Ahead of the Bell: Mid-America Apt Comm downgraded

Baird downgrades Mid-America Apartment Communities; lifts price targets on apartment REITs

• On 9:17 am EDT, Monday September 21, 2009

NEW YORK (AP) -- Apartment real estate investment trusts have risen in recent months as investors eye an economic recovery, but an analyst lowered her rating on Mid-America Apartment Communities Inc., saying that going forward, the stock may not be as appealing to investors looking for growth.

Mid-America, which is up 28 percent in 2009, has been an attractive pick in turbulent times because of its conservative portfolio, small amount of debt coming due in the next three years and safe dividend, said R.W. Baird analyst Paula Poskon in a research note Monday. The company may post better-than-expected results in the third quarter, and the stock could rise above $50. Mid-America closed Friday at $47.71.

"But ultimately, a year from now we expect the market to be squarely focused on growth names in advance of the expected late 2011-into-2012 recovery," Pokson wrote, and Mid-America will likely trade between $45 and $50 next September. She downgraded Mid-America to "Neutral" from "Outperform."

While apartment REIT shares will see a lot of volatility from now until September 2010, she expects the stocks she covers to wind up at the same level or higher than they are now a year from now on economic recovery prospects. She raised price targets across the board.

Poskon reiterated a "Neutral" rating on Camden Property Trust, Essex Property Trust Inc. and UDR Inc. She left AvalonBay Communities Inc. at "Underperform" and maintained an "Outperform" rating on Associated Estates Realty Corp.

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