Mid-America Apartment CommunitiesMAA

Morningstar Rating

Stock Research and Analysis

by David Rodziewicz

Mid-America is a real estate investment trust that acquires and manages apartment buildings in the Sunbelt region of the United States. We do not believe the company has earned a moat because of its focus on lower barrier to entry units and concentration in a highly competitive region. Read more

Bulls Say

Even with the decline in home prices, renting remains a more economical option than buying in most major markets.

Mid-America has approximately $50 million in debt maturing for 2009 and 2010. The company has the liquidity to pay down or refinance these obligations, a claim some REIT peers cannot make.

The potential for further declines in the housing market also make ownership undesirable, generating demand for apartment space. Read more

Bears Say

Almost 20% of the company's properties are in the Texas, an area held up by the energy industry. Lower commodity prices are a head wind and may force job cuts, thus weighing on Mid-America in its largest market.

The company's focus in the Sunbelt could be detrimental as some of the company's core markets have been particularly hard-hit by the housing slump.

If long-term interest rates rise, in addition to already increased credit spreads, this firm's cost of capital would increase, pressuring asset values and reducing cash flow. Read more

Strategy

Mid-America focuses on acquiring new properties and redeveloping its self-managed apartment portfolio, situated in the Sunbelt region of the U.S. All of the company's properties are garden style. Prior to 2003, the company was heavily focused on development, but it has since turned to acquisition to fuel growth. Read more

Management

Mid-America earns a C for stewardship, in our opinion. H. Eric Bolton, CEO and chairman of the board, started with the firm in 1994 and has been CEO since 2001. We prefer these roles be separated as their commingling can create conflicts of interest. Read more

Profile

Mid-America is a Memphis-based real estate investment trust founded in 1994. This Sunbelt-focused REIT acquires and manages a portfolio of apartments totaling almost 140 properties with nearly 40,000 units across 13 states. Read more

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