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MAA Acquires Twin Assets - Analyst Blog

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MAA ( MAA ), an apartment-only real estate investment trust (REIT), has recently completed the simultaneous acquisition of 'Palisades at Chenal Valley' - a 248-unit upscale apartment community in Little Rock, Arkansas, and 'The River's Walk at Celebrate Virginia' - a 232-unit apartment community in Fredericksburg, Virginia, for an aggregate cost of $67.5 million. The transactions were funded with the proceeds from its at-the-market stock issuance program and availability under its credit facility.

Developed in 2006, 'Palisades at Chenal Valley' is located within the master-planned Chenal Valley development site, which boasts of extensive outdoor recreation venues, upper-end shopping malls, and the area's finest golf venues. In addition, the property offers luxury amenities such as a resort-style pool with outdoor grill, a billiards room, and a walking trail.

Developed in the current fiscal year, 'The River's Walk at Celebrate Virginia' is located in the 2,400-acre mixed-use Celebrate Virginia planned unit development site that includes award-winning schools, high-end retail and entertainment venues. Furthermore, the community provides easy access to major employment centers in Washington and Richmond, Virginia. Besides its strategic location, the property also offers upscale amenities such as a saline pool, outdoor fireplace and a movie theatre.

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 49,407 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. We also have a 'Neutral' recommendation and a Zacks #2 Rank (short-term 'Buy') for UDR, Inc. ( UDR ), one of the competitors of MAA.

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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.


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

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