homes is a soft market, but our multi-family business is very strong. Our commercial portfolio remains solid as always. If you’re going to be in the real estate business, you need to have a broad enough portfolio of assets so that you’re not totally relying on one single type of asset during these market peaks and valleys.”
CEOCFO: Do you have a preference in terms of partnership, or building from scratch or is it just about taking advantage of what is there?
Mr. Moos: “One of the reasons we are so successful is that we own what we manage and we manage what we own. Whether an apartment complex, office building, or development project, we are extremely hands on. We like to control the destiny of our assets. If it’s land that’s being developed, we often bring in a development partner. In most cases, that development partner has a minority interest in the project and we continue to be the principle behind the asset. If it’s an apartment building we’ve built or purchased we place our team of property managers onsite. We generally see the best results when we stay actively involved in a project versus passing it off to someone else.”
CEOCFO: Are you finding more opportunity in the current economic environment?
Mr. Moos: “From the purchase side we are seeing a lot of opportunities to acquire fantastic assets. We are optimistic in our approach, as we remain very selective in what we are going to purchase. We bought some apartment buildings recently and we recently purchased a new office building. In addition to those, we have another office building under contract. We continue to find great opportunities and then take advantage of the situation when they are right for our company and for the current market conditions.”
CEOCFO: Is it a challenge to find personnel to manage the various facilities?
Mr. Moos: “In today’s market it is probably a little easier than it was maybe a year ago. We have more people to select from, but for the most part our screening process has always been pretty effective. We have a solid HR team and they’ve done a bang up job. Our turnover rate is probably as good as anybody in the industry. When we find good people they tend to stay with us for quite some time.”
CEOCFO: What is your occupancy rate?
Mr. Moos: “It varies across the board, but with our primary properties we are in the 90% plus in occupancy. We have several new apartment buildings we recently built and we’re doing a decent job leasing them up. Some markets lease up very quickly and others take a bit longer, but that’s just the nature of the current economy.”
Given all of your years of experience, what do you know about managing
properties that maybe others don’t quite understand?
CEOCFO: You know what you are doing and you do it consistently!
Mr. Moos: “Yes and because of our experienced staff, we tend to do it right more times than not.”
CEOCFO: What is the financial picture like today for American Realty?
Mr. Moos: “Everyone in the real estate market is having challenges that didn’t exist a year ago. We know how to manage our properties and generate good operating earnings. Where there are some difficulties is that many banks around the country are having their own financial concerns and that carries over to the real estate market. As a result, we are feeling the impact of those struggling financial institutions. We’ve had two banks that’s we consistently did business with that were recently taken over by the FDIC. It had nothing to do with our loans, but we still suffer the impact. One of the bankers told me that if he had more loans like ours they wouldn’t have gotten into the trouble they did with the FDIC. The problems of the financial institutions now become our challenge. There is nothing wrong with our asset, the quality of the property or how we service the loan, it’s just that these particular banks are having problems. As a result, we are spending a little more time on the capital markets side as it relates to new financing, renewing loans or new projects.”
CEOCFO: What is ahead?
“We remain highly focused. We stay on top because we know our assets well
and have a seasoned team of professionals in our organization. We are a
matrix driven organization with people who are very good at what they do.
For example, we have a separate solid management team responsible for each
discipline; land development, apartment assets and commercial buildings. In
addition, there’s a select team of professionals who handle our day to day
operations, leasing management, accounting, financial reporting, as well as
regulatory and compliance reporting. We are confident in our phenomenal
assets and very seasoned professionals managing those assets. Therefore, we
feel optimistic about the future. As this economy has found the floor,
particularly here in the real estate market, things will start to recover.
We think we’ll weather the storm better than most companies because we went
into this real estate slow down with solid assets and a better management
“If you’re going to be in the real estate business, you need to have a broad enough portfolio of assets so that you’re not totally relying on one single type of asset during these market peaks and valleys.” - Daniel J. Moos
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