Mid-America Ready To Acquire More Apartment Projects (MAA)

Mid-America Apartment Communities Inc. (NYSE: MAA) has a new investment partnership it plans to use for making acquisitions.  The $250 million fund may be a bit misleading on the size, mainly because its partner seems to be a 10% contribution by Mid-America itself.  Here is the basic criteria and the investment goals of the fund for Mid-America:

Mid-America’s primary operating unit called Mid-America Apartments, L.P. entered into an agreement with TPRF II/Memphis Investor L.L.C.  This TPRF II is an affiliate of Thackeray Partners.  The two have established a joint venture called the Mid-America Multifamily Fund II, LLC.  Mid-America will own one-third of the fund, while TPRF II/Memphis Investor L.L.C. will own the rest.

The fund will acquire up to $250 million of multi-family apartment communities over an eighteen-month period.  The total equity contribution by Mid-America is approximately $25 million and this will be Mid-America’s exclusive investment vehicle for acquisitions 7 years of age or older during the investment period.

Mid-America will receive a management fee of 4.25% of revenues, an asset management fee of 0.5% on equity invested, a 0.5% acquisition fee of the purchase price of each acquisition.  It will also receive a promote fee for investment returns above 15%. Mid-America anticipates an investment life for Fund II of a period of 6 to 8 years.

Mid-America shares are trading a tad lower by 1.9% at $35.01 on fairly thin trading volume, while its 52-week range is $22.22 to $60.66.  Its market cap on last look was listed as $988 million.

Jon C. Ogg
June 29, 2009