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Mid-America Apartment Communities Inc. Message Board

  • zebraspit zebraspit Jul 12, 2006 6:41 PM Flag

    Schizo behavior not a healthy sign

    Kind of ironic that the reason given for the overvaluation of this stock last year was that investors were paying up based on these apartment assets being ripe for conversion to condo in a hot condo market; yet, now, the conversion market is all but dead, and the new rationale is that rental apartments are hot because rents make go up because of a dying sales market.

    My guess is that many of the conversions and new condos will go bust and all those units will be coming on to the rental market actually depressing rents.
    At that point the market will see the glass as half-empty, and because of the overvaluation, these apartment REITs will be heading back down fast and hard to be repriced at a 6% yield, at best.
    That takes it to $40 or lower.

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