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Mid-America Apartment to Raise Capital Through Notes Offering

Zacks Equity Research

Mid-America Apartment Communities, Inc. MAA — commonly known as MAA — announced the pricing of senior unsecured notes through its operating partnership, Mid-America Apartments, L.P.

The $300-million offering of 2.750% senior unsecured notes was priced at 99.762% of the principal amount. The notes are set to mature in 2030.  

Subject to certain closing conditions, the offering is anticipated to close on Nov 26.

The company expects to use net proceeds from this offering to pay down part of outstanding debt under its unsecured commercial paper program. Further, funds will be used for general corporate purposes, including the repayment of other debt, and to fund acquisition, development and redevelopment of apartment communities.

By paying down its debt obligations, this offering is likely to provide flexibility to the company. In addition, it reflects the company’s focus to efficiently address its financial obligations. Moreover, since unsecured notes can be borrowed at lower rates, the new debt will result in lower funding cost.

Notably, MAA has been focused on redevelopment initiatives to generate accretive returns and boost earnings from its existing asset base. In fact, it completed interior upgrades at 6,596 units in the first nine months of 2019 and expects to redevelop a total of 7,500-8,500 units by this year’s end. In addition, management projects multi-family property acquisitions worth $50-$100 million in 2019.

Hence, MAA has prudently accessed the debt markets, in order to pursue the above-mentioned growth opportunities and maintain its ability to source future accretive transactions.This, in turn, establishes a more conservative capital sourcing policy and will likely help solidify the company’s balance sheet.

Over the past six months, shares of this Zacks Rank #2 (Buy) company have outperformed the industry it belongs to. Its shares have gained 21.2% compared with the industry’s rally of 13.2% during this time frame.

Other Stocks to Consider

Equity Residential’s EQR shares have gained 5.5% over the past three months. At present, the stock carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Sun Communities, Inc. SUI have appreciated 10% in the past three months. Currently, the stock holds a Zacks Rank of 2.

UDR Inc. UDR stock has rallied 2.6% in three months’ time. It also currently carries a Zacks Rank #2.

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United Dominion Realty Trust, Inc. (UDR) : Free Stock Analysis Report
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