Town and Country chief hopeful about firm's future


Town and Country Trust's chairman and chief executive yesterday defended the company's performance and depressed stock price to shareholders and said he is "optimistic and hopeful" about the Baltimore-based apartment owner's future.

Alfred Lerner told investors at the company's annual meeting that Town and Country has been stymied in its efforts to raise equity and acquire new projects, largely because of the performance of its stock, which has fallen by 35 percent since its initial offering in August 1993.

It closed unchanged yesterday, at $14.25.

"Our hands are tied, and we're trying to get them untied," said Mr. Lerner, the former chairman and chief executive of MNC Financial Inc. "We can't afford to raise equity at the current stock price, and without some equity, it's hard to buy anything. But I'm optimistic and hopeful."

To bolster investor confidence, Mr. Lerner and President Harvey Schulweis last October spent a combined $4.06 million to purchase 280,000 shares of Town and Country, the area's largest apartment owner with 17 complexes.

With the purchase, the pair increased their holdings to 3.4 million shares, or more than 19 percent of all outstanding stock, according to the company's most recent proxy statement.

In all, Town and Country owns 35 complexes with 13,631 units valued at $422 million. In 1994, it reported funds from operations -- a key measure of performance for real estate investment trusts (REITS) -- of $31.4 million, a 116 percent gain from the previous year.

Mr. Lerner and an institutional investor blamed Town and Country's flagging stock price on Wall Street's concern about $232 million in bonds that mature in 1998. Town and Country issued the bonds in conjunction with its $341 million initial offering.

"The market is giving us a discount because of an event in 1998 that is hard to predict now," he said. "If we had to do it again, we'd have 15-year bonds. We made a mistake."

He added the company intends to refinance the debt on a long-term basis with a fixed interest rate when it matures.

"Refinancing debt carries a certain level of uncertainty, and Wall Street doesn't like uncertainty," said Michael J. Fusting, managing director of Corbyn Investment Management Inc., a Lutherville firm that owns in excess of 5 percent of Town and Country's stock. "But their portfolio is doing well, it's been intact for 15 years and has a good track record."

The Town and Country chairman also said its $1.60 per share annual dividend would be maintained in the near term.

In response to a shareholder question about a potential merger of Town and Country with another REIT, Mr. Lerner said he was not "ideologically opposed" to such a marriage, but that he had not yet seen a deal that made sense.

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