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Ginkgo Residential IPO Offers Housing Rebound Play

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Details Regarding the Ginkgo Residential IPO

Ginkgo Residential IPOGinkgo Residential Trust Inc. filed for a $250 million Initial Public Offering (IPO), Ginkgo Residential IPO for short, in March 2012.  Once the Ginkgo Residential IPO occurs, the Ginkgo Residential stock will trade on the New York Stock Exchange (NYSE) as symbol “GNKO”.

Robert W. Baird & Co will underwrite and manage the Ginkgo Residential IPO.  Ginkgo Residential plans on using the proceeds from the Ginkgo Residential IPO to repay mortgage debt, fund future acquisitions, and for general corporate purposes.

The Ginkgo Residential IPO Provides A Way To Invest In Housing Rebound

The Ginkgo Residential IPO offers investors a way to play the housing rebound in the United States.  Ginkgo Residential is a self-managed, self-administered real estate investment trust (REIT).  Ginkgo Residential acquires and renovates middle income residential apartment communities in the southern United States.  Upon completion of the renovations, Ginkgo Residential owns and manages the residential apartment properties and markets them as newly renovated apartments with desirable amenities.  Ginkgo Residential’s properties are primarily located in the states of North Carolina, South Carolina, and Virginia.  As of the Ginkgo Residential IPO filing, the company’s properties included twenty-four apartment complexes with greater than 5,760 middle income apartment units.

Ginkgo Residential is a recently formed company that came into existence in early 2012.  The company acquired the portfolio of its predecessor company, which was known as BNP Residential Properties.  For the year ended December 31, 2011, the occupancy rate of the Ginkgo Residential apartment portfolio was 94.1%, with an average monthly revenue of $800 per unit.

Ginkgo Residential seeks to create long-term value for its stockholders by operating in residential markets that the company perceives to be underserved and overlooked by competitors.  When assessing residential apartment communities, Ginkgo Residential looks for apartments that:  are close to shopping, job corridors and health care providers; have well-maintained apartment units; include attractive on-site amenities; provide rental rates that are a value in comparison to other apartment units in the area; and have above average square footage based on the apartment market that they are located in.

The risks associated with investing in the Ginkgo Residential IPO appear to be limited.  Ginkgo Residential serves the high demand middle income housing market.  Due to the 2005 to 2012 collapse in real estate prices, residential REITs such as Ginkgo Residential are currently near the bottom of their valuations.  A slowdown in the United States economy could reduce Ginkgo Residential’s occupancy rates, and subsequently the company’s revenue and earnings outlook.  However, any such slowdown should not impact Ginkgo Residential’s long term valuation.  With the recovery of the United States residential housing market long overdue, the Ginkgo Residential IPO could prove to be a winning investment for long term investors.

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