MAA
(
MAA
), an apartment-only real estate investment trust (REIT), has
recently priced the secondary offering of 1.7 million common shares
at $62.23 each. The company has also granted the underwriters an
option to purchase an additional 255,000 shares to cover any
over-allotments.
UBS Investment Bank, the investment banking division of
UBS AG
(
UBS
) and Jefferies & Company, Inc., the principal operating
subsidiary of
Jefferies Group, Inc.
(
JEF
) acted as the joint book-running managers for the equity
offer.
MAA anticipates generating gross proceeds of approximately
$105.8 million, before underwriting discounts and estimated
expenses, from the share issuance. The company expects to utilize
the proceeds to increase its liquidity to take advantage of
distressed selling as real asset values drop in the aftermath of
recession.
Since its inception in 1994, MAA has evolved as a publicly owned
company from a portfolio of 6,000 apartments in the Mid-South area
to a portfolio of 48,537 high-quality apartment homes spread across
the Sunbelt region of the U.S.
The company typically divides its portfolio in two tiers -
larger primary markets and lower population secondary markets.
Secondary markets often have stable fundamentals due to limited new
supply. Having a diversified presence in different types of markets
helps mitigate risk and decreases volatility in the event of a
slowdown in any one product type.
MAA's diversified market profile with its focus on solid
employment markets of the Sunbelt region across both the
high-growth primary markets and the less cyclical secondary markets
provides a stable earnings platform for the company.
Furthermore, as 'echo boomers' (children of the baby boomer
generation) opt to move out and more renters decide to part ways
with families and roommates, the single-family home-ownership rate
across the U.S. has witnessed a continuous decline and the demand
for multi-family rental apartments has surged.
With new supply remaining muted until late 2013 or 2014, we
expect the multifamily sector to remain comparatively stable in the
coming quarters, as renting has emerged as the only viable option
for customers who could not get mortgage loans or are unwilling to
buy a house at present.
We maintain our 'Neutral' recommendation on MAA, which presently
has a Zacks #3 Rank that translates into a short-term 'Hold'
rating.
JEFFERIES GP-NW (
JEF
): Free Stock Analysis Report
MID-AMER APT CM (
MAA
): Free Stock Analysis Report
UBS AG (
UBS
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research