The firm maintained its "outperform" rating on Mid-America Apartment, saying that it likes the Memphis-based real estate investment trust's recently announced $3.88 billion purchase of Post Properties (POST), Barron's reports.
Raymond James noted that investors may be cautious about the deal because it's expected to be slightly dilutive to near-term funds from operations as a result of the $20 million in overhead costs. Following the deal's announcement yesterday, Mid-America's stock traded lower.
Despite this, the firm said Mid-America's purchase of the Atlanta-based REIT should generate a 3% to 4% upside by the end of 2017.
"We do like this strategic combination for the long-term, and we think yesterday's sell-off presents an attractive entry point in the industry's newest large-cap, blue-chip REIT," Raymond James continued in an analyst note, according to Barron's.
The deal is expected to create the largest multifamily REIT based on number of units, with about 105,000 across 317 properties.
About 2.19 million shares of Mid-America have traded so far today, above its 30-day average trading volume of $576,407.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate MID-AMERICA APT CMNTYS INC as a Buy with a ratings score of B. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.You can view the full analysis from the report here: MAA