Mid America Apartments (MAA), an apartment-only real estate investment trust (REIT), has recently completed the acquisition of ‘Allure in Buckhead Village’ – a 230-unit multifamily apartment community in Atlanta, Georgia – for an undisclosed price.
Despite having several properties listed as ‘held for sale’ in the Atlanta market, the acquisition signifies the inherent high quality of the asset and its superior demographics, which the company believes would drive solid return on investments going forward.
Developed in 2002, ‘Allure in Buckhead Village’ is strategically located in the Buckhead sub-market of Atlanta, which is regarded as one of the largest mixed-use development areas of the country. The property offers a mix of one- and two-bedroom apartment units with an average apartment size of 979 square feet.
In addition to the locational advantage, the property offers luxury amenities such as a resort-style pool, fitness center and outdoor kitchen. Post-acquisition, MAA further intends to renovate the apartment home interiors with stainless steel appliances, new counter tops, and improved lighting and plumbing fixtures.
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 49,155 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 Sunbeltregion 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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