MAA Prices Secondary Offering - Analyst Blog


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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
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: JEF , MAA , UBS

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