MAA (MAA), an apartment-only real estate investment trust (REIT), has recently completed the acquisition of Allure at Brookwood – a 349-unit premium multifamily apartment community in Atlanta, Georgia – from an unnamed seller for an undisclosed price.
Despite having several properties listed as ‘held for sale’ in the Atlanta market, MAA has acquired a couple of properties in the region, the latest being Allure in Buckhead Village in May 2012. The string of acquisitions signifies the inherent high quality of each asset and superior demographics, which the company believes would drive solid return on investments going forward.
Developed in 2008, Allure at Brookwood is strategically located in the Buckhead sub-market of Atlanta, regarded as one of the leading mixed-use development areas of the country. In addition, the property is placed in the midst of the largest office submarkets of the region including Midtown, Buckhead, and Central Perimeter, which on an aggregate span over 50 million square feet of office space. The apartment community is also located in close proximity to several major medical employment centers of the region.
Besides its locational advantage, the property offers luxury amenities such as a resort-style pool, fitness center and outdoor kitchen. Consequently, the acquisition offers unmatched revenue generating options for the company, and even provides an opportunity to command premium rents despite a challenging macroeconomic environment.
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 49,094 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.
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 #3 Rank for UDR, Inc. (UDR), one of the competitors of MAA.
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