Mid-America Apartment (MAA) reported 3Q08 FFO of $0.90 per share. Excluding $0.01 per share of hurricane charges, 3Q FFO [funds from operations] came in $0.01 below our estimates. Occupancy noticeably dropped in the quarter, and the company will have a much more difficult time raising rents in the early part of 2009.
With job losses mounting, apartment rentals will suffer and we have lowered our 2009 FFO estimates by 6% in response. We still rate the company a Buy due to valuation, yield, and the company's strong balance sheet.
Shares of MAA are off about 34% since the beginning of October. MAA is trading at a significant discount to NAV [net asset value] and the yield, now above 8% is being covered at the AFFO level. In addition, the company has very manageable 2009 debt maturities and plenty of liquidity to withstand the current meltdown in the credit markets.
Read the full analyst report on MAA
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