Mid-America Apartment (NYSE:MAA)

Mid-America Apartment Communities is a real estate investment trust (REIT) that owns and manages apartments in the southeast and south-central United States. The company through its continuous acquisition and development has been able to expand its portfolio to more than forty thousand apartments spread across 13 states.

The U.S. housing market has slumped since reaching its peak in 2005. However, apartment market outlook continues to be robust considering factors like expected increase in job growth rate by 1.2% for the coming year. Moreover, mortgage defaults had shoot up sharply owing to 17 straight rate hikes till mid 2006. This has put up a halt on aggressive lending. Endorsing the same, most of the first time homebuyers have no alternative left other than renting option. This has pushed demand for rental house and has resulted elevation in rental by 4.0% to 4.4% across the state.

The company through its three-tier market strategy has been able to spread its portfolio across different states. This should enable the company to withstand diverse economic cycles in different states. Moreover, the company has set up its base in areas with nourishing job opportunities; as it has entered in seven of the ten top national markets.

The company has been successfully able to complete its renovation of 1,086 apartment units, which has yielded them a rent hike of 17%. A subdued supply pressure should persist in the near future, which should supplement this rising rental rates. The management through new development, redevelopment and core acquisition initiatives expects funds from operation (FFO) for fiscal 2007 to around $3.40 to $3.60 per share, an increase of more than 2% in comparison with last year. Mismatch between demand-supply should aid Mid-America to get the better deal, when matched against market.