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Apartment REIT MAA Has 'For Rent' Sign On Front Lawn

By: Investor's Business Daily
Posted: 2/14/2014 5:21:00 PM
Referenced Stocks: MAA

MAA ( MAA ) is a midsize real estate investment trust that owns big apartment complexes and is now nearly twice its former size, thanks to a merger.

Last Oct. 1, it completed a merger with Colonial Properties Trust that the company believes will allow it to run its apartments more efficiently.

As of Dec. 31, the company, originally called Mid-America Apartment Communities, had 84,641 apartments in 275 communities in 14 states and 50 markets. It focuses on high-growth large or secondary markets in the Sun Belt.

It owns seven complexes in its hometown of Memphis, Tenn. An example is the Reserve at Dexter Lake, which features a 17-acre lake with fishing, paddle boats, tennis courts, an infinity pool, spa and coffee shop.

Most of its properties are in the Southeast, but it owns apartment complexes as far west as Nevada and Arizona.

The stock has been moving sideways since the summer of 2011, although funds from operations, the REIT equivalent of earnings, have been growing at a sluggish rate.

In the most recent quarter, reported Feb. 5, the company reported FFO dropped 2% from a year ago. That was the first drop in 10 quarters. Revenue, however, jumped 90% thanks to the merger. It had been tracking in the low single digits. But CEO Eric Bolton said he expects good leasing conditions during 2014.

Analysts expect 2% growth in FFO in 2014 and 7% growth in 2015.

The company's debt-to-equity ratio is high at 183%, but that's down from 230% the previous year and 289% the year before that.

MAA pays a quarterly dividend of 73 cents a share, which works out to an annual yield of 4.3%. The dividend is up from 26 cents as early as 1994.

The five-year annualized dividend growth rate is 3%, lower than some REITs in IBD's Income Investor screen.