Mid-America Apts Undervalued

Mid-America Apartments (MAA - Snapshot Report) reported 2Q FFO [funds from operations] of $0.95 per share, 13% higher than the year-earlier period and $0.02 per share higher than our estimates. Steady operating results and lower interest expense were the main reasons for the increase.

The company expects multi-family fundamentals to weaken in the coming quarters due to a stagnant US economy and lack of meaningful job growth. We still rate the company a Buy due to valuation and yield. MAA is trading at a significant discount to sector averages, and the company has an above average dividend that is being coverage at the AFFO level.

We still like the multi family sector, although declining national job growth trends will have a negative effect on rental demand. We are setting our price target at $56.00 per share or 15x 2008 FFO estimates.

Read the full analyst report on MAA

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(MAA)	04/21/10

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