Post Properties (PPS) Stock Soars on $3.88B MAA Merger

Shares of Post Properties Inc. (PPS) were trading up +7.63 or +12.26 percent to $69.85 per share in Monday’s premarket after news broke early this morning that the company had entered into a definitive merger agreement with Mid America Apartment Communities Inc. (MAA). Post Properties Inc. stock closed at $62.22 per share, up +0.36 or +0.58 percent in Friday’s regular trading session.

Stock Analysis

Founded in 1971, Atlanta, Georgia based Post Properties Inc. develops and operates upscale multifamily communities, Post branded resort style garden apartments and high density urban apartments as a real estate investment trust or REIT.
Post also develops condominiums converting existing apartments into multifamily communities selling the individual units. The company owns approximately 24,000 apartment units in over 60 communities in Atlanta, Washington, Dallas and Tampa.

Mid-America Apartment Communities Inc. is headquartered in Memphis, Tennessee and owns or has an interest in approximately 254 multifamily properties in addition to 79,496 apartment units in 15 states. The company’s main market cities include Dallas, Memphis, Jacksonville, Atlanta and Houston. The company conducts all of its business activities including property management, development, acquisition and disposition through its operating partnership: Mid-America Apartments, LP.

This morning, Mid-America announced it would buy Post Properties for approximately $3.88 billion. The merger of the two companies will create the largest (by units) publicly traded real estate investment trust specializing in multifamily apartments. The combined company will have an equity market capitalization of about $12 million and a total market cap of approximately $17 billion.

The deal will have Post Properties stockholders receive 0.71 shares of newly issued MAA stock. Based on Friday’s closing price for MAA stock of $102.15, the approximate value of each Post Properties share comes to $72.53, about a +16 percent premium to Post shares Friday closing price.

Post Properties Chief Executive Officer and President, David P. Stockert stated this morning that, “This merger redefines the combined company in terms of product, capability and capacity for consistent growth.  Its unique position in the apartment REIT space and strength of its financial position should drive an advantageous cost of capital and value for shareholders of both companies.  Post shareholders are receiving an attractive value for our assets and business and a 24 percent increase in the dividend, while preserving the continuing opportunity to participate in the combined company's ongoing success.”

The board of directors of both firms has unanimously approved the deal. The number of board members for the MAA board will be increased by three to 13, with three directors designated by Post from its existing board of directors and appointed to the MAA board. H. Eric Bolton, Jr. will continue as Chief Executive and Chairman of the board with Alan B. Graf, Jr. continuing to serve as Lead Independent Director for the combined firm.

The company will retain the MAA name after the completion of the merger and will continue trading under the MAA ticker symbol. After the closing of the transaction, the company will be headquartered in Memphis, TN with significant presences in Atlanta, GA and Dallas, TX.

Other News About PPS

Post Properties reports 2Q results

Company beat analyst forecasts by $0.03 per share in their latest quarter.

5 Residential REITs Thriving on Rising Rents

Both Post and MMA were included in this article.

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Published on Aug 15, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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