Mid America Apartment Communities Inc (MAA), Equity Residential (EQR): Why Is This REIT Stronger After its Merger

Competitors

The largest firm in the sector is Equity Residential (NYSE:EQR) with 113,685 units. The number three player behind Mid America Apartment Communities Inc (NYSE:MAA) is AvalonBay Communities Inc (NYSE:AVB) at 73,477 units. By market cap however, it is the sixth largest multifamily REIT. Equity Residential (NYSE:EQR) and AvalonBay Communities Inc (NYSE:AVB) have total caps of $33.8 billion and $23.3 billion, respectively. UDR, Inc. (NYSE:UDR), Essex Property Trust Inc (NYSE:ESS) and AIMCO all have total caps in the $9.5 – $10 billion range. As noted earlier, Mid America Apartment Communities Inc (NYSE:MAA) will have an $8.6 billion total capitalization.

Mid America Apartment Communities Inc (NYSE:MAA)’s ROAA will be in line but slightly below Equity Residential (NYSE:EQR) and AvalonBay Communities Inc (NYSE:AVB). That said, its ROAE falls at the midpoint between Equity Residential (NYSE:EQR) at 14% and AvalonBay Communities Inc (NYSE:AVB) at 8.8%. In terms of valuation, Mid-America’s price to FFO is 14.6x compared to 18.2x and 25.2x at Equity Residential (NYSE:EQR) and AvalonBay Communities Inc (NYSE:AVB), respectively.

Conclusion

Mid America is worth investigating for investors looking at REITs behind this merger. It is well positioned in its core market, has positive industry trends and is a reasonable valuation at this time.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Why Is This REIT Stronger After its Merger originally appeared on Fool.com is written by Mike Thiessen.

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